How to negotiate a purchase price

Show notes

Frank Valentic is the Director of Advantage Property Consulting, an award-winning buyers and vendors advocacy service in Melbourne. Frank has over 20 years of experience as a buyers and vendors advocate, and you may recognise him from his appearances as a buyers’ agent on every season of the television show, The Block.

In this episode, Frank breaks down everything you need to know about negotiating the purchase price of your property. He’ll explain everything from why you might want to consider negotiating the price of your property, to the research you need to do, to how to approach the negotiation. Plus, Frank shares his biggest tip for anyone looking to negotiate, that might just help you secure your dream property for less.

Transcript

Michael 0:00
The information contained in this podcast is general in nature and is not to be taken as financial or personal advice.

Michael 0:06
It does not consider your objectives, financial situation or needs.

Michael 0:10
You should consider whether this information is suitable for you and your personal circumstances before acting on it.

Michael 0:17
Hi and welcome to the home, run your guide to buying your first home in Australia on the show, I’ll walk you through the home buying process from every angle.

Michael 0:24
We cover steps to take the pitfalls to avoid and the answers to all your questions you’ve been dying to ask no matter what stage you’re at, you’ll learn everything you need to know about buying your first home.

Michael 0:35
I’m your host, Michael Nasser and I’m a mortgage broker at Lendstreet and I really love helping people buy their first home.

Michael 0:45
Frank Atlantic is a director of Advantage, property consulting, and is a buyer and vendors advocate with over 20 years of experience.

Michael 0:53
You may also recognise him as one of the superstar buyer advocates from the TV.

Michael 0:57
Show the block where he has represented clients in every single season to date in today’s episode.

Michael 1:03
Frank breaks down all things purchase price negotiation.

Michael 1:07
He’ll explain everything from why you might consider trying to negotiate a purchase price to the due diligence required to maximise your chances of success.

Michael 1:14
Plus Frank shares is the number one tip for anyone looking to negotiate that could just help you secure your dream property for less.

Michael 1:22
Let’s jump in.

Michael 1:26
Alright, Frank, welcome to the show.

Frank 1:29
Thanks, Michael.

Frank 1:30
Thanks for having me just to get started.

Michael 1:32
It’s always nice for our listeners to understand who we’re talking to and a bit of insights as to their background.

Michael 1:37
And I want to talk to you about your property career in a second.

Michael 1:40
But before we get into that, you didn’t actually start out your career in the property industry.

Michael 1:44
Did you?

Frank 1:45
No very different industry.

Frank 1:46
I’m a, actually a qualified secondary P.E teacher, believe it or not.

Frank 1:50
When I graduated, there were no teaching jobs.

Frank 1:52
So I ended up working in the fitness industry in sports management industry for about 12 years.

Frank 1:57
So I started as a gym instructor and then progressed my way through various management roles.

Frank 2:02
And at the same time, I was playing soccer, Semiprofessional as well.

Frank 2:06
So I was very much into sport of fitness.

Frank 2:08
So how the hell I got into real estate is a really good question, Michael.

Frank 2:12
But my mom encouraged myself and my sisters to invest in property.

Frank 2:16
So I bought my first home, like your first home buyers.

Frank 2:19
It was a bit of a challenge back then and bought it when I was 25 in East Brunswick in Melbourne.

Frank 2:24
And then I had five investment properties by the age of 30.

Frank 2:27
So I, I really enjoyed it.

Frank 2:29
I got a real buzz out of it and I started my buyers advocate business back in 2000.

Frank 2:34
And I’m still going today.

Michael 2:36
What was it about real estate that made you go?

Michael 2:38
You know what, this is, what I’m gonna do.

Michael 2:40
This is for me.

Frank 2:41
I just love property when, when people say, oh, I love going through properties.

Frank 2:46
So I, I got the bug.

Frank 2:47
You know, once I bought my first property, then I bought my second and you know what, five and five years, I just got the bug for it and I think because I was good at it and I enjoyed it.

Frank 2:57
It was more like a, a hobby versus having a job and I, I still see myself living out my hobby, helping clients, but I talk the talk and walk the walk and buy my own properties, do my own developments as well.

Frank 3:09
So, you know, it started as a hobby and, and it’s become a great full-time career for me and, something that I’ll, I’ll do until I die.

Frank 3:17
I think.

Micahel 3:18
So, you launched your business.

Michael 3:19
It was as a property, buyers advocate, also known as a buyers agent in New South Wales.

Michael 3:24
But I imagine when you did this, I’m not sure what the year would have been.

Michael 3:26
But it would have, you would be one of the first buyers agents or buyers advocates around at the time.

Michael 3:30
Is that correct?

