How To Find A Bad Agent To Buy Off
After looking for investment properties myself, in such a tough market, I realised I needed to start thinking more creatively when it comes to getting a good property deal to renovate.
My plan was;
- To buy under market value
- Something I could add value to
- A property with the problem that can be easily solved for little cost
- A location that will have high capital growth
I knew the way the market was going I definitely had my work cut out for me. I believe I just had to work harder and smarter than everyone else. I’m a firm believer that a real estate agent can push the price of the property up by 10% but they can also make it slide the other way.
Agent due diligence
So I set out to research the property market and the agents at the same time. To my delight I found many agents that just weren’t up to scratch when it came to their advertising and negotiation skills. I also found what agents would be very hard to negotiate with. Still remaining friendly I made offers on some of the properties but they made it just too competitive and the price went out of my budget. After observing many auctions and negotiating with some of the agents we truly knew who were the good the bad and the ugly.
Characteristics of those bad agents
- Bad marketing
- Bad photos
- No paid advertising
- Home cluttered and no staging
- Bad negotiation skills
- Less than 6 months in sales
- Know the area better than the agent
- Know your pricing better than the agent
- Have a good solicitor that you can contact easily
- Not set up on the web ports correctly or missing on some of them
- Bad manners on the phone
- Doesn’t get back to you
- Doesn’t remember you after following relationship building steps
Property/market due diligence
Between my wife and I we inspected up to 10 open homes a weekend. After tracking sold prices over a couple of weeks we could clearly see that the market was easily going up $10,000 a month. What really shocked us is when we attended auctions. We found that buyers at auctions were getting very emotional at the time and bidding well over $80,000 more than normal sales.
We had to change our strategy. After spending a lot of time carrying out due diligence on many properties, we found that we only needed to do due diligence on non-auction properties. We also started to get to know who were the good and bad agents, so we focused on the non-auction properties that had bad agents. This gave us the best chance of getting a property at a price that made our project profitable.
This took a period of three months. Here’s a list of things that we looked for when I came to the location.
Location tips for price growth;
- Good schools public and private (could be selective)
- Affordability and movement of affordability
- Industrial areas
- Hospitals, shops, entrainment
- Check flooding maps, R codes, housing commission, developments.
- Check infrastructure plans.
Now we were ready for the hunt
After this time we knew exactly what properties would sell for and we could see what agents were under selling the properties. We began stalking mode and did our best to get on a bad agent’s “buyer hot list’. The trouble was the really bad agents didn’t even keep one of these Lists. One of these agents told me “just to go on realestate.com and then call me”. I felt sick in my stomach of how bad that agent was. It was kind of not a big surprise as I knew it was one of the cheapest agents in the area. I just felt sorry for the owners that sold with him.
How the deal went down
We found the perfect combo;
- An agent with less than six months experience in the industry
- The property was two bedroom but could be easily converted into three
- The property was not well maintained and needed work
- No professional photography which produced inquiry
- He did not negotiate well and gave all these cards away
- He did not know the market
- House was cluttered
- He was prepared to sell prior to auction
- The property was not marketed well
- The property was structurally sound
- Fitted our location criteria
This was the perfect storm but don’t get me wrong we worked hard for it as he was still getting offers at 11 o’clock at night as we were signing a contract up in the office. By building rapport with the real estate agent it really helped us get the deal across the line.
The property was purchased for $505,000 and properties around the area have sold for over $650,000 4 months later. If you are quick, you work hard and follow some of the principles outlined here you can do well in this market.
About Jhai Mitchell
Jhai is an award winning Internet Marketing Real Estate Agent for Elders Toongabbie and Kings Langley. After running his own internet marketing business he has now set his own sites for the real estate industry. He observed that 90% of real estate agents did not know how to market themselves online. Jhai is now fixed on one goal. To teach real estate agents that they can market online so much better than they currently are.
Since then he has been consistently quoted in the Sydney Morning Herald and Real Estate Business online. He is a regular guest blogger on TheHomePage.com.au, sharing his expertise of marketing aspects for the Real Estate Industry. His biggest passions are his wife, martial arts, dogs and most of all property.