You’ve probably heard that we’re currently in a “buyer’s market”, thanks to the property slowdown, interest rate cuts and restrictions that have been placed on investors and interest-only loans.
Does this mean you should be leaping for joy, certain in the knowledge that you’ll easily snag a bargain?
Well, I don’t mean to burst your bubble but it is still very possible to overpay for your next property, even in today’s supposedly “perfect” conditions.
The selling agent is beholden to the seller, not the market.
This means they’ll always try to get the best possible price and eek a few thousand dollars extra out of potential buyers if they can.
The property may still seem like a bargain, but you could be paying more for it than you need to.
And nobody wants to do that!
First-time buyers are especially vulnerable to this, as savvy agents can smell them a mile away.
The sales team will have the perfect spiel prepared and lead you to believe you’re getting the property for a rock-bottom price.
Inexperienced buyers also don’t know how to ask the right questions. Is the property on the market?
Will the vendors consider a low-ball offer if I can commit to a faster/longer settlement period, or if my finance is ready to go, no conditions attached?
They don’t understand the power of negotiation, nor have the confidence to back themselves up.
If it really is a buyer’s market, you shouldn’t be fawning all over the agents as though they’re doing you a favour by selling you the property.
Instead, make them chase you.
In the current conditions, it’s also important that buyers, whether shopping for their own home or an investment property, don’t come on too strong from the outset.
Two things happen when an auctioneer hears a surprisingly high bid early in the piece.
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First, you’re putting a huge target on your back as a gullible purchaser who’s fallen in love with the home.
And second, you may just inflate the seller’s opinion of what the home is worth, making future negotiations more difficult.
The last thing you want to do is give them a boost of confidence and bravado when the ball is supposed to be in your court, or worse – give your competitors the impression that you know something they don’t about the property, driving the price sky-high.
Another red flag that buyers must avoid is being nervous or excited at the auction, and let these emotions get the better of them.
Unfortunately, selling agents are always on alert for these bidders.
I wouldn’t go so far as to call them suckers, but many agents and auctioneers would certainly see them as easy prey.
At an auction, it’s important to appear strong and composed, toward both your fellow bidders and the sales team.
This can be surprisingly challenging – even if you think you have nerves of steel, it’s possible to crumble come auction day, which is where professional help can really come in handy.
What it all comes down to is this: whether it’s a buyer’s market, a seller’s market, or a “the economics guy on that breakfast TV show says this was a good idea” market, the core principals remain the same.
Look for properties with good capital growth prospects, keep your wits about you, and only ever pay what you can genuinely afford.
Don’t be swept up in the hype or try to time the market. And when in doubt, ask an expert who can advise you and advocate on your behalf.
Sure our property markets are improving, but correct property selection is even more important than ever, as only selected sectors of the market are likely to outperform.
Why not get the independent team of property strategists and buyers' agents at Metropole to help level the playing field for you?
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