Frank 3:31
Yeah, that was it back in 2000 in Melbourne?

Frank3:34
I had hair back then.

Frank 3:36
But, it was quite hard at first because no one knew what you did.

Frank 3:40
You would always get asked, what do you do?

Frank 3:42
You get asked and you know, why would someone pay you a fee when I can buy a property for myself?

Frank 3:48
So that was the common hurdles you are having that people would like.

Frank 3:51
Well, why would I pay you to do it when I can do it myself?

Frank 3:54
So it was, it was pretty tough at the start.

Frank 3:57
You had to work quite hard to get clients on board because they didn’t know what a buyers advocates are, you know, that changed a lot over the years.

Frank 4:05
And every year after that, there are more biased advocates or buyers agents emerging.

Frank 4:10
And I think it, you know, changed considerably in 2013.

Frank 4:15
I, I was on the block TV show for the first time and that profile that buyers advocates got on the show there and have gotten now for the last 10 series has been amazing.

Michael 4:27
So initially, it would have, you would have been a pioneer really getting into it, but there were certain mechanisms and reality TV was one of them and you’ve mentioned, some of our listeners might recognise you from the show, The block and that definitely catapulted the industry and explained what buyers advocates do or buyers agents do.

Michael 4:42
So.

Michael 4:42
Yeah, if it’s ok to talk about that, that’d be great.

Michael 4:44
So how did you first get involved with the block and tell us about that experience?

Frank 4:48
I actually was proactive, I knew that the block was coming to Melbourne.

Frank 4:52
They were in Sydney and they had a failed series in Sydney and they were selling these houses in Cameron Street in Richmond.

Frank 4:59
There were four selling agents in Melbourne.

Frank 5:01
So I was proactive, I rang all the selling agents and said, if you’ve got any buyers that don’t want to get their mugs on TV, because not everyone wants the world knowing what they’re doing, I’ll bid for them and I won’t charge them a fee.

Frank 5:12
And I ended up getting my first client Glen Casino from and at the time referred his his client to me.

Frank 5:20
And we ended up buying Polly Moss’s house.

Frank 5:23
That was the only one that sold that night at the Fitzroy Town.

Frank 5:26
All I can remember it was all the others passed in and that was obviously the first experience.

Frank 5:31
And then I proactively did that the next few years, contacted the agents and it was bidding on, on the show.

Frank 5:38
And then I got asked to go on as a guest judge.

Frank 5:40
And, you know, I’ve been on every series, you know, taking buyers through, going through with the buyers jury.

Frank 5:46
And so it’s been a great profile for us

Michael 5:50
Is the auction process at the block different to an everyday auction?

Frank 5:52
Oh, yeah, definitely.

Frank 5:53
Well, when you’ve got, you know, cameras and you’ve got like 5 million people watching that auction the next day, it’s not a, an auction on the street where, you know, there’s 10 people there.

Frank 6:03
It is different.

Frank 6:04
As I said, it’s like a cauldron in there.

Frank 6:07
Sometimes it’s like, you know, you might have 50 60 buyers in the lounge room with cameras and, you’ve often got five bidders there.

Frank 6:15
The auctions are really competitive, whereas often options, you might turn up an auction and, and not have any bidders or one bidder.

Frank 6:22
But the block options tend to always attract more bidders and more interest.

Frank 6:26
You’re generally up against, you know, 4 to 5 bidders there.

Frank 6:30
It’s quite different to the way that we would normally buy property because, as buyers advocates, I buy about 90% of our properties off the market.

Frank 6:38
We buy properties before they get listed and where we can buy them without competition where we’re not up against four or five other bidders,

Michael 6:48
Something you’ve mentioned there, which leads nicely into our topic for today or what we’re gonna spend some time talking about.

Michael 6:52
Now, you mentioned that the majority of your purchases are done via off-market transactions and I imagine that’s a negotiation sale process as obviously, as opposed to an auction process.

Michael 7:02
And today, we want to spend a bit of time talking about negotiating and negotiating when it comes to, you know, private treaty sales.

Michael 7:09
So I wanted to dive into, to a part of the home buyer process that can seem quite intimidating for first-home buyers.

Michael 7:15
And that is this negotiation, when would someone want to negotiate the purchase price on their potential property that they’re looking to purchase?

Michael 7:22
At?

Michael 7:22
What point do you know that that’s what you’re doing?

Frank 7:24
The point is when you’re interested in a property, then you, you start to obviously go down that process.

Frank 7:29
If it’s a private sale, I usually say to a client, you need to get your jets on as soon as possible, as soon as the agent has the contracts and whatever it’s called, it’s called Section 32 here in Melbourne.

