Stay Cool, Calm And Informed – Auctions Are Way Up, So What Can Buyers Do?
Originally published on Linkedin.
The start of the year is generally a quieter period in property sales, but that’s not the case this year, with Australia’s auction market up 30 per cent year-on-year in the first few weeks of the year. What is driving this? Momentum carrying over from the post-lockdown surge in activity that happened late last year.
However, psychology is also at play. Some expect that the market will start to ease from its white-hot behaviour in 2021, and sellers want to get ahead before selling their property becomes more challenging and the balance shifts back towards buyers.
Whether the market plays out that way remains to be seen, however, it does seem to be the case that sellers that have done their homework see the early part of 2022 as an opportunity.
What does that mean for buyers, however? Potentially, frustration. We know that buying property is top-of-mind for many Australians, with “buying a new home” one of the top New Year’s resolutions and therefore top-of-mind for many right now. Clearance rates are also currently high – ranging as high as 76 per cent in Brisbane and 78 per cent in Adelaide, and that can lead to buyers making rash decisions.
So how can buyers achieve the dream of a new home or investment property early in 2022 when so many chips seem stacked against them?
I was recently interviewed by Domain about strategies for buying properties at the best possible price, and one of the key recommendations that I make – particularly with properties that have gone to auction, is to remove emotion as best you can. That can be tough for experienced buyers, let alone people looking for their first home or investment, and that’s why being informed is going to be so important when buying a property in the early part of this year… even moreso than normal.
As I say in the interview – you want to be clear on your target price before you interact with the agent and/or seller on any level. If you know what you’re willing to pay for a property, then you’re not going to fall for tricks to get you to pay an emotional premium.
There’s a secondary benefit to doing your due diligence and research before showing up at auctions… if you know the area well enough you might not even need to go to the auction.
One of the pieces of advice that I regularly provide to clients (especially those that have become desperate and are placing bids on anything that they can find) is to take a step back and research the area further.
This means exploring one or two suburbs or areas closely (rather than casting a wide net and expanding the property hunt to an entire city), and making sure that you’re constantly on the radar with agents. I always recommend that clients reach out to the top five agents in the area (and more, if possible), as part of the researching process. Staying on their radar, and making sure that they’re aware of where your interests in property lie, can often result in you getting a first look at a property, off-market, before it goes to auction.
When subsequently interacting with them to negotiate and purchase property, asking the right questions is important. Some of the questions I encourage (and ask myself) include:
What is the highest offer you have rejected?
What price will the sellers accept?
Is the seller ready to trade today?
What is the seller's ideal settlement period?
Does the seller require access to the deposit to fund their onward purchase?
Would the seller like to include or sell any items or furniture together with the property sale?
Have the sellers prepared any designs or plans for home improvement that they never proceeded with?
Are the sellers aware of any works required to the property?
Finally, it’s important not to try to “low ball” offers, as many newer property buyers will try and do. Agents and the sellers that they advise are far too savvy for that.
Speed is paramount in securing the ideal property in the current market, but the need for speed should not lead buyers into making hasty and ill-informed decisions. The speed of the decisions that you make needs to be backed up with confidence, and that confidence will come from having an intimate knowledge of the market and the buying process.
Having the support of experts in negotiation to advise on the bidding and research process is invaluable. I also highly recommend to clients to get a conveyancer on board to ensure that there are no surprises with the property.
To read all my expert advice in the Domain interview, click here.