There are numerous stereotypes surrounding property purchasing. One of them is the idea that mind games can help your dream house magically fall into your lap. Another is the belief that those who work in the industry must be the best when it comes to buying houses.
Rest assured: being on top of every tasty off-market and being a negotiation master isn’t a free ticket to a smartly picked crib. DMARGE recently caught up with Edward Brown, director at Australia’s leading real estate provider Belle Property, who told us real estate agents are actually some of the worst icons to emulate when you are buying a house.
“How does one buy property like a real estate agent? Don’t be like a real estate agent when you’re buying property: we become too emotional. We’re probably the worst… we become too competitive.”
Instead, Brown advises would-be buyers to keep calm and do their research – without getting neurotic: “Educate yourself, don’t try to overthink what a property might or might not be worth.”
That said – there is a balance to be had. Brown also acknowledges emotion, to a certain degree, plays an important role.
“Pay what you think it is worth and be prepared to have a buffer but also pay that little bit more to secure the property.”
“You don’t want to be that person who just keeps missing out because you keep trying to be too pragmatic about price of the property,” Brown added. “Ask yourself: ‘how important is your time and the journey in the search for a new home?’ If you find something that ticks most of the boxes for you; jump at it because there might not be another one.”
This links in with another discussion Brown had with DMARGE earlier this year, in which he said that smart buyers would do well to avoid the following ‘lowball’ mistake.
“Biggest falling market mistake? Lowballing on the assumption people have to sell. Of course, no one wants to pay too much money – they [the lowballers] have just taken a realistic and pragmatic approach – but [the truth is] you’ve got to have a bit of emotion running around.”
And when “a lower amount than you hope is going to be accepted doesn’t work,” you may find yourself backed into a corner, or having pissed off the vendor who knows that, if they are in an area with more demand than supply, they can get more money by waiting.
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“A house is worth what someone is willing to pay,” Brown told us. “But if you’re trying to run around putting lowball offers on everything, there’s a reason why your offer will be accepted on something – no-one else wants it.”
“Good quality homes will sell for a fair and reasonable price – maybe not the same price they could have once achieved in a booming market, but good homes will always have demand in any marketplace.”
“Everyone’s going to share their view. But, in reality, if it’s a couple buying (or if it’s a bachelor or bachelorette buying), they should think about what it’s worth to them,” Brown added.
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“Do your research, look at realestate.com.au, look at Domain, see what’s been selling that’s similar, get a bit of a feel for what things are worth and take that into your value – every real estate agent, buyer, broker, all have an opinion – it’s whether or not it has any relevance.”
“Family members are always going to say – don’t pay more than such an such – but what we always see is people having regrets that they should or would have paid more for a property, had they had their time around again.”
“The opinion was said to them that they shouldn’t pay any more, that they should walk away – but one of the biggest mistakes people tend to make is they ask too many opinions of everyone and then pass up good opportunities.”
So, all up, if you lowball, with no wiggle room for negotiation, you are both putting yourself in a weak position to own the property, and also risking offending the vendor (it’s also a sign you’re just not looking at the right properties for your budget).
“People make offers and if they make an offer well below, sometimes the vendor just doesn’t want to deal with them,” Brown says.
“Not saying you need to go crazy – it’s worth what your willing to pay – but add to the consideration; it’s someone else’s property.”
Founder at The Rubinstein Group, Gavin Rubinstein made similar comments to DMARGE earlier this year. One big regret Rubinstein sees all too often is: “Waiting for the market to fall, (nobody can pick the bottom of the market) and missing out – only to find themselves still looking 12-24 months later.”
“Something many buyers could have done sooner is engage a reputable buyer’s agent to help them through the buying process,” Rubinstein added.
“Beware of ‘paralysis by analysis’ – one must be practical when buying real estate, but with the homes I sell, being family homes, most of which are unique there is an emotional factor that needs to be accounted for.”
The solution? According to Rubinstein, “If it feels right, ticks 8 out of your ten boxes, is within budget and seems fair priced based on similar properties that have traded, don’t waste time with