Mindful spending in the lockdown property market
Recently I was reading a report about changing buyer behaviours during this pandemic and one thing that really struck me was the observation of our switch to more “mindful spending”. In other words, we’re taking our time, not impulse-buying as much and are re-evaluating our needs vs wants when it comes to what we spend our money on. Given that discretionary spending is limited, and we can’t currently travel, dine out or plan for live events we’re also saving more: not necessarily a bad thing.
However, when it comes to spending money on Sydney real estate (and for many other Australian property markets) are buyers being mindful? Are decisions on what, where and how much to spend being made with sufficient consideration? Are they taking time to conduct essential due diligence? The trouble is that, in a seller’s market, there often isn’t sufficient time, or indeed housing stock, to have the luxury of taking days or weeks to make a decision. In many Sydney areas right now, buyers are out in force, ready to offer and exchange, and are certainly making compromises on features that, less than 12 months ago, they wouldn’t have budged on. That’s what a housing boom does: fuels demand amidst fear of spiralling prices. It also creates panic buying in some scenarios, despite the larger price tags.
As buyers’ agents, we are also dealing with some of the lowest stock levels I can remember, and I’ve been buying for clients for over 16 years now. Some high-demand suburbs on the lower north shore, for example, have 0-3 house listings: hardly a smorgasbord of choice for discerning buyers, who are keen to lock in 2021 prices. Feeling it even more keenly (and with an air of desperation) are those buyers who sold in 2020 or this year, and are looking to get back into the market. Headlines that remind them every day is costing them an average of $1200 can be terrifying, let alone competing for property and continually missing out. No opportunity for mindfulness here.
So….the question remains: what to do if you are currently in the market and want to ensure you are a mindful spender? After representing hundreds of buyers since 2005, and having been through quite a few property cycles personally now, what I do know is that decisions can certainly be made quickly, as long as you are prepared, have excellent support and have done your homework. As buyers agents we qualify our buyers prior to commencing a search for them, ensuring they are realistic, market-ready and committed once the right property does appear. After all, good opportunities don’t wait for anyone and if all the hard work can be done efficiently and in a prompt timeframe there’s no reason why you can’t make that buying decision both quickly and mindfully.
My top tips for mindful spending on property in a hot market:
- Have your finance good to go: either a pre-approval or verification from your lender/broker that shopping can commence!
- Be very sure about your non-negotiable features and ensure they are realistic in the current market.
- Be deposit-ready. If funds are tied up in other assets ensure they can be readily moved, in case a cash deposit is required.
- Research, research, research your market. Monitoring sales and auction results, staying on top of what’s happening in your preferred areas by speaking with local agents, tracking key indicators such as Days on Market (DOM), listing levels, properties sold off-market and pricing revisions all help.
- Get to know your selling agents. Constant contact is what we do to stay in touch with them, so as a ready buyer you need to be top of their lists when a new listing or off-market presents itself.
- Attend auctions (yes, even online) and make private appointments regularly for stock of interest. He who hesitates loses, so don’t wait a week or two, believing the property will still be available.
- Follow up with properties that sell with no price disclosed, or “Price withheld” Selling agents are usually accommodating in letting you know what price (or range) was achieved, if you have good relationships with them.
- Gather a supportive and responsive team. If not using a buyers agent, then at the very minimum ensure you have a great conveyancer or solicitor on speed dial, a few building/strata inspectors to select from who can move quickly, a competent lender/broker and trades on hand who can provide quotes should renovations form part of the purchase. I cannot emphasise enough here the importance of building a quality team, as one weakness in the cog can cost you dearly.
Being mindful doesn’t have to mean slow, but well preparedness will save you potential angst and regret in any real estate market.