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THE DEFINITION OF A GOOD DEAL

THE DEFINITION OF A GOOD DEAL
A good home or a good price? Both, if possible.

by Neil Jenman

If I were a spruiker, I'd charge several thousand dollars for the information that's about to follow.

I'd write a multi-page screed peppered with metaphoric drum rolls and trumpets about how this "secret information" is only available to a "limited few" but it can be yours if you pay me a mere fraction of what I can make for you.

I'd use the most common sales closing technique of spruikers. "If I guarantee to make you mega-thousands then it's great value if you pay me a few thousand."

You'd pay me, say, $5,000 and I'd put (or make sure you keep) an extra $50,000 in your pocket.

The thing that makes me cross about spruikers is that the information they sell is readily available at a fraction of the price from a legion of more honest sources.

So, when a dishonest spruiker "sells" a good idea to a naive consumer, the consumer usually defends the spruiker - not realising, of course, that the information that cost several thousand dollars was probably available in a book for just a few dollars - or even for free on the Internet.

The thing that makes me cross about consumers is that many of them don't take the time to do just a little bit of basic research which would show them how to save heaps when they buy, sell or invest in real estate.

Think about how hard the average wage-earner works to earn say $50,000. Or, take it a step further and think about how long it takes the average wage-earner to save $50,000. Five years? Ten?

But the average wage-earner - and especially the average first-home buyer - heads off into the real estate market-place without the faintest idea of what to do or how to do it.

Take the case of Bob and Vicki.

For months they have been looking for a home in Melbourne.

Now, anyone who has been following the Melbourne market will know that it's hectic. [Many suburbs are experiencing an 'Indian Summer Boom' - more on that in another article on another day].

Bob and Vicki have been trudging from home to home among crowds of other home-seekers. They have been quoted false price after false price. Buyers galore facing liars galore.

It was driving them to despair.

They'd see a home they love, ask the agent how much it would sell for and then, based on the agent's "quote", they'd spend hundreds of dollars on inspection reports, get their hopes up and then, come the day of the auction, the home would sell for a motza more than they were quoted.

The agents - in typical lying-scoundrel-fashion - would shrug and say, "That's the market."

So Bob (whom I had met a couple of times) called me. He said he was "sick to death of auctions. "

Like most inexperienced buyers, Bob didn't realise that auctions are a game. The rules of the game are set by the agents.

It's a simple game, however, and agents are mostly simple people. Cunning, unethical, but simple nevertheless.

"Agents, especially those who use auctions, are not very smart," I told Bob. "The average buyer is much smarter than the average agent. You're a lot smarter than these agents, so why don't I tell you how to play the game?"

"Great," he said. "You tell me what to do and I'll do it."

I began by asking Bob how much he could afford to pay.

"$400,000," he said.

That struck me as a bit low. Bob's a young lawyer with a great future. Although he's still in his 20s, ten years from now, he'll be earning a huge income.

So, surely he could afford more. Yes, he agreed he could easily handle $450,000. Straight away he felt better.

I also told him that, when they found the home that he and Vicki loved, they should be prepared to pay more than its market price.

He was shocked. Like most of us he wanted a good deal.

But what is a "good deal"?

Is it a good price or a good home?

"Look, if you absolutely love the home and you can easily handle the repayments - with no strain and no pain - and you intend to live in it for many years, don't worry about paying more than the 'market price'. In ten or twenty years, it won't matter.

"And, today, if you're prepared to pay more than the 'market price' you'll automatically be ahead of other competing buyers, many of whom are focused on 'getting a good monetary deal".

Surely, when you are buying a family home, the definition of a "good deal" should be "a home you love at a price you can afford"?

If "your price" is higher than the market price, then you have an excellent chance of getting the home you want.

Bob agreed.

I told him to read the chapter from my book, 'Don't Sign Anything!' http://www.realestatemonitors.com.au/index.php?offer=DSA on the auction system. "It'll take you less than 60 minutes to know the rules of auctions. And I'll bet, once you know the rules, you'll be running to the next auction. That's how excited you'll be."

I also offered to get a friend (an agent called Andrew) to help him bid at an auction. Andrew is young, smart and knows the auction game inside out. He's also a great bloke (who would never auction a home for his sellers).

I'll let Bob tell you what happened on the weekend.

"Neil, We got a house! And we got it for $53,000 under our limit. Thanks to each of you for your great advice and guidance. Andrew was cool as a cucumber (bidding at the auction).

I think ours was a classic case why the auction system is doomed for the vendor.

This house ticked a lot of boxes for my wife and I so we were prepared to spend over the real market value.

If the agent had done his research he'd have known that we previously bid $416,500 for a similar house auctioned by his agency.

I indicated that we'd be prepared to make an offer before the auction, but the agent told me not to waste my time as it will waste everyone's time and everyone will just get annoyed and it will end up going to auction any way.

At auction we set our limit at $413,000, but we got it for $360,000.

Fantastic result for us the purchaser."

The reserve price on the home was $330,000 which means the auction agent is probably bragging that he "got $30,000 above reserve."

This is exactly what I mean about agents - especially those who push auctions - not being very smart.

It's nice to help homebuyers, especially first homebuyers. It's really nice to help them get a double good deal - a good home for them at a good price for them.

If I were a spruiker, I'd have charged Bob and Vicki at least $10,000 for my "secrets".

But what a rip-off that would be.

I am sick of hearing spruikers say, "I do this because I like to help people." Liars. They do it for the money. If they really did it because they liked to help people, they'd do it for nothing - or, at least, for a reasonable fee in relation to what it cost them.

So, if you're a genuine homebuyer and you need a helping hand, we'll give it to you. With no spruiking fees.

And, of course, the same applies to genuine homesellers - especially those poor souls who have been persuaded to sell their homes by auction.

If that's you, then you'd better contact us - fast.

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This article was taken from the Articles page of the Jenman website.


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