Frank 7:41
You know, you want to catch other buyers on the hop.

Frank 7:43
So if you are interested in a property, then you really want to get your skates on because I tend to find that good properties in, in any market, in any state are always going to have competition.

Frank 7:54
So if you can try and bet your competition and catch them on the hop a bit, get your ducks in a row.

Frank 8:00
Always say, you know, go through a property at least twice and make sure that it’s the right property for you.

Frank 8:06
Go through it with family and friends go through it at different times of the day because I think you’re making a really big financial decision.

Frank 8:14
You don’t want to buy a property, only haven’t gone through once and then, you know, you purchase it and then you’re not happy because you didn’t realize you miss certain things.

Frank 8:22
And so I’d always recommend that second inspection, Michael is crucial and get the family and friends support, get some experience, support people that have gone through and bought properties before that might be able to give you some advice.

Frank 8:35
If it’s a property going action, then we’d usually try and negotiate three days before a public auction because I know in Melbourne that means that it’s an unconditional sale and the vendor is going to be more likely to negotiate because it’s going to be an unconditional sale.

Frank 8:50
So it depends on the States and what the rules are in each of the States if it is going to operate.

Frank 8:55
But do your due diligence go through the property twice and then start that whole process of getting information and negotiation when it comes to due diligence.

Michael 9:06
Obviously, I, I guess everyone would know to go and inspect the property and go through it.

Michael 9:10
Perhaps they would know to go it a few times.

Michael 9:11
But is there anything you know, from your experience that a first home buyer should focus on or aspect of due diligence that you think perhaps they’re not really focusing on that, that one should

Frank 9:21
Definitely, you know, getting things in place.

Frank 9:23
So having your finance preapproved with a broker like yourself is crucial.

Frank 9:27
You know, I’d never recommend a client go out shopping until they’ve got the money to do it.

Frank 9:32
So otherwise you’re, you’re on the back foot from day one.

Frank 9:35
If you’ve got to make your offers subject to finance for 2 3 4 weeks, then you’re giving attention to the other buyers the upper hand and that’s not what you want to do.

Frank 9:44
So you want to have the upper hand in the negotiations, you wanna make your offer as attractive as you can.

Frank 9:50
Number one is having that pre-approval in writing and number two is getting the contracts checked out by professional conveyanceR ASAP.

Frank 9:59
So we’ll usually send them through.

Frank 10:00
I’ll have a look at them as well for my clients there within a couple of hours.

Frank 10:04
We’re ready to transact, we’re ready to catch the other buyers on the hop and that’s what you want to try and do.

Frank 10:09
We then would organise if we wanted to get a building and pest inspection report done.

Frank 10:14
I’ve got three qualified building inspectors that we recommend that we can get them out within 24 hours.

Frank 10:19
So we’re not gonna hold up the offer process.

Frank 10:22
We can make that offer subject to that within 24 hours and then it makes our offer quite attractive versus having someone waiting around the vendor, having to wait two weeks until they find out whether a building inspection is, it’s been conducted and been approved.

Frank 10:39
The other important things to do your due diligence with looking at prices.

Frank 10:43
So making sure that you go out and look at other properties, hopefully you’ve gone to other options as well and get a feel for the marketplace.

Frank Frank 10:52
How does the other sales compare?

Frank 10:54
Keep a scrapbook of all the other sales of other properties that you’ve gone through?

Frank 10:59
And as I said, times of the essence, when you’re ready to negotiate, you want to catch the other buyers on the hop and you want to have all these things in place and have the right professionals there have that pre-approval from yourself ready to go.

Frank 11:15
So you’re not waiting around and, and then, you know, it’s two or three weeks and that opportunity passes.

Michael 11:20
Let’s imagine they’ve done the due diligence as you’ve mentioned.

Michael 11:23
And when you sort of explaining all that, it totally makes sense why you’d be using a buyer’s advocate because there, there are a heap of things that you’ve mentioned there that I’m sure you’ve gathered over years and years of experience and a first home buyer doing it for the first time.

Michael 11:33
I’d be surprised if they could do all of that that you’ve mentioned.

Michael 11:37
But in saying that, let’s say they do do it, they’ve done their due diligence, they’re happy.

Michael 11:41
What does the negotiation process look like after the due diligence?

Michael 11:44
Has been completed and you’re, you know, ready to start negotiating.

Frank 11:48
For me I’ve always usually recommended that a first home buyer get someone else to negotiate so they can take the emotion away.

Frank 11:55
So I tend to find that a lot of first-time buyers tend to get caught in the emotional wave.

Frank 12:01
And if they fall in love with the property, they can often pay too much and let emotion take over and that’s disastrous.

