Buying a new house is one of the biggest investments a person will make in their lifetime. With climbing interest rates and supposedly one of the most over-priced markets in the world, Sydney home-buyers are constantly on the look out for ways to get a bargain.
According to inner west real estate sales and property management agent Ian Comyns, getting the best deal isn’t always as easy as some people might think.
“It’s very hard for a purchaser to buy a property at less than market price,” he says.
Here are his six top tips for buying a great home at a good price.
1. Understand that the market is efficient
Market efficiency dictates that at any given time, prices actually reflect all available information about the house market.
When people say they’ve got a bargain, 98% of the time there is a good reason why it’s cheap.
Comyns recommends that all purchasers find at least three comparable sales to support their opinion of value.
Research shows that purchasers will generally look at 20 to 30 properties before deciding which one to buy, and so they know better than anyone what a property is worth. Purchasers can follow the market and determine what the best price for a property is themselves.
2. Know the market like the back of your hand
The easiest way to guarantee that you’re paying the best price for a property is by keeping up with the real estate market in the area in which you want to buy. This will give you a clear idea of what to offer, as well as what to ask for when it comes time to sell.
Purchasers can keep up with the real estate market by searching recently sold, comparable properties in the area.
A comparable property is one that is similar in size, condition, neighbourhood and amenities.
Reasonable sellers know that they must price their properties similarly to other comparable properties on the market if they want to be competitive. Knowing the market like the back of your hand will ensure you know the best price.
3. Play in a down market
“People who make a lot of money out of real estate always play in a down market,” says Comyns.
According to Comyns, people who buy in a down market are often likely to get terms and conditions from a vendor that they would not be able to extract if the market was good.
A seller, if under duress, may agree to an extended settlement if the price offered is sweet enough. The extended settlement period could enable a purchaser to buy a property, do it up, and put it back on the market before the transaction has settled, which would never happen in a strong market.
“If you’re looking to make money out of real estate, buying in a down cycle is the way to do it.”
4. Buy ugly and make beautiful
Comyns says that despite popular belief, houses advertised as a ‘renovator’s dream’ or ‘needing work’ will not be the bargains they seem.
This is because these properties tend to attract far more buyers than renovated properties, exposing buyers to more competition and overpricing.
Comyns recommends purchasers look at buying something that doesn’t need renovating for practical reasons, but is just really ugly.
“You are far more likely to get a great price for a property that is ugly than one that needs practical renovations,’ says Comyns.
“Buy ugly and make it beautiful!” he says.
5. Follow auctions
Buying at auction can often be an opportunity to buy at a good price. This is because a lot of things can go wrong at an auction, and there are often opportunities for buyers to ‘swoop in’ on properties that have been passed in.
Vendors at auction are generally more desperate to sell, so by following the auction cycle and going to as many auctions as possible, buyers are increasing their chances of getting a good bargain on a great home.
6. Buy by private treaty
If you’re serious about buying a property and you’ve decided you know what it’s worth to you, put in on a contract with a cheque for your agent to give to the owner.
“Nothing says you’re a serious buyer like stapling a cheque for the full deposit amount to your contract,” says Comyns.
“It indicates that you’re a genuine buyer and should give the vendor an added reason to choose your offer over any competing offers,” he says.
It’s very hard for a vendor to say no to an offer if the agent has a signed contract and cheque in hand. If you really want the property than be ready. Make the offer.
To help buyers negotiate the best price for a property, Exchange Property Sales and Management have released a FREE Property Investor Handbook. To download your own free copy, visit the Exchange Property Sales and Management website today.