Be a smarter home buyer
Back in 2009 the average tenure for an Australian house owner was 7.5yrs, rising to an even longer 11.3yrs by 2019. Sydney homeowners, however, stay longer, with an average of 12.4 yrs for houses and 9yrs for apartment dwellers (RPData Core Logic) No real surprises here, especially given the higher entry costs and disincentives to moving, such as stamp duty.
On average, homeowners only trading once a decade or so, means they’re bound to be a little “rusty” when it comes time to purchasing what is often the largest asset of their lives. Here at House Search we’re often approached by buyers who are frustrated, out of touch with the local market or simply unsure of what constitutes good value, so elect to seek professional help during this very emotional time. Being at the coalface we also hear about the previous experiences they’ve had and mistakes that have been made along the way. Here’s some of the more common errors that we’ve found inexperienced purchasers make:
Not conducting enough local market research. This is imperative to avoid overpaying when you do come across the ideal property. Invest in some recent sales data, follow local sales and auction results, inspect and track the specific market in which you’re aiming to buy. Getting a handle on prices and market activity is crucial, and not something that can be done purely online.
Not obtaining finance approval. Unless you’re a cash buyer, don’t even think about putting in an offer until you’ve obtained pre-approval for finance, so you know exactly how much you can spend. Not doing so can be a recipe for heartache, not to mention a waste of time. With the current recent interest rate hikes, ensuring your pre-approval is also current is vital.
Believing the “price guide”. Though we like to think that agent-provided price guides are accurate, buyers need to conduct their own realistic research as such guides can be misleading at times. Again, this comes down to local market knowledge, and research into values.
Not being organised. In any market a quality property will more than likely have other interested buyers. Often buyers can miss out as they didn’t have all their “ducks lined up” ready to purchase and so miss out or become gazumped by a more organised purchaser. Ensure the finance is sound, have a solicitor or conveyancer review the contract, be deposit-ready and prepared to make a decision! Vendors can be fickle creatures and verbal acceptances stand for nothing in the world of real estate. Here in NSW, until a property is exchanged it is still on the open market and selling agents are required by law to present all offers.
Poor negotiating. Inexperienced buyers can end up overpaying due to their inability to “read the situation” and negotiate favourably. It’s also not about just getting the right price- terms and conditions can make a difference as well to the vendors decision. Setting ultimatums on offers, leaving too much time between offer and exchange and losing out to another buyer, letting personal feelings get in the way of a win-win transaction, being impatient, not acting quickly enough, acting too quickly when patience was required, being unrealistic on price… these are all common mistakes that can see buyers diminish their chances.
Emotional buying. Need we expand here? Auctioneers love emotional buyers – they go over their limit, have no time to suffer buyer’s remorse as the hammer falls in their favour and spend the next few months justifying the extra money paid to themselves as a form of solace. Do yourself a favour and get someone else to bid on your behalf if you feel you can’t stick to your limit- and never make it an even number. Round up (or down) to a price you’d be 100% happy to walk away from. Auctions are not for the faint-hearted and you also need to have a “passed-in” plan should you find yourself at a negotiating table with three seasoned selling agents and the auctioneer after the event.
Analysis Paralysis. Doing nothing at all can often be the result of information overload, lack of confidence and an inability to take action. For those investors or homeowners waiting for a 30-40% fall in market prices before they decide to buy, best of luck in your quest! Whilst you’re paralysed by inaction, there are many others out there who continue to buy, regardless of the section of the cycle we happen to be in and are more than happy with their decisions and results. Picking the bottom of the market is a gamble and hope is not a strategy when it comes to changing property markets. As for future property predictions, guaranteed capital growth is a myth and don’t believe anyone who can tell you otherwise. With an overload of data (and opinions) out there in the world of property, it’s easy to sit on the fence and do nothing. The perfect buying environment is when you’re financially and emotionally ready to move forward.
If, like many of our clients, you wish to avoid making some of the above mistakes by engaging a professional advocate to work on your behalf we look forward to hearing from you. We’re here to help, and have been doing so for Sydney buyers since 2005.