Real Estate Expert
We saw the property market in 2013 really heat up and I suspect this will continue as we enter 2014. Buying in a hot market can be very difficult. Competition is strong and buyers can suffer a lot of disappointment as they continually miss out on properties.
Doing the obvious things to prepare for buying – such as getting finance pre-approved, is nowhere near enough to get you ahead of your competition in a fast-paced market.
Here are my top tips for buying property in a hot market
- Registering on major portals is not enough. You might think registering your buying criteria on realestate.com.au and other major portals will ensure you see every new listing. But that’s not always the case. It’s important to register your criteria with individual agencies because they’ll put you on their database and you’ll usually be contacted before new properties are even advertised. Some agencies, including ours, offer pre-campaign inspections to database buyers only, giving you first opportunity to buy. In a hot market, many homes never make it to their first public open
- Get a great team around you. Go into the market with a mortgage broker, accountant, pest and building inspector and conveyancer at the ready. Being able to move quickly is paramount. In a hot market, it’s not uncommon to see sales coming down to two buyers at the same price in a race to exchange
- Take comfort in the competition. I know that sounds strange but think about it – competition is social proof that the property you want is worth fighting for! If you secure the home, you can also look forward to buyer competition later down the track whenever you decide to sell
- Stretch your budget – but not too much. Never overextend yourself, but certainly look for ways to stretch your budget without getting into financial hardship. Consider an interest only loan so your repayments are smaller for the first few years. Reduce credit card limits to increase your borrowing capacity
- Tell the agent you’re interested. If you don’t make your interest known right away, you might not get the chance to make an offer. Remember, many properties sell prior to their scheduled auctions in a hot market and this often happens in the first week
- Look next door. If you’re continually missing out on properties, consider the suburb next door. There can be some serious price differences between neighbouring suburbs. Alternatively, choose another area altogether that offers the same lifestyle. Say you love the café culture and CBD proximity of Sydney’s Eastern Suburbs. You’ll find the same attributes in the more affordable Inner West
- Make good offers. Don’t muck around in a hot market. Start with an offer that is close to your walk-away figure. As always, the agent and vendor will assume your first offer isn’t your best so leave some wiggle room. Waive the cooling off period, put the offer in writing and mention your pre-approved finance. To make it more seductive, sign a contract and attach your deposit cheque! Also, look for ways to help the vendor. Offer a shorter settlement or early release of the deposit if they accept the price. After one or two rejected offers, try an odd number such as $337,500 instead of $340,000, as it implies you’re stretched to your limit.
- Bidding at auction. If you’re going to start the bidding, start low. Project confidence and make your bids fast and assertive. gonising over your next bid is a sign of weakness. Call out your offer in full (i.e. say “$350,000” instead of the increments, i.e “$5,000”). Finally, always stick to your walk-away price. Short term disappointment beats long term remorse!
Buying in a hot market is not ideal but remember – hot markets indicate the cycle is moving north. Even if you pay somewhat of a premium today (not too much though!), your property’s value will catch up shortly. If you believe prices are going to rise 10% in 2014, then paying 10% above what you think a property is currently worth is not a big deal in the long run.
Also, keep this in mind. In my 30 years of real estate, I have often found that fate can play a hand in finding the right property. I’ve seen many underbidders walk away miserable only to find a more suitable property just a few weeks later. If you miss a property – or several properties, accept that it wasn’t meant to be and look forward to finding something better soon. Good luck!
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