Tips for buying in a hot property market

Tips for buying in a hot property market

After a year spent cooped up in a small apartment in Sydney, Leonie and her husband set their sights on owning a home in the Blue Mountains.

After about three years of saving and planning, there was another hurdle: when they started looking at properties late last year, it felt like their dream was slipping out of reach.

“It was really confusing. [We were asking ourselves] do we buy now, because they could keep going up? Or are we in the midst of a bubble that’s about to burst?” says Leonie, who is 34.

Property analytics firm CoreLogic estimates national home prices were up 2.8 per cent in March alone, the largest monthly increase in 32 years.

For those on the sidelines, there’s strong pressure to buy now or risk being priced out in future. And with interest rates at record lows, there’s no shortage of competition.

Here are some tips from two property experts to help you manage FOMO while you’re on the property hunt.

Plan in advance and know your limits

Buying property is an emotionally charged business, which is why it’s important to have a solid strategy before you start negotiating.

And good preparation is about more than just looking at comparable sales, says Tonya Davidson, a buyer’s agent with more than 30 years’ experience in real estate.

“I run though a series of questions. One of which is ‘OK, it’s Sunday morning, you open the paper, you’ve got a coffee in your hand, and you see the property sells for X.’ How do you feel?”

It’s a helpful exercise for setting a price limit away from the stress of auctions and agents, Ms Davidson says.

“You need to do it away from the negotiation.”

Olivia Triandos, a property valuer in Melbourne, says prices are moving quickly and it’s important to set realistic expectations.

“It’s a week-by-week market. If you don’t buy, you’ve got to re-assess. Sometimes you’ve got to bite the bullet, and pay a little bit extra today, because you don’t know what tomorrow is going to bring,” she says.

“At the moment, there’s five or even 10 bidders at properties [in Melbourne], so you’re competing against a lot of people.

“Before COVID, it wasn’t as strong. You might have had up to five. That’s what I’ve seen.”

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Beware pushy sales tactics by agents

Real estate agents use all kinds of tactics to help secure the best price for the vendor, so it’s important to be on guard.

When looking at listings, remember that photos are taken with artificial lighting and wide-angled lenses. These can make properties seem more spacious and light-filled than they are in reality.

Agents can also use crowded inspections to create a sense of anxiety and urgency, which can lead to people paying more than they otherwise would.

While agents are allowed to be “persistent”, they aren’t allowed to use high-pressure tactics, harassment and unconscionable conduct.

For example, Fair Trading NSW notes that “an agent cannot repeatedly call you straight after you have inspected a property and demand you make an offer by the end of the day”.

Negotiating with agents can be another tricky area. For example, an agent might say there is “other interest” in the property but it may not mean they have another offer.

“Some people wouldn’t ask, they’d just bid, thinking that the interest was an offer,” Ms Davidson says.

“You’ve got to know how to play it, and you’ve got to read the other person. You’ve got to know if there’s another buyer.”

Leonie and her child walk on the beach.
Leonie is looking forward to life outside the city, but she found the property hunt difficult.(

Supplied

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Be organised before you put in an offer

Before you bid, NSW Fair Trading recommends:

  1. 1.Getting a copy of the sale contract as soon as possible and having it examined by a licensed conveyancer or solicitor;
  2. 2.Organising pre-approved finance; and
  3. 3.Keeping in mind that offers can be made verbally or in writing. Putting your offer in writing can help with record keeping and tracking negotiations.

All states and territories except Tasmania and WA have a mandatory cooling-off period for private sales, during which a buyer can back out of a contract by forfeiting a set amount to the seller.

Keep in mind though that these periods do not apply if you are buying at auction. They may also not apply if you are putting in an offer before an auction.

Here are links to resources and information about cooling-off periods for each state and territory:

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Don’t rely on ‘crystal ball’ predictions

People love to speculate on the direction of the property market in Australia, but the truth is no-one really knows what will happen.

Ms Triandos says it’s important to decide based on your personal circumstances — not what others are saying about the market.

“There’s two ways about it. [The first is] the market is going to increase, and maybe you’re going to have to buy further out,” she says.

“Or maybe the market will decrease, and you’ll be getting these properties that people have paid big bucks for.

Leonie weighed up the pros and cons and in the end she decided to buy. They put in an offer above the price guide for a house that suited their needs but “also needs a bit of work”.

“We feel we paid a little bit too much, but we also feel like we won’t regret it in the long term. And we were happy to do that,” she says.

“We’re relieved, excited and a bit nervous.”

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