Buying a property in a seller’s market can be quite a challenge especially when there is such a limited supply. Many buyers find themselves making snap decisions they may later regret due to an overwhelming fear of missing out. Due diligence often goes out the window or they pay way too much in a desperate bid to secure a property.
If you’re becoming disheartened in your struggle to buy in this market, here’s 5 great tips that might help you get a head start on your competition.
Tip #1 – Be ready to buy:
- It seems obvious, but make sure you have your finance pre-approval in place and your deposit ready to go. A good agent will want confirmation of this so they know whether they should take you seriously or not.
- Do your research – what have similar properties been selling for? Get to know the values in the area.
- Due diligence – Understand what you’re buying before you even inspect the property. Are there any issues that might affect your willingness to purchase, ie zoning, new infrastructure such as a motorway, is it in bushfire/flood prone land, is it in a high density social housing precinct? Most of this information can be found in the Contract for Sale.
Tip # 2 – Request a Contract for Sale from the agent prior to inspecting. The main things to look for are:
- Settlement period – does it suit your requirements? Will you require shorter or longer?
- Deposit – most contracts require 10% as standard, but this can usually be negotiated to 5%.
- Review the zoning certificate – this will tell you what can and can’t be done with the land, whether there are any affectations, road widenings, or if it’s in flood or bushfire zones.
- Review the drainage diagram – are there any easements you need to be wary of? This is especially important if you’re thinking of re-developing or installing a swimming pool.
- Once you’ve inspected the property and are happy to proceed and make an offer, we always recommend having a lawyer review the contract first.
Tip #3 – Inspect prior:
- If possible, make an appointment to inspect the property prior to the first open home to get a head start on your competition.
- If this is not possible, at least take a drive by. Check out the neighbourhood, visit the local cafe and make sure you arrive early to inspect on the first Saturday.
Tip #4 – Questions to ask the agent:
- “Why are the vendors selling?” Knowing their circumstances can provide valuable insights into how motivated they might be to make a quick sale.
- “Are the owners willing to sell prior to Auction?” The answer to this one is critical. If they are selling due to divorce, or it’s a deceased estate with multiple beneficiaries, they may want the easiest, fairest and most transparent way to sell which is usually by public Auction. However for the right price, the parties can often be persuaded. If the owner is elderly, they may prefer a quick sale to reduce stress and disruption.
- “What is the price expectation? Do you have a list of comparable sales to back up your estimate?”
- “Is there anything you know about the property I should be made aware of, such as structural issues or termites?” Agents have a duty to disclose to buyers anything they know about the property that might potentially affect a purchaser’s decision to buy. Of course, follow this up with your own pest and building inspection. Asking this question upfront however can sometimes reveal issues that may be a non negotiable for you. At least you can then move on to the next property without wasting any more time or money.
Tip #5 – Make an offer:
- The sooner you can make an offer to purchase, the more chance you have of securing a sale. However there’s no point low balling your offer in the hopes of securing a bargain. In a sellers market, this will only insult the owner and affect your chances of further negotiations.
- Put a time limit on your offer. Let the agent know you have another property you will go for if this one doesn’t happen – be able to quote a specific address to add weight to your story.
- Your offer should preferably be within the upper level of the range quoted by the agent (provided you are satisfied from your own research it’s worth that amount). A seller is most likely to sell prior to Auction if the price they are offered is close to or in excess of their dream price.
- Making an offer is not just about the price. It’s structuring your offer in a way that shows you are serious, sensitive to the vendor’s situation and that you are capable to settle.
- The less changes you require to the contract as it stands, the more chances you have of your offer being accepted. This means agreeing to their settlement period and paying a 10% deposit. If you try to negotiate these terms, the vendor may consider another offer over yours that doesn’t require these changes – even if your price is slightly higher.
- Your offer should be in writing and include:
- 10% deposit
- Settlement terms as per contract
- Exchange with a 66W – this means an unconditional exchange (no cooling off). This will always be required if purchasing prior to an Auction. However even if it’s a private treaty sale, an offer with a 66W is more secure for the vendor and means when contracts exchange there is less chance of the sale falling over.
- Anything else you think might sway the vendor in your favour – ie if they have nowhere to go, you could offer a lease back arrangement for a certain period of time.
We hope these handy tips will help you secure your next property without overpaying or skipping your due diligence. Having the right team around you is critical. Mortgage brokers and lawyers that are readily available to answer any questions you might have, plus the expertise and know how of a qualified buyers agent will make a real difference to the outcome.
Need to sell before you buy? Our Vendor Advocacy service could be just the thing you need to help you maximise your sale price and keep more money in your pocket to put towards your next purchase. This FREE service is proving invaluable to home sellers all across Sydney. You can find out more by clicking here.
If you’d like to learn more about how to buy a property after just one open house, book in a time with me here for a quick chat – kathryn’s calendar booking.
The views expressed in this article are an opinion only and readers should rely on their independent advice in relation to such matters.