How to buy a house in Australia

Real estate is often considered a numbers game where top dollar wins the day. However, many experts say buyers who think price is a seller’s sole motivator could be making a costly mistake.

Real estate is often considered a numbers game where top dollar wins the day.

However, many property experts agree that buyers who think price is a seller’s sole motivator could be making a costly mistake.

Negotiating conditions, settlement periods and even your move in day could be worth more than money in today’s market.

TALK ABOUT TIMING

Melinda Jennison, buyer’s agent with Streamline Property Buyers and president of the Real Estate Buyers Agents Association of Australia, says what can sweeten the deal often comes down to a seller’s personal circumstances.

“There are many things outside of price that can motivate a seller to accept one offer over another. For example, if a vendor needs to sell their home before committing to the purchase of their next property, sometimes a longer settlement is advantageous,” she explains.

“We’re in an environment where there’s little to rent in many regions around Australia, which is frustrating for sellers. If you can solve that problem by allowing them to stay longer in their home, that can mean more to them than money.”

Settlement periods can be crucial in negotiations.

Beyond stretching the settlement, becoming a seller’s landlord is another option.

“Offering a short-term, rent-back solution solves the same problem, but all this is dependent on how quickly you need to move in.”

Your Property Your Wealth founder and buyer’s agent Daniel Walsh has personal experience using timing as a negotiating tool.

“When I bought my house, the vendors were moving to Tasmania, but didn’t want to go straight away,” he says.

“Another buyer wanted a 30-day settlement but that made them nervous, so I offered three months. I offered time and security with a no finance clause so they actually took a lower price compared to my competition.”

KEEP IT CLEAN

Clean terms can also lead to a no-fuss sale, Jennison says.

“As a buyer, many of your competitors will submit conditional offers subject to a building and pest inspection or finance approval after the contract is entered into. If you remove those conditions that becomes very appealing.”

A purchaser who’s done their homework and has all their financial ducks in a row is often an easier sell to a stressed out seller, says Robert Martin, buyer’s agent with Rethink Investing.

“If an agent has two buyers offering $1m; one with finance conditions and the other without – you can guess where they’ll lean straight away,” he says.

“It’s a simple mistake so many buyers make, thinking another $50,000 or $100,000 will always secure the property. It doesn’t.”

Walsh says a successful sale, especially in a seller’s market, is about making the settlement conditions suit the vendor.

“In a hot market people will go in with unconditional finance to prove how strong they are. What they’re doing is putting an offer forward and acting under auction conditions, but essentially putting the offer forward to not go to auction,” he explains.

“In the past, when a seller has wanted a 5 per cent deposit, I put down 10 per cent. It’s about showing as much commitment as you can that you’re willing to be a stronger buyer in every way.”

ASK THE RIGHT QUESTIONS

An understanding of what the motivation is behind a sale can be used to the buyer’s advantage.

“That’s what we do as professional buyer’s agents. It’s all about positioning an offer that’s favourable and providing a solution for both parties. A lot of buyers aren’t sure what they can ask an agent, but you can ask anything. It’s up to the agent if they’re willing to disclose that information,” Jennison adds.

“While it’s their job to protect the privacy of their sellers, there’s no reason why you can’t strike up a good relationship with them and ask questions like, ‘How motivated are the sellers?’ ‘Have they got somewhere else to go?’ ‘Are they going to be looking primarily at price?’ These answers will give you an indication as to what kind of settlement might be more favourable to them.”

Martin says a good connection with local agents will let them know you’re in a position and put you front of mind.

Do your research and ask the right questions.

“If they know what you want – and that you’re ready – then it’s not unheard of that they’ll suggest properties to you before they even hit the market and you’ll have a chance to secure them without competition.”

Walsh agrees that relationships with agents are valuable when negotiating. “If you’ve been reinforcing that you’re ready to go and are having regular conversations with them then you might get to the point where they’re subconsciously looking for you without even realising.”

More than money: Look beyond the sale price to see what you might be able to offer a seller.

Get curious: Ask a selling agent lots of questions so you can get on the same page as the vendor.

Be prepared: Having your finances sorted not only helps you avoid missing out when house hunting, but is also attractive to sellers.

Originally published as How to buy a house in Australia