Buying property in a sellers market
Buying property in a sellers market can be extremely difficult. With the current booming real estate market in Sydney, many buyers are missing out on securing a property to purchase. With interest rates at the lowest point in Australia’s history, auction clearance rates at the highest level in many years and property prices increasing by 16% in Sydney over the past 12 months, buying a property has become a more difficult process than ever. The number of affordable properties on the market is far outweighed by the amount of buyers competing for the purchase.
Home buyers and investors need to adjust to the current real estate conditions and realise that there are a whole new set of rules when buying property in a sellers market. You need to do your research, be prepared to move fast and take on a completely different negotiation strategy. Below is a list of things you can do to increase your success when buying property in a sellers market.
Get conditional pre-approval on your home loan
When the right property comes along you need to be ready to move fast and the most important step in this process is to get a conditional home loan pre approval. A pre approval costs nothing and it will give you the confidence to go ahead with an offer, knowing exactly what your budget is and that your finance is ready to go. It will also make you more appealing to a vendor if they know you have your finance ready to go.
Research the areas and the properties you are looking at
It’s imperative you have as much information about the area and the true market value of the property before you step foot in the door. You can obtain a free suburb profile report which will give you details of the current real estate market in that suburb, capital growth, recent sales information, suburb profile, median property prices & more. You can also obtain a free automated property valuation report on the specific property which will give the sales history of the property, an estimated valuation and comparative sales of similar properties recently purchased in the same area.
Be ready to make an offer straight away
Buying property in a sellers market means you don’t have the luxury of time, you need to be ready to make fast, informed decisions and put in an offer before you get trumped. Many buyers view a property, then go home to think about the purchase, look at the financials and talk it through with their partner. They come back the next week end to have a second look and then make an offer. In a booming market, it can often be too late by this time, as a more prepared buyer has already secured the property. When you inspect a property, take a property inspection checklist with you so you can go over every aspect of the properties features, have your property valuation report so you know how much to offer and if the property meets your needs, make an offer there and then. Remember, the more people who are exposed to a property, the more likely it is for the property price to go up.
Make a realistic offer
When you are buying property in a sellers market, long drawn out negotiations don’t work. A seller won’t even consider an offer that is too low and you will give other buyers the opportunity to put in better offers while you are trying to negotiate. Do your research and put in an offer that is realistic and appealing to the seller, based on solid comparable evidence from your property valuation report. Putting in a strong offer that is close to your maximum up front will hopefully stop a bidding war with other buyers. Put your offer in writing to demonstrate that you’re a serious, decisive buyer and you’re ready to take action.
Put a deadline on your offer
Advise the agent that you will need a response on your offer within a set time period, usually 24 – 48 hours because you are looking at several properties and if this one doesn’t work out, you’ll have to move on to the next. A serious buyer, offering a good price who has their finances in order and a tight deadline can often be exactly what is needed to close a sale quickly. A fast negotiation reduces the time the property is open to other buyers to step in with competing offers.
Make an offer before the auction
Even though auction clearance rates are extremely high, some vendors would still prefer to avoid the stress and uncertainty of an auction and will be prepared to accept good offers before the auction date. The best times to do this is after the first or second open home when not a lot of buyers have had an opportunity to view the property or the week prior to the Auction when the sellers will be most nervous about a sale going ahead.
Use Professionals to assist you
Build good relationships with local agents
Get in touch with all the local Real Estate Agents and advise them of your intent to buy. Keep in touch with the agents on a regular basis, don’t wait to hear from them if a suitable property becomes available. Building a great relationship with agents can sometimes get you early access to newly listed properties. If they know you are a serious buyer and you’re doing everything you can to secure a property, they will be more inclined to work with you and recommend you as a favorable buyer to the seller.
Enlist a Professional Buyer’s Agent
A professional buyer’s agent will have relationships with local real estates so they can gain access to properties early, get insights into the seller’s requirements and negotiate on your behalf.
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