Frank 12:09
It could be disastrous if you know, they pay 700,000, you gave them a pre-approval for 650.

Frank 12:15
And they, they’ve now overpaid the bank.

Frank 12:17
you know, obviously give them the extra funds and they’ve got a major problem.

Frank 12:22
They’re either gonna have to come up with the 50,000 and lose their deposit and move away.

Frank 12:26
So, yeah, I think that’s the most important part.

Frank 12:28
Either use a buyers advocate.

Frank 12:30
I just helped a client this week buying Street Brand and she’d been continually missing out on properties.

Frank 12:36
She was so excited when we bought for her and I was able to buy a property before a using that Wednesday strategy.

Frank 12:43
Catch the other buyers on the hop.

Frank 12:45
They weren’t quite ready and we were, and we had everything in place.

Frank 12:49
You know, that’s what you want to do is as I said, use someone else, use a parent or a friend that’s experienced as well.

Frank 12:56
That can take the emotion away because I think, you know, that having that emotion can really make people overpay sometimes, especially when it’s your first property.

Frank 13:05
So just making sure that you’ve got the upper hand in the negotiation position, the real estate agent is usually more experienced than you are in negotiating.

Frank 13:14
So you ideally want to try and level that playing field a bit because it will come down often to negotiation between you and the agent.

Frank 13:22
You know, you want to make sure that you’re not sort of playing on, on a very unequal playing field.

Michael 13:28
And I’m sure there’s definitely no one definitive answer for it.

Michael 13:31
Let’s say when you’re purchasing a property that’s for sale, if there’s a actual price mark or listed, what would your tip be for a first home buyer that’s in that situation?

Michael 13:40
Is there like a rule of thumb is to, to offer something less or, or obviously you’re not going to offer more.

Michael 13:45
But how would you go about that particular, you know, type of communication with the agent?

Frank 13:50
Well, if there’s a, a price range which there often is, so there’s a property price that 6 to 660 then generally the agent and the vendor are going to want something towards the higher end of the range as a general rule of thumb or above.

Frank 14:06
So general rule of thumb is, you know, if I was in that situation, which we were this week, we offered something halfway, you know, something at 630 test the water got a feel for how hot or cold it is and it’s cold and say, well, yeah, we’re not really there, then, you know, we can readjust and see whether we want to increase our offer and increase it up towards the top of the range.

Frank 14:27
That’s generally the way I, I find that if there’s a range, if there’s a set price, there might be about $10,000 in negotiating in there.

Frank 14:35
If it’s priced at 859 the owner might look at 850.

Frank 14:39
So you might start an offer at 820 to 830.

Frank 14:43
And again, just get to see how motivated the vendors are to sell.

Frank 14:47
Sometimes more important Michael than price is the settlement terms for the vendor?

Michael 14:52
Yeah, I was gonna ask, are there other tools that you can incorporate into an offer?

Frank 14:56
Find out, you know, ask the right questions.

Frank 14:59
You know, why is the vendor selling?

Frank 15:00
When would they ideally like to settle?

Frank 15:03
What’s their preferred settlement date?

Frank 15:05
That’s goal because if you can find out that they might have bought another property and if you can give them the settlement date that they’re dovetailing their other settlement and they don’t have to move twice, that can be worth a lot more than 10 20 $30,000 for people to have to move twice.

Frank 15:20
So we did that with a purchase recently here in Melbourne in ood, we found out what the vendor wanted we offered in the middle of the range and we were able to get it in the middle of the range because we gave them the settlement that they wanted, even though they wanted more money, we were able to negotiate probably $50,000 off the price by giving the right terms.

Frank 15:39
So settlement terms can be more important than the end price in a lot of instances for people.

Frank 15:46
So settlement is important also what deposit you’re gonna give.

Frank 15:49
If if you’re a first time buyer, you might only be able to give 5% deposit and the vendor might want 10% because they want a bit more.

Frank 15:56
Sure and someone else offer 10%.

Frank 15:59
So even the deposit amount, if you had a higher deposit, that’s gonna send you a better state than it had only a 5% deposit because if you were to default, the vendor has got, you know, 10% in their pocket to keep.

Frank 16:12
So deposit can be important.

Frank 16:14
But I I tend to find settle that can be sometimes just as important as the price to find out that information.

Frank 16:20
You know, why is the vendor selling?

Frank 16:22
If it’s been a rental property, if it’s been owned or occupied, it might, might be a bit more emotion.

Frank 16:27
There, there are all sort of things there that can give us some gold nuggets.

Frank 16:32
When you’re negotiating, you’re trying to get as much information to give you a better advantage when you’re negotiating versus other buyers or versus the vendor.

