How to beat the real estate boom

You can buy more quickly and more cheaply despite Australia’s booming property market by following these five steps. But be prepared for some ‘brutal honesty’.

With no sign of the housing juggernaut slowing, savvy buyers are turning into professional-style property buyers, buying quicker and cheaper by following five key steps.

Property negotiator Scott Aggett of Hello Haus advisory agreed to share five tips that professionals use to land their clients properties as the market pace builds.

He believes the strategies can work to not just land a property but also get it quicker and cheaper even during the boom market expected over the coming year.

Rocketing property demand means buyers have to put in a lot more effort before hitting the househunting market.

1. GET REAL ABOUT YOUR ABILITY TO BUY A NEW HOME

Step one, he believes, is for buyers to get real about not just what they want but their ability to land it.

“A problem we regularly see among homebuyers is a failure to conduct a full and frank assessment of what they want, and the means they have on hand to get it,” he said.

“The result is inevitably a huge amount of disappointment, wasted time and lost opportunity.”

Be honest about your budget, he said – and what that can buy in the current market.

Compromise, he said, may well be necessary.

One way to absolutely know what your money can buy is to check recent “already solds”, he said – not the “for sales”.

“Focus specifically on homes that have traded in the last 30 days. When markets are changing rapidly, sales evidence becomes increasingly less reliable as it moves further and further beyond that 30-day benchmark.”

“Those “sold” properties are like a close friend – they’re brutally honest about the market and what you should expect.”

Property negotiator Scott Aggett.

2. REMEMBER IT’S A NUMBERS GAME

Step two, Mr Aggett said, was to remember it was and is a numbers game, and agents know all the numbers.

“Part of becoming an expert in your specific property type and location is to engage with agents at every opportunity – and more you do, the better off you’ll be. So, talk to every agent in your area and sector.”

He said it would be preferable to have a system to communicate with relevant agents weekly.

“I find that in capital city locations it’s common to connect with 80 or more agents if you want to gain access to all available property options.

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“This may shock some readers, but it’s essential to establish those relationships and maintain constant contact.”

Serious buyers must put in that kind of legwork in boom markets to make sure agents know that they are not just qualified but keen to buy – and you may find yourself informed first when relevant properties come up.

Track information around the entire suburb’s sales, days on market and average views per listing to build a good picture of the market.

3. UPSKILL YOUR HOUSEHUNTING

Step three, he said, was to upskill your househunting:

“Being able to talk the lingo, source data and interpret what it means is all part of finding that ideal home,” Mr Aggett said.

The numbers to track in the suburb you’re keen on are days on market, vacancy rates, median price, rent movements, gross yields, listing numbers and average views per listing.

“Trends across all these helps paint a picture about supply and demand in your market. If you

have a skilled adviser on hand, they can evaluate the likely future direction of prices based

on this data.”

He said skilled buyers know how to assess a property based on comparable sales in the areas by keeping track of market transactions and knowing how to compare one home to another.

“A rapid, accurate assessment means you can quickly jump on an opportunity or walk away from a dud well before other buyers even know they’re on the market.

Upskilling also means knowing the buying process, he said in a statement, including sourcing options, effective negotiations around contract price, terms and conditions, what happens during settlement periods and how to deal with contingencies.

Asking the agent why the owners are selling is among questions buyers must ask.

4. BE FULLY INFORMED ABOUT YOUR TARGET PROPERTY

Step four, Mr Aggett said, was to be fully informed about the target property as possible.

“This begins with questioning the agent. Find out why the owners are selling, if there are

previous or current offers and what their price expectations are. You also need to determine

any contract conditions that may be attractive to the sellers.”

“A comprehensive due diligence of the property is essential. Look into building condition, town planning implications, surrounding uses and any other elements that can influence current value and future potential.”

5. NEGOTIATE ‘HARD AND SMART’

The final step is ‘negotiate hard and smart”, he said.

“Be a tough, well-informed, slightly sceptical but also respectful negotiator,” Mr Aggett said. “Be conscious of your walk away price and conditions well in advance. That critical point where you will confidently exit the negotiation without regret.”

“Think carefully about price. You want to secure the home for the lowest possible price, but don’t isolate the seller by proffering a ludicrously low figure.”

His suggestion is to rely on your own in-depth research for pricing, not the agent’s asking or guide price.

Another major tip was to turn contract conditions into sweeteners for the seller such as an extended settlement or higher deposit, or even removing the “subject to finance” clause if you’re confident of your position to stand out in today’s market.

He also suggested calling out any potential bluffs on pricing, he said, by respectfully asking for specifics if a suggestion is made about a competing bid.

SEE THE LATEST PROPTRACK HOME PRICE INDEX

Always have a fallback option, he said – other properties that the agent knows you are prepared to go to if you need to.

Undoubtedly, buying quicker and cheaper requires preparation and effort, he said, “but the result can mean tens-of-thousands more in your pocket, and less wasted hours hunting down a property”.

Work like an expert, he said, or if that sounds too hard, simply engage a buying specialist to do all the research and preparation for you.

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