Nicholas Charles, real estate agent at PPD, shares his insight on the mistakes that he’s seen property seekers make time and time again in the market.
It wasn’t that long ago that buyers were saying to me that they will wait until the market bottomed out; that was late 2018 – early 2019.
My advice to them at the time was that when you find the property that feels right for you, and you are ready to buy, just buy it, because “picking the bottom of the market” is a skill that no one has ever mastered. Sure, some people have been lucky, but in terms of a formula to use; it doesn’t exist. Why is that? Well, like any market, there are extraneous circumstances that take place that no one can predict, like COVID-19. No one could have predicted that!
The other factor that novice buyers didn’t take into account was that the slow-down was artificially manufactured by the regulator, APRA. They sucked the heat out of the market, so the fundamentals hadn’t changed, it was a policy change that took place. No one could have predicted that either!
Ok, so here we are at the beginning of 2020 and we are seeing all of the losses recouped with no signs of slowing down, so what do you do if you are a first home-buyer looking to get in? Well, the first piece of advice I can give you is to make sure you’re pre-approved, then pick an area where you would like to live, research prices, go to open homes and be prepared to wait. However, if the first place you walk into feels like somewhere you could live, and you will know it, then buy it.
The amount of buyers I have met over the years who have said to me, “we should have bought the first place we saw, but we thought we should look around for a bit longer” and sometimes these poor people are told that they shouldn’t buy the first thing they see! Wrong advice.
Another piece of advice I hear told to young first home buyers is this one; “don’t let the agent know you like it/are interested”. Wow, arguably the worst piece of advice I have ever heard.
Why? Well, let’s just play this out. You walk into a property, and let’s say it ticks every box, and, you want to buy it. As agents, we are trained to handle objections, so, the buyer starts throwing out all of these objections, which the agent then recognizes and responds to, and at the end of it, the buyer who has been told to play their cards close to their chest, says they will think about it. However, deep down inside they want it.
The agent then meets another buyer who inspects the property, takes a contract and buys it. The other party is then miffed that they were not told, to which the agent responds that they were told that you wanted to think about it. The agent has done the right thing by the owner, however, the advice given to the other buyers was flawed and outdated.
So, here is my advice to all buyers out there. If you walk into a property that you like, tell the agent you like it. Ask for a contract and if they have access to a building and or strata report. Tell the agent that you are finance approved and ready to make an offer once you have done your due diligence with the contract, and if they could keep you informed of any offers that come in or if it is likely to sell prior to auction. Ask the agent what the process will be if there is a pre-auction offer, or if they receive an offer, by that I mean, will they be doing a “sealed bid” scenario or will they be disclosing offers to each contract holder (a mini auction).
All of this is contrary to what us agents expect, however, it will put you in a position where the agent knows that you are ready to perform, and are keen. So who do you think they are going to work with? The buyer that plays games, or the buyer that says they like it, and are ready to buy? Now, the first thing people will think is, won’t the agent just make up another buyer, or offer, to push me up in price? Maybe, although it’s illegal, and beyond your control, so let’s deal with what we can control.
Just because you are being honest about your position, it doesn’t mean you have to spend every cent you have in order to own it. You have to make an offer at a level where you feel it represents value compared to other sales in the area, and also, it has to pass valuation from the bank also. If this property is going to be a home for at least 5 – 10 years, then don’t quibble over 10k or 20k if it means you can own it that day.
If you haven’t sold the property you are living in, and you want to buy first, my advice is not to do this unless you can well afford it, then put your property on the market, put a long settlement on the contract, with a special condition stating you are amenable to bring settlement forward when you have found a property, find a buyer for yours whilst actively being out there looking for the next place, and, bring the two together. It isn’t impossible, it is very doable, you just need to get the right agent working with you who has the experience to do this.