Welcome to the first part of our 4 part series titled: The Definitive Guide To Inspecting An Investment Property.
In this four part series on inspecting an investment property we will take a look at:
- Important questions to ask the agent
- Important things to consider when selecting a street
- Important things to consider when inspecting the outside of a house
- Important things to consider when inspecting the inside of a house
The number one mistake first time and established investors make is to think they can understand an area by jumping on realestate.com or domain.com. While its important to understand whats available online its far more important to understand the underlying drivers in a market and to do the right research upfront.
When buying well its important to understand which questions you need to ask the agent.
The listing agent will give you the greatest insight into a property.
The best news is you don’t need to be an expert to get the right information out of the agent you just need to know how to ask the right questions.
The trick is to keep it simple, and make sure you build rapport with the agent.
Relationships are your most important asset in real estate, and if the agent likes you and is comfortable with you they will disclose vital information you need to make a decision.
Great questions to ask include:
Have you done a title search? Did it come back ok?
- It is important to know whether a title search has been done, before you inspect a property or put in an offer. A title search is the first thing an agent will disclose and will help you make sure there are no covenants or encumbrances over a property.
Have you received any written offers?
It is important to know whether an agent has received any written offers. It is very rare that an agent will disclose how much the offer was if they have received an offer, but you can ask probing questions like:
- Was the written offer close to asking price?
- If I was to put an offer in at $x, is our offer in the ballpark?
These are vital questions that will help you decide if you can purchase the property for the right price.
Its also important to know, why an offer wasn’t accepted, or if a previous offer fell over due to finance, due diligence or a building and pest inspection.
Why are the owners selling the property?
- Asking this question will give you an indication of the motivation behind the sale…Its important to understand how motivated an owner is to sell as it will ultimately affect your purchase price.
- The best priced properties are generally picked up as a result of divorce, death, financial pressure and damage.
Has the property been tenanted?
- As an investor you need to know if the property was owner occupied or whether tenants have been living in the property. This is important as it will give you an indication of what the property could rent for.
Is there anything outside of price that will make our offer more attractive to the vendor (seller)?
- If there are multiple offers that are very similar in price, it’s always good to know if there is anything else that will help your offer stand out. Things like a shorter settlement, building and pest and finance period can help make your offer more attractive. Generally speaking real estate agents are lazy and want the safest and simplest sale possible. I have also found a deposit which covers the agents commission on settlement will go a long way when comparing two similar offers.
Is there anything else we need to know about the property?
- This questions gives the agent an opportunity to address any issues associated with the property before you and your team begin your due diligence process and uncover them for yourself.
- You will be surprised how often agents tell you information which is not in their, or their clients, best interest when asked this question.
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