Michael 16:39
And when you’re putting these offers in, you know, in this negotiation process, are you generally doing it verbally or would you recommend doing it verbally or is it in writing or how do you best suggest that, you know, someone does that

Frank 16:52
Definitely in writing via an email, Michael.

Frank 16:54
So I usually would like to, I call it sort of go fishing a little bit.

Frank 16:58
I don’t want to put it on a contract yet.

Frank 17:00
I want to sort of suss out the vendor before we then get really serious.

Frank 17:04
And when we get serious, then we’ll place our offer on the contract of sale that’s sort of almost out.

Frank 17:09
Ok.

Frank 17:09
This is our last offer, you know, take it or leave it scenario, but the initial probably offer or two would be via email.

Frank 17:16
It would be I pull up that fishing offer to test how cold or hot the water is.

Frank 17:21
Go in at, you know, something a bit below where they, they’re chasing or where the owner agent has said they’re wanting.

Frank 17:27
And then, you know, you can progress them potentially with the second offer.

Frank 17:31
You know, if you’re there, they’re not always recommend you show how serious you are.

Frank 17:35
You put on a contract of sale, attach your five or 10% deposit, if you’ve got a deposit check or you say to them, send us your bank account details and we’ll transfer the money as soon as the vendor accepts the offer and the other thing I’d like to do.

Frank 17:49
Always, Michael is create a bit of a fear of loss for the vendor.

Frank 17:53
And whenever I make one of those offers, I, I give the vendor a deadline and it’s usually 12 o’clock the next day.

Frank 18:00
You know, it’s usually a 24-hour deadline or it might be five o’clock this afternoon because I don’t want the agent and the vendor to shop our offer around and give everyone else an opportunity to, you know, come back forward.

Frank 18:13
So always give them a deadline and I always use a little bit of that fear of loss that, you know, we’re usually looking at multiple properties for clients.

Frank 18:22
So we, I’d usually say, well, you know, offers here.

Frank 18:25
If it’s not accepted by the deadline, then our clients said that they’re gonna have a look at this other property and that we will progress with the negotiation on that one.

Frank 18:33
So it creates that bit of a fierce situation for the vendor.

Frank 18:37
Here’s your offer.

Frank 18:38
We’ve come up already.

Frank 18:39
We’ve given it the right terms.

Frank 18:41
So that’s the way I like to negotiate to try and get us in a good negotiating position.

Michael 18:47
What would be your biggest tip for anyone?

Michael 18:49
And it could be, you know, about any aspect there of the negotiation.

Michael 18:51
If they’re about to enter into a purchase price negotiation, if there’s one take home tip.

Frank 18:58
Do that due diligence really quickly. If you want a property, you wanna try and catch as many buyers on the hop so that they’re not ready to go.

Frank 19:04
So, you know that getting contracts checked.

Frank 19:07
Ok.

Frank 19:07
I’ve just checked in with Michael.

Frank 19:09
My finances all pre-approved.

Frank 19:10
I’m ready to go.

Frank 19:11
I’ve had my building report done.

Frank 19:13
Sometimes I might not even do the building report yet, but it’s subject to a building report within 24 hours.

Frank 19:19
I’ll then organise that once the owner has accepted the office.

Frank 19:22
So I’m not spending money doing a building report and then the owner doesn’t accept our offers.

Frank 19:27
So I usually make it subject to building report, but it’s only 24 hours.

Frank 19:31
So that’s really important.

Frank 19:32
Get all that stuff done quickly and speed.

Frank 19:35
Yeah, because if you wanna catch the other buyers on the hot, you wanna make sure that they haven’t had a chance to their building report, haven’t had a chance to get their contracts checked out.

Frank 19:44
They might still be sorting out finance.

Frank 19:46
And the other most important thing for me is pounding the papers, doing the walking, going around, looking at other properties, going around physically, going to auctions, physically, inspecting properties.

Frank 19:57
You will learn so much about what you should pay.

Frank 20:00
You’ll learn about how your property compares to others.

Frank 20:03
As I said, keep a scrapbook folder, whatever you wanna call it, keep the brochures of the properties as you’re going through what they sold for how it compares to this property because that’s literally how we value properties and value, value them.

Frank 20:16
And if you get the value wrong and you’re buying a property and you’re paying 700 the bank values at 650 you’ve got a big headache problems or actually Michael, you’ve probably got the headache.

Frank 20:28
And also the other bit is, you know, when you’re attending those options, introduce yourself to agents when you’re attending inspections, give them your details, please.

Frank 20:37
We’re serious buyers.

Frank 20:38
We’ve got finance approved.

