Veronica’s 8 Rules for buying property

Over many years in the real estate business, Veronica has brought and sold 100’s of properties.  With an extensive knowledge of buying property around the 10km radius of Sydney’s CBD property market, she is the go to person for all things property in the Inner West.

These are her hot tips for buying property and staying in front of the 8 ball.

RULE 1 8rulesforbuyingproperty

Don’t harbour a romantic attachment to a particular style of property, particularly one that is to be an investment. This can make you susceptible to behaving emotionally during the purchase process.

In my case, I have a thing for old shopfronts. I came close to buying one a few years back and had to pull myself into line because it was on a busy road close to two pubs!

I see people make similar mistakes with other unique and charming properties. They aren’t all to be avoided but you need to be extra critical if you find yourself falling in love…

RULE 2

Don’t start your property hunt before your finance is approved.  It can take quite a while to gather all the documents required for getting pre-approval, so get this sorted ASAP.

The risk you run in looking prematurely is that you find something you like and another buyer is in a much stronger position to act. You could end up missing out purely because you aren’t ready. Or you end up paying more because any delays in getting your finance approved could give other buyers the opportunity to compete with you.

RULE 3 

Look for an investment property with maximum buyer appeal. In my business we always aim to buy real estate for which owner occupiers will compete when it’s time to sell. These are the buyers who tend to push prices up (as opposed to investors) so you are more likely to get capital growth by focusing on what appeals to them rather than putting too much emphasis on “numbers” alone.

RULE 4

Don’t drag the chain when it comes to the due diligence. If you like a property get your bank valuation booked, strata report ordered (if it’s a unit or townhouse), building & pest inspection organised and contract reviewed ASAP.

The longer you take, the more opportunity there is for another buyer to come along, which would erode any advantage you may have if you have seen the property first.

RULE 5

Don’t show your frustration with the selling agent.  The reality is that they hold all the cards – they know how many other buyers are interested, whether offers have been made and they should have a pretty good idea of how much the vendor wants. You, the buyer, are at a distinct disadvantage and you won’t help that situation of you get the agent offside.

Hopefully the agent you are dealing with is the one actually communicating with the vendor (some agencies have both listing agents and those who deal with buyers) and is able to manage their price expectations. Ideally the agent you are negotiating with is also the one directly working with the owner, otherwise competing agendas can come into play.

This is a delicate process, as egos can get in the way and negatively impact the negotiation process. You need to do your own price research and establish a range within which you believe the property to be worth. And try to remain calm as you proceed.

RULE 6 

If you make your offer too early the agent will have an opportunity to “shop” it around to other buyers while you are getting ready to sign on the dotted line. In NSW gazumping is NOT illegal and a property is still available to be sold to somebody else until contracts have exchanged, so aim for the shortest amount of time possible between your offer being accepted and the property being taken off the market.

The only exception to this rule is if you need to make a low-ball offer to “condition” the vendor’s expectations. But that sort of opportunity doesn’t come along often in a seller’s market!

RULE 7

Keep a level head if an agent tells you another buyer has made an offer after you made yours. Don’t assume they are bluffing, but equally, don’t panic.

We advise clients all the time on pricing and purchasing strategy.  When an agent brings up the subject of “another buyer making an offer” it is often hard to decide whether or not it’s a real offer.  But if you have done your price research and have a clear understanding of the property’s value, it doesn’t really matter whether this other buyer exists or not.

If they don’t exist, it’s merely the agent using it as a ploy to negotiate with you (a tactic required if their negotiation skills aren’t well honed).  If the buyer does exist, you will either pay more than them or not. It is better not to be emotional at this stage, even though this is easier said than done.

One thing that you can do under these circumstances is to put your final offer on a signed unconditional contract and submit it with a deadline for exchange.

RULE 8

Know when to walk away from a property.

Do your pricing research before you start to negotiate and narrow down a range in which you believe the property to be worth.

Think about how good the property is and honestly critique its drawbacks. Then consider how uniquely it suits your needs and how long it may take you to find another suitable prospect.

Then you will be more likely to remain clear headed about the value and the price you are prepared to pay.

And if somebody else is prepared to pay more under these circumstances – let them.

 

Best Option – engage a professional

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First published:-  5th Mar, 2015

 

Please note:
Good Deeds buyers tips are intended to be of a general nature. Please contact us for advice that is specific to your individual circumstances. You may also need to get advice from other professionals such as an accountant, mortgage broker, financial planner or solicitor.

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