With auction clearance rates further falling away and stock levels rising, it is likely that we are going to enter a buyer’s market, where there are more sellers than buyers so the buyers have more influence on the final agreed price to a property.
But just because a market favours buyers doesn’t mean that whoever buys will automatically make money. That’s because prices could fall even further or you have bought an overpriced property.
So how can you buy well in a buyer’s market?
Advertisement: Story continues below Conduct research into an area: that is, find out where schools, hospitals, cafes and public transport systems are. Compare this to surrounding suburbs, then check the prices of properties in the surrounding suburbs.
Sometimes there can be mispricing of properties between suburbs. Two years ago, I bought a property in a suburb in Sydney’s upper north shore. At the time, house prices in this suburb were about $50,000 to $80,000 less than surrounding suburbs.
On further investigation, it seemed that since this suburb had some light industrial zoning, the suburb was discounted. This did not make much sense and so I bought in that area. Now there is no discount for that suburb.
Conduct many site inspections – and I mean many. I would suggest at least 50 property inspections. Indeed, one of Sydney’s best buyer’s agents, Patrick Bright from EPS Property Search, suggests 100 site inspections.
The reason for seeing so many is that one becomes very familiar with the local areas and what properties are selling for given their respective quality and location.
Conduct an independent valuation. I am surprised how few people do this. Many are quite happy to buy a general building inspection report, which can often be useless, yet they are not willing to spend about $300 to find out whether the home is fair value.
Get an independent valuation before making an offer. Or at least get a comparable sales report for the street and suburb. These reports are supplied by organisations such as Australian
Property Monitors and cost about $50.
Get friendly with the agent.
By being friendly with an agent you can find out all sorts of things that might be valuable in negotiating, such as why the seller ismoving on, how long the property has been up for sale, what new properties there are, and so on.
Get a home discounts report, which tells you how long properties have been on the market for and how much they have been discounted. This allows you to better negotiate when making an offer.
Overall, buying well even in today’s market requires diligence and time. If you persevere, it is quite possible your investment will perform well.
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