5 ways property buyers can get the edge in a booming market
Housing markets continue to rise, despite ongoing lockdowns, but is price growth set to slow down during the traditionally popular spring selling season?
In a market that is already challenging for buyers with a shortage of supply versus properties being sold, how can you stand out as a buyer to secure your next home or investment property?
I've observed all of this first-hand many times. So if you're asking these questions as you hunt for property now, here are 5 ways you can get an edge as a buyer in today's market.
1. Look for unique properties
Look at properties with quirky features that you could easily renovate or fix. If you can see past ugly wallpaper, dated vanities and light fittings, you may find yourself in a rather advantageous position with less competition and more room for negotiation. It's also a good idea to see if you can reconfigure rooms to get maximum space.
In the age of quick and easy Bunnings or IKEA kitchens and bathrooms, these once big-ticket renovation items can be quite quick and affordable. They will come at a price much less than buying a property that doesn't require any work.
2. Consider value-adding upgrades
In addition, minor upgrades such as fresh and neutral cosmetic finishes to paint, carpet, kitchen appliances, light fittings, door hardware, taps, mirrors and blinds will have a great impact on the property's eventual presentation, and these renovations come at a small price.
If the property is being purchased as an investment, these costs will be tax-deductible and increase the eventual rental income.
Properties that lack storage, air-conditioning, attractive features or gardens may find themselves being discounted from buyers' lists before they even view the property, and are simple, inexpensive fixes.
3. Ensure your finance is pre-approved
Part of being a proactive buyer is having your finance pre-approved – it's an absolute necessity in the current market.
Knowing exactly where you stand allows you to tailor your search and your strategy in buying. If you know the exact terms you can offer, you can submit your offer in writing with confidence and then it can immediately proceed when your offer is accepted.
Pre-approval times and loan approval times have both blown out during the pandemic. Banks processing times are longer due to overwhelming demand. So, make sure you give them everything they ask for (statements, financials etc). If they need to come back and ask for more, you will move down the queue and your approval will take longer. Banks are also scrutinising everything (e.g. spending habits) more than ever before, so keep this in mind.
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4. Be known to local agents
If you're ready to go, let agents in the area know! You won't have a chance with off-market opportunities if agents in the area you're looking to buy in don't know that you are there.
Get in touch, let them know your criteria and budget and ask to be contacted for off-market opportunities. It's also a good idea to be added to their mailing list so you're one of the first to know about new listings that go to market, including being one of the first ones to inspect the property when it becomes available.
In my experience, I have seen buyers organise private inspections to build rapport with agents or they've taken every phone call from them, even if the property the agent is suggesting is not of interest. It's also a good idea to stay in regular contact, so you're always top of mind.
5. Get your offer "seen"
To get the competitive edge over other buyers, there are a few things you can do to make sure your offer stands out:
- Price: Consider the current market when submitting your offer. A common mistake is to offer a low-ball price. A-grade properties or investments rarely sell "cheap" and by offering a very low price, it's likely to give off the perception that you aren't a serious buyer or you're unable to negotiate.
- Motivation: Is the seller interested in a longer or shorter settlement period? By knowing the seller's motivation, it allows you to tailor your offer to best suit their requirements. In the instance where they have already committed elsewhere, you could make your offer more appealing by offering unconditionally (if your finances allow for this) and tailoring the settlement to their requirements.
- Negotiating: Be prepared to negotiate! Unless the seller or buyer is prepared to negotiate, it's unlikely you'll be able to come to an agreement to proceed. If you have offered below the asking price, the seller is likely going to counter or request an increase to your offer. It's important that you do your research so you can demonstrate to the buyer that the property is only worth what you have offered. And finally, stand your ground.
- Cooling off: Do you need to cool off? An offer subject to cooling off will be less attractive than an unconditional offer, just as an offer without a lot of conditions will be more attractive than an offer subject to several conditions. Removing a cooling-off period will show the seller that you are serious.
So, what works to get the edge in the current market?
- Being proactive. Ensure that you have your pre-approval prior to commencing your property search so you don't miss out on properties while submitting your paperwork and waiting for banks or brokers to get back to you.
- Doing your research. Not just on the asking price, but also on recent sales of similar properties, so you can be clear about what you anticipate the property will sell for.
- Knowing your limits. Have a clear list of absolute deal-breakers and absolute necessities, so you can make a decision if the property is suitable immediately upon viewing.
- Decisive action. Be decisive by submitting a clear offer in writing after viewing the property. This will demonstrate that you are serious and it won't leave room for the property to be snapped up while you think about it for a few days.
What doesn't work in a booming property market?
- Waiting around for follow-up calls. In the current market, you won't find many agents getting the chance to make their usual follow-up calls after viewings. If you have viewed a property and are serious about purchasing, you will need to make contact right away.
- Shopping at the top of your price range. Avoid looking at properties at the top of your budget. To avoid disappointment, to give yourself room to negotiate or to provide you with funds to make minor changes, it is recommended that you begin your search well below your maximum budget.
- Complicated offers. An offer subject to too many conditions will be much less attractive than a clean offer.
Although the market is very competitive right now, you can still find a great property and make a successful offer if you have the right mindset and approach. There are many tips and tricks beyond the above that will help you find a property (e.g. forgoing a car space or converting a study into a bedroom). The opportunities are endless, so never give up and seek professional advice when needed.
Lloyd Edge is a buyer's agent and the director of Aus Property Professionals, and author of the best-selling book Positively Geared.
Disclaimer: The views and opinions expressed in this article (which may be subject to change without notice) are solely those of the author and do not necessarily reflect those of Finder and its employees. The information contained in this article is not intended to be and does not constitute financial advice, investment advice, trading advice or any other advice or recommendation of any sort. Neither the author nor Finder has taken into account your personal circumstances. You should seek professional advice before making any further decisions based on this information.
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