When it comes to purchasing real estate, the choices and challenges can seem endless.
But, as with many things in life, achieving a successful outcome can be founded on good fundamentals. While I acknowledge it takes years of experience and professional skills to maximise the result, by applying the 10 key actions, you can improve your chances of finding a home or investment that meets your needs and your budget.
1. Shorten your “must-have” list
All too often, we get caught up in the complications and opportunities presented by the property market.
I’ve seen it countless times. Buyers start their property search by going wide. They extend their budget parameters and research homes well beyond their needs and means.
While it might be fun to look at lots of properties and options, you’ll soon be worn down by studying real estate that doesn’t fit the bill.
Instead, narrow your focus. Have a list of “must-haves” and “like-to-haves”. Know what your deal breakers are and where you’re flexible. Develop a clear sense of the ideal property type, size, features and budget for you. It will save your time and sanity.
2. Be locationally focused
Looking at properties in an area where you’ll never want to live is wasted effort. It’s too easy to compromise excessively on location and find yourself running from one compass point to another, looking at open homes in suburbs that will never meet your brief.
I suggest you start by selecting no more than three adjacent suburbs to research. This allows you to understand them intimately and become an area expert, knowing every transaction that’s occurred and occurring. There are also fewer agents to forge relationships with.
It means that when the right opportunity comes up, you can jump on it confidently.
3. Be finance-ready
All too often, buyers launch into the search without getting their financial ducks in a row first. This is a huge error that can end up costing you unwanted time and lost opportunities.
So get your financing conditionally approved before you start looking for a property.
A conditional approval will tell you how much you can invest in a property. The mortgage broker and financier scrutinise your financials to determine how much you can borrow and on what terms. This gives you a definitive line-in-the-sand figure, so you don’t waste any time (yours and others) looking at homes that are outside your budget.
Also, lenders run through your statements with a fine-tooth comb and question any unusual spending. The result is that it can take weeks — sometimes months — to get a lending decision from a financier. Having conditional approval before you sign means you’ve already gone through this rigorous procedure. The result is a smoother settlement process and the option to offer a seller a reduced “subject to finance” period. You may even be able to purchase cash unconditional in some instances.
This will make you a more attractive option to sellers; I’ve even seen some vendors agree to a lower purchase price for conditionally approved buyers.
4. Study your market
Buyers with the best success in securing the right home at the right price have normally studied their locations and property options for at least four to eight weeks before they commit to purchase. This isn’t to say you won’t occasionally get lucky and jag something straight away, but it’s rare.
You should study price movements, vacancy rates, home-ownership-to-renter ratios and a heap of other metrics. It’s also good to know about new and existing infrastructure, where school catchment lines sit, public transport options and a host of other qualitative information.
Of course, actual transactions in that area and at your price point should be on your study list. You need to look through open homes and follow up sales prices with agents. Keep track of how quickly things sell and what listings sit unwanted for extended periods.
Be relentless in your education, because when the right home comes along, you can recognise a great deal and act swiftly to secure it.
5. Develop a pre- or off-market strategy
Buyers’ agents spend a lot of time building rapport with many local agents so that they’re the first to know about a potential listing or even a home that the owner doesn’t want to advertise publicly.
You’d be surprised at the number of properties sold this way, and the first time the public hears about them is when they’re marked “sold” on the internet.
So, have a strategy for making reasonable but constant contact with local agents. If they’re clear on what you want and know you’re ready to buy, you may well get a call before a listing hits the market.
6. Inspect properties personally
It’s easy nowadays to sit in your armchair and scan through the portals for listings and sales. Instead, you should get out and see the homes for yourself. In fact, I’d recommend walking through at least 30 to 50 homes to familiarise yourself properly with your area and price point.
Why in person? Well, what’s presented on the internet is a glossy version of reality. You need to see a property’s actual condition, position, layout and outlook. Go onsite and pick through all the pros and cons.
It’s also another path to building rapport with the selling agents in your area of interest.
7. Attend live auctions
In a similar vein, it’s imperative that you attend auctions and track their results.
Auctions are an up-to-the-minute picture of what’s happening in your market. And it’s not just about price. You can also see how many people are attending, how many are bidding and at what price points things start to slow down or speed up.
Here’s a pro-tip: don’t be afraid to ask the selling agent how many people were registered to bid and what the pre-market interest was like. Most are happy to share intel if they think it will help deliver a future sale.
8. Be ready to act quickly
Buyers who can make accurate, fact-based, yes-or-no decisions tend to get what they want in the real estate game.
Having a conditionally approved loan before you start inspecting properties is part of the process, but being an area expert is just as essential. In addition, consider having professional advisers at the ready — perhaps a town planner or builder on your speed dial who can provide fast advice.
Successful buyers can take great prospects off the market rapidly by signing them up while other purchasers are still pondering.
9. Make well-informed offers
Once you’re able to determine a listing’s market value with a degree of certainty, make your first offer convincing.
I’d suggest staying within at least 95 to 97 per cent of market value with your first offer. This gives you plenty of room to move up but also shows you’re serious about purchasing.
10. Don’t lowball agents
In the same vein, avoid ultimately unsuccessful tactics like putting forward ridiculously low offers on properties.
First up, they rarely work. Even a desperate seller will uncover plenty of potential buyers if they price their property to sell.
But there is another problem with lowballing: it gives you a reputation as a timewaster. Lowballing communicates that you will tie up the vendor’s and agent’s time and are unlikely to agree to a reasonable figure. Lowballing stops agents from calling you about pre-market deals or sharing information that could be useful in the future.
By following these 10 key tips, you can significantly increase your chances of securing the right property at the right price. A well-planned approach, combined with thorough research and a commitment to understanding the market, will set you on the path to success in the competitive property landscape.
