Know what you’re looking for.
Whether you’re buying a property to live in or as an investment – you need to have a clear picture of the suburbs you’re interested in and exactly what you are looking for. The more defined your plan, the more likely you will know it when you see it. If you’re looking at 10 different suburbs, chances are you’ll end up with analysis paralysis – too much information and too many options to weigh up. In this scenario, you might never make a decision.
Make sure you know what you’re buying.
Once you’ve found your property, you need to bring in the professionals to ensure that what you’re buying is still likely to be standing in five years’ time and you’re aware of the likely maintenance costs in the coming years. A building inspection is imperative for everything that you consider. You should also opt for a strata inspection if you’re buying a unit and a pest inspection if you’re buying a house. These should give you a clear indication of major works or special levies that you need to add into your budget.
Get pre-approved for finance.
So many buyers spend months and months looking for properties to then find they can’t afford it and have to start the process all over again. It all ends up in frustration, which could lead the buyer making a ‘reactive’ decision on the wrong property purely because they’re fed up. If you get pre-approved for finance up front and let your bank or mortgage broker know exactly the type of property you’re trying to buy and in what suburbs there should be no surprises down the track.
Be confident about what it’s worth.
Many buyers of property make very emotional decisions when they find their dream property and often buy with their heart rather than with their brain. Their buying is based on what the bank will lend them and not necessarily on what the property is worth. As a professional buyer, I have been buying similar types of property in the same suburbs for over 10 years now and I see around 500 properties a year. So you could say I have a very good knowledge of what that type of property is worth in those suburbs. However, I still pay an independent valuer each and every time I bid on a property. Together with the building and strata inspection, it might cost me $1200-1300 with no guarantee of a buy, but when I’m spending $500-800k on a property it may well save me tens of thousands of dollars in the long run.
Get friendly with the agent.
The key contact between sellers and buyers, agents are the first to be aware of properties for sale, yet so many people are shy about handing over their mobile number at open for inspections. How will you ever be made aware of deals or changes in a vendor’s expectations unless you make contact with the agent? You need to persuade the agent that you are very serious about buying property and can make a quick decision. Make sure they know you are pre-approved for finance, are serious about buying and can make a quick decision, followed by a signed, unconditional contract. People are often scared about telling an agent what their budget is as they think the agent will make them pay more. For me, I always say that I can buy up to any amount if it’s the right deal, but in reality I am only prepared to pay what it’s worth and will get an independent valuation to double check that figure.
Make an offer.
If you don’t ask you don’t get, so if you want to guarantee a buy before auction then you’ve got to make an offer. Unconditional offers (offers that are not subject to anything such as finance, building inspections etc) are always more appealing to vendors, as it means that it’s a very serious offer and can’t be backed out of. If you are buying before auction your solicitor will need to sign a form called a 66W, which means that you are waiving any cooling off period contained in the contract. To make sure your offer is accepted, you will need to have had a detailed conversation with the agent to discuss what the vendor’s expectations really are and if there is anything else that is likely to make your offer stand out from any others. Did they want a long or short settlement, a deposit released before settlement, or to extend their stay in the property?
Not all properties get advertised on the market. Some vendors want to do it without the neighbours knowing, some need a very quick sale, others still may not want to disturb their families or tenants with open inspections, others still may not need to sell but are open to offers if prospective buyers come in. The better you know the local agents and the more they think you are serious about buying and can make a quick decision, the more likely you will hear about silent sales. Often agents will take a property to their closest contacts and people on their database, before offering to the general public via a marketing campaign.
Use a professional buyer.
Successful property buyers will normally look at around 100 properties in the area they are interested in before they make a decision. In addition, they will do secondary research to find data about recent sales and available stock in their area of interest. If you’re busy with work Monday to Friday and with family on weekends, it can be very difficult to dedicate the time needed to buying the right property. At the same time, a property purchase is a lifetime of savings and not something you want to take lightly. If you buy property once every 5-7 years but there are professionals who do it every day, often it’s the professionals that will have the better contacts to secure those silent sales and a greater chance of negotiating the best deal. Vendors use professional agents to negotiate for them, so why not you as a buyer? It might cost you $10-20k, but it might make you an additional $40-50k, as professionals make the process easier and secure a better deal.
Chris Gray is CEO of property portfolio company Empire. He is a leading property expert who provides opinion and commentary regularly in the news media. For a FREE copy of his latest book, The Effortless Empire: The Time-Poor Professional’s Guide to Building Wealth from Property, visit www.yourempire.com.au