How to Find Deals: Estate Agents (Part 1)
Over the coming weeks, we’re going to think about how to find the property deals that are right for us. However, before we start thinking about this, we need to give some thought to something which comes first, and that’s what we are really trying to achieve in property.
When we know what it is that we’re trying to achieve in property, we can then think about which would be the best strategy to help us to achieve this. Because, when we know which strategy we are trying to follow, we can then start to think about the best way to find deals to make this possible.
So, let’s think about this at a very basic level with buy to lets. When it comes to vanilla buy to lets, where would be the best place to find deals?
I would argue that the best place to find these types of deals is by going to the estate agents’ offices. Often, when I say this to people they look at me with surprise – if not horror. Most think that all the best deals which come into the estate agents will be those that they will never be able to get their hands on. They assume that agents hold all the best deals back to hand over to their preferred buyers.
In my opinion, I’m not sure this is really true; not when you look at the bigger picture. Just because another investor wants a particular type of property, this doesn’t necessarily mean that it will be the same type of property or the same type of deal that you are looking at yourself. There’s often the presumption that there’s only one type of deal and that the estate agent will recognise what this is – but this isn’t true.
For example, it could be that your strategy is to “buy and hold” property to rent out. However, it might be that the other investor who the estate agent has in mind, is looking for properties which they can flip. Or, it might be that you are looking for properties in a lower value area which might be great for renting out, whereas the other investor may be looking for refurb opportunities in a much better area to enable them to sell on to an owner-occupier.
I think there’s a lot of confusion around the concept of estate agents holding deals back. The reality is though, that there are enough deals in the estate agents’ offices in your local area or your investment area for you to be able to find all the deals that you want for your particular strategy.
Let’s also consider the other misconception that if a deal is through an estate agent, then it’s not going to be a very good deal or it’s not going to be a very creative deal. Many investors think that if a deal is through an agent then they won’t be able to negotiate hard and buy below market value. Again, this is not necessarily true.
Here’s why. When a property comes into an estate agent’s office, the agent doesn’t necessarily know what deal is to be done. (Equally, you don’t know what deal is to be done). So, you need to make sure that you put in the time and effort to go through the deals in your local area which are registered with the estate agents, to try and discern what type of deal COULD be done.
In my humble opinion, most deals ultimately come down to the motivation of the seller. Now, if the seller has specifically mentioned to the agent that they are looking for a quick sale, then the agent will know the motivation of the seller. But, 9 times out of 10 the agent simply takes an instruction from a vendor without necessarily knowing the history behind the property.
As investors, we earn our money by doing the digging, groundwork, due diligence and research to find out what IS going on – and this allows us to ascertain whether there’s a deal to be done or not.
As a final thought, let’s just clarify something. When I say go into the estate agents, I’m not talking about just stopping by the window; viewing a property which looks nice and then offering 5% below asking price. When I talk about going into the estate agents, I’m talking about having a very particular plan of action that will enable us to find those deals – and to then act upon that plan of action.
We’ll think about this in more detail next week. But until then…
Here’s to successful property investing.
Peter Jones B.Sc FRICS
Chartered Surveyor, author and property investor
By the way, I’ve rewritten and updated my best-selling e-book, The Successful Property Investor’s Strategy Workshop, which is an account of how I put together my multi-property portfolio, starting from scratch and with no money of my own, and how you can do the same. For more details please go to: www.ThePropertyTeacher.co.uk/the-successful-property-investors-strategy-workshop