Frank 20:39
If anything comes up off-market or before-market, can you let me know just ask the question if the agent thinks you’re a serious buyer and you tell them we’ve got a preapprove or we’re ready to go if you can find some of those properties like I do as a buyers advocate off the market and you’re not having to bid against five other people?

Frank 20:58
Are you gonna be able to buy them at a better price?

Frank 21:00
I’m not gonna go in and use, use an advocate.

Frank 21:02
So, so there’s some of the main ones but yeah, due diligence is go because you get any of those things wrong and it’s a big stuff up.

Frank 21:11
So you need to do those little steps.

Frank 21:14
The other ones there that I haven’t even touched on Michael.

Frank 21:16
But if you’re buying in an owner corporation, I think it’s really important to ring the owners corporation.

Frank 21:22
There’s usually a certificate in there that gives you an idea if there’s any special works or things happening in the building, but I would always contact the owners corporation.

Frank 21:32
And is there any problems with the building?

Frank 21:34
Is there anything I’m looking to buy in this building?

Frank 21:36
Is there any levies coming up doing that?

Frank 21:38
Due diligence?

Michael 21:39
We call it a new South Wales Strata report.

Michael 21:41
Basically, it’s commonly referred to us.

Frank 21:43
Yeah, we call it an owners corporation report.

Frank 21:47
Same thing.

Frank 21:48
And the other thing is I’d also recommend contacting Council and, you know, just ask them whether there’s any developments, any zoning changes and that affecting this property that I’m gonna buy because the last thing you wanna do is I’ve had other buyers, do, they buy a property and they then realise there’s 100 apartments going up next door and they’re gonna be looking out onto a brick wall versus looking out to a nice park view.

Frank 22:12
So just those little extra steps that if you do those and you know, you can’t always foresee what’s going to happen in the future, but you can’t, you can foresee what’s already in place at the moment.

Frank 22:23
So, but owner’s corporation crucial because you could buy into one and then find out that you’re gonna be hit with a $20,000 levy because the roof needs to be replaced.

Frank 22:33
We’ve had major cladding issues here in Victoria.

Frank 22:35
I don’t know if it’s similar around other states that, you know, are checking out if there’s all the cladding needs to be replaced with a fire in cladding.

Frank 22:44
That’s a major expense.

Frank 22:46
So that’s all what I call due diligence.

Frank 22:49
Do your research, do your homework before you start signing contracts.

Michael 22:54
And there’s someone who’s done this tens of thousands of times.

Michael 22:56
What’s one of the biggest mistakes that you see people making when it comes to property sales negotiations?

Frank 23:02
One can be that they’re too picky and too choosy.

Frank 23:07
They, they’re not as flexible and they want everything and I say to clients, you know, we might want the task for but we might not be able to afford it with our first property.

Frank 23:16
So try and have your wish list but being very flexible because, you know, I know when I bought my first house in East Brunswick, I would have loved to have a lock-up garage.

Frank 23:25
I didn’t have a lock-up garage.

Frank 23:27
I would have loved to have had a bit more renovated.

Frank 23:29
I couldn’t afford a bit of that renovated.

Frank 23:31
So I just was flexible with it.

Frank 23:34
So I think a lot of first-time buyers sometimes are not flexible enough and then they end up missing out on opportunities and it ends up costing them often a lot more if it’s in a rising market like we saw in, you know, the Post COVID, that Post COVID, they’re missing out and then they’re in that sort of fear of missing out head space and the prices keep going up and up and they can often get this hard and then just put it all together.

Frank 24:01
So, so yeah, just be a bit more flexible, you know, if you have to buy something smaller or not quite exactly what you want for the first property because it’s not gonna be your last property.

Frank 24:10
Most people will move and trade in five years.

Frank 24:13
I tend to find with my clients, their first property.

Frank 24:16
You might need to move a suburb out.

Frank 24:18
You might need to buy something smaller instead of, you know, you want two bedroom, two bathroom, but maybe compromise and go to the two bedroom, one bathroom, convert a laundry into a bathroom, have a little bit of flexibility there.

Frank 24:30
I think that’s one and the other one we have on, I say use someone else because I see so many first-home buyers overpay, they get carried away with the motion.

Frank 24:40
They pay 700 bank fees that it’s 650.

Frank 24:44
Then they’ve got a big headache and you’ve got a big headache dealing with it.

Frank 24:48
That’s the other one as well.

Frank 24:49
So if they did their due diligence on price and they stuck to their budget and they had someone there who’d say no, we’re not going anymore.

Frank 24:57
So they’re probably the two big ones, Michael that I see.

Michael 25:01
So we always close our interview with two questions.

