It's so hot, it's nuclear!
What an incredible start to the year we’ve had in the property market. After the Year That Must Not Be Named, I think we were all ready for a nice, quiet 2021. And then that went out the window completely.
So what’s a buyer to do?
Firstly, be sure that you’re ready to commit. Absolutely, unequivocally ready. The pace of the market is not kind to hesitation; you need to be sure that you (and anyone else buying with you) are ready to make the decision when the right property arises.
Part of that decision must entail having your finances ship-shape and ready to go. Some banks aren’t even providing pre-approvals these days which can come as a bit of a surprise but what really needs to happen is to have had human eyes cast over your finances and confirm that you’ve got not only a plan, but a plan B and C too. Not only does this help you (and your buyer’s agent!) sleep well at night, it means that you’re ready to act when the time is right.
If you’re buying into a market that you don’t know that well, it’s time to step back and address that first of all. It might be that you’re hoping to buy just a few kilometres from where you currently live, but be honest with yourself - do you know that area inside-out? Where the good/bad/no-go zones are, and the lines that delineate them? The school zonings that will affect future demand and price growth of the area? Which pockets, if any, are gentrifying and at what rate? The list goes on. What I’ve noticed is that when buyers hesitate, it’s often because they’re not confident in knowing whether this purchase is the right one for them. And usually, this comes down to not knowing the area well enough to feel decisive enough to act. If time isn’t on your side consider engaging a professional who can speed up the process and fill in the knowledge gaps. Time is an expensive commodity that many buyers can’t afford.
As a buyer, you need to be clear on what you want and where you’re willing to compromise.
If keeping within budget means looking at an area that isn’t as premium as you’d hoped, it might be the best decision you’ve made if it saves 6-12 months of heartache in repeatedly missing out and gets you into the type of home that will meet your needs for some time. You can of course increase your budget, but not everyone can or is willing to make that decision. And where do you draw the line if you can increase your budget? Paying through the nose for an average home isn’t what you’re hoping to achieve, right? In recent weeks I’ve noticed buyers throwing caution to the wind more often than not which signals we’re entering into silly territory. Ensure you understand the risks if you push your budget to the limit as no one knows what the future holds.
Take control and be organised with your search. Understand what’s currently on the market, what has sold recently and which agents are active in the type of property you’re seeking. Put crudely, you’re one of hundreds of buyers they’re meeting every week so don’t expect that they’ll have time to talk you through your decision. Sales agents are focused on finding their next listing for sale (and if they’re not, they ought to be) as right now, their future income comes down to having something to sell in a market where supply is tight.
Being aware of these market conditions will help you to better understand when it’s time to act and how to participate in the process. In days gone by a property would be listed for sale by auction, and sold at auction about a month later. With buyer demand now at nuclear levels it’s not surprising to see an auction with a mere two week campaign length, or to receive a call for offers to be made after just one open home. You need to be ready to act quickly. Hesitation or unpreparedness to make a binding offer can cost you the property.
If you do find yourself at auction, the biggest tip I can give you is to remember this is just one property. There will always be other properties for sale on the other side of the weekend. People will always need to move away, move to a bigger home, move to a smaller home - property sales is right up there beside death and taxes as one of life’s certainties.
No one knows what the future holds; price growth cycles don’t last forever (even if it feels like it will when we’re in the thick of it). Spend the necessary time to understand the sizeable mortgage you may be taking on and what repayments and timeframe you’re committing to. Money is relatively cheap now but ask anyone who’s lived through more austere times and you’ll gain some idea of just how debilitating high debt levels can be.
Know your numbers, be clear at what price you need to walk away. And stick to it.
Undoubtedly, well-meaning others will have their own advice to share with you. Just be wary of who you listen to and understand if they have their own agenda or if they have the experience through many property transactions to guide you without bias. If in doubt, you can always seek an experienced, independent third party for advice. My clients do exactly that, and it means they’ve replaced the stress and uncertainty with professional guidance to navigate an insanely competitive market.