Michael 25:04
The first one is, what’s your number one tip for first-home buyers trying to get into the market?

Michael 25:08
And this doesn’t have to be on negotiations such it could be anything.

Michael 25:11
I sort of feel like I know where it might be headed.

Michael 25:13
But just to ask the question, what would your number one tip would be for first home buyers?

Frank 25:21
Be prepared to walk away and, and stick to your budgets. So, you know, I remember 1995 when I bought that first house, I missed out on two houses previous to that, but I stuck to my budget.

Frank 25:30
I’ve made sure that I didn’t get carried away.

Frank 25:32
I ended up getting a better house with the third house than the first two.

Frank 25:36
I missed out on.

Frank 25:38
And you know, the first two, I was devastated.

Frank 25:40
You can’t sleep.

Frank 25:41
You’re tossing and turning.

Frank 25:42
Should I paid more?

Frank 25:43
Should I have gone up the goal there is there’s always gonna be another opportunity out there.

Frank 25:48
We don’t live in a marketplace where there’s only one house and if you miss out on that house, you got no other opportunities.

Frank 25:55
So, so I think that’s probably my, my biggest tip for buyers.

Frank 25:59
Overall.

Frank 25:59
First home buyers is, you know, there’s always gonna be another one if you miss out on it.

Frank 26:03
Like I did, the third one was actually so much better than the first two.

Frank 26:07
I was so glad I missed out on the first, but I waited and waited and waited for the right opportunity, the right price.

Frank 26:14
So that would be my, my one, you know, that sort of get disheartened as well because, you know, it took me a year to buy that first property.

Frank 26:21
I searched from 1994 to 1995 and sometimes it can be disheartening.

Frank 26:26
You sort of go.

Frank 26:27
Oh, you know.

Frank 26:28
Yeah, we’re out this weekend again.

Frank 26:30
I was going out with my beautiful mom was taking me out and we were going out every week and, but I put the prices back to front by the end of that, but I was doing my due diligence, I was recording the prices we were going to auctions.

Frank 26:43
So yeah, do that.

Frank 26:44
And as I said, do you do the hard yards?

Frank 26:46
You know, it’s not an easy process.

Frank 26:48
The first time go out there, see as many properties as you can get to as many auctions as you can.

Frank 26:54
If there’s an auction down the road, it’s a property that it’s not even your budget go and see it, get some experience, see how the actions run, see how that all works because the more experience you have, it’s only going to benefit you with this purchase and other, you know, property purchases in the future.

Michael 27:10
And I think if you, if you have that budget and you can stick to it, it does take the element of emotion out of it because you’re acting now with a bit of reason as opposed to just, you know, how you feel about something and overall that could potentially occur when you’re negotiating or purchasing that first property.

Frank 27:25
Yeah.

Frank 27:25
And sometimes be flexible, you might go up a few $1000 but they go up 100,000.

Frank 27:29
You know, if you’ve got a pre-approval to this limit, then there’s a little bit of flex and one of my little tips that works really well.

Frank 27:36
I, when I’m bidding at auctions, I try and get to the even numbers first.

Frank 27:40
So most people end at 650 660 670 700 710.

Frank 27:47
So I try and bid to those numbers first so that I get there, that mentally already this other person might be at their limit.

Michael 27:54
They’ve got to go over.

Frank 27:56
They’ve got to go over now and I always in my budgets and offers in uneven numbers now, maybe I’m a bit dyslexic, but it actually works.

Frank 28:04
So instead of going at auction with 700 I’d go in with 703 or 708 or, and I tell my clients to do the same because I’m gonna try and play the, getting to the round numbers game first.

Frank 28:15
And even when you put an offer in, if you put an offer in at 700 3000, I would say to the bed and the agent like we’ve really pushed ourselves out the last dollar, it looks like it’s an offer that’s been extended 1st 700.

Frank 28:29
So that’s a little tips that I’ve maybe learned from 28 years of, of buying and, that, yeah, ended in an uneven number.

Frank 28:36
And also as I said, if you are bidding at an auction and you’re in a state where there auctions get to the even numbers first, get to the 700 695.

Frank 28:45
The, because people will be generally in those things.

Frank 28:48
And I’ve never had a client who’s come up to me and said, oh, my, , limit is gonna be 703,000.

Frank 28:53
They’ve always said, oh, we’ll go up to 700 I go, no, no, we need an odd number because I need to explain the psychology of it.

Michael 29:00
The second question that we ask is if you’re a first home buyer and you had a million dollars to buy, where would you buy?

Michael 29:05
And we can keep this to Melbourne in terms of your areas of experience, where would it be? And I guess why?

Frank 29:09
In Melbourne, I’d definitely look at a, a house in the north, an area like reservoir where, you know, there was this area I nearly bought in back in 1995.

Frank 29:21
That’s where I those two properties.

Frank 29:23
And I could have bought those two houses for 122,000 and 125,000.

Frank 29:28
So now, you know, entry level for a good property and reservoir 12 kilometers north of Melbourne CBD is around a million dollars.

Frank 29:35
You know, you can, you can get in 850 to, to a million.

Frank 29:38
So it is still a good area because it’s great bang for buck in terms of like, if you’re on the same distance to the city, you’d be in Brighton and the median house price would be $3.5 million southward beaches.

Frank 29:51
So similar distance, you’re about half an hour from the city.

Frank 29:54
So I think it still gives great bang for buck.

Frank 29:56
Am with the price range that it’s got the other area that, that I would look in would be sort of further down the coast.

Frank 30:02
We’ve got a lot of people now in Melbourne working hybrids, so they might work from home a couple of days a week and only have to travel into work a couple of days a week.

Frank 30:10
So, an area like Dramana on the Mornington Peninsula is about an hour’s drive from Melbourne.

Frank 30:16
Now it’s got great freeways.

Frank 30:18
Great Peninsula link all the way through and you can enjoy the beach lifestyle, the water views without, you know, having to go through all the congestion that some people could be driving on many of those freeways and take them an hour to get home every day and not have, you know, water at your doorstep.

Frank 30:35
So I think again, value for money is great.

Frank 30:38
It’s an area that’s gone up.

Frank 30:40
I think when COVID hit went up 40% the morning Peninsula suburbs including Dramana, but I still think it’s got great bang for the buck because you’ve got that beach life.

Frank 30:49
I’ve got a holiday place and I sort of live between the two, I live in, in, in Melbourne Beach and down that way and when you’re near water, you’ve got a great lifestyle.

Frank 30:59
And also if you’re looking at investing a million dollars is essentially an investment.

Frank 31:05
You want your million dollars to go up in value and get some great capital growth.

Frank 31:09
So, so I think both of those areas would give great bang for buck in 10 years time.

Frank 31:15
As I said, you’re never gonna buy a reservoir for that 122,000 that I nearly bought in 1995 78 fold in 28 years.

Frank 31:24
So that’s some tips there on different areas that that might work out.

Michael 31:30
I like you gave us some suburbs there because so often I’ll ask that question and I’ll go, well, it depends on the brief of the client and it depends and that’s, that’s also a good answer.

Michael 31:37
But I like that you’ve actually pinpointed two suburbs and, and explained why and, and I think they’re great and I think focusing on that capital growth is obviously the way when it comes to property.

Michael 31:45
So, so I definitely agree with you on that one.

Frank 31:48
And Lance King just another little tip for the first time.

Frank 31:51
But if you can buy something that’s got a bit of land, even if it’s got a small courtyard versus buying a nice shiny ritzy apartment in a big high-rise tower with no land.

Frank 32:02
All you’re buying is airspace and I don’t know anyone that’s made money out of airspace, buying airspace.

Frank 32:08
They will make money out of buying lands.

Frank 32:11
If you’re going to buy an apartment or a unit, try and buy one that’s got some lands.

Frank 32:15
So we love the via units.

Frank 32:17
We call them here in Melbourne that a small bit of a courtyard outside.

Frank 32:22
You know, land is king land, appreciate buildings appreciate.

Frank 32:25
So, yes, a great little tip there.

Frank 32:28
You know, all those properties there that the house and reservoir and the house in and the land is really the thing that’s gone up from 122,000 up to a million.

Frank 32:37
The house has got older and appreciated.

Michael 32:39
Yeah, got it.

Michael 32:41
Well, thank you so much for joining us on the show today, Frank, where can our listeners find you if they want to learn more?

Frank 32:46
Well, they can find us online on our website.

Frank 32:49
So our company name is Advantage Property consulting.

Frank 32:53
So Advantage property.com.au or lower case they can jump on there, they can send us an email or they can contact our office and we love to assist them.

Frank 33:03
If they’re looking to buy or sell in Melbourne, we’d hope that we could provide, you know, expert advice and, and help along the way.

Michael 33:11
Thanks so much for joining me on the show today, Frank.

Frank 33:13
Thanks Michael.

Frank 33:14
It was a pleasure and I look forward to speaking to you again.

Michael 33:18
You’ve been listening to the home, run your guide for buying your first home in Australia.

Michael 33:22
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Michael 33:31
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Michael 33:33
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Michael 33:39
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Michael 33:42
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Michael 33:47
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Michael 33:54
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Michael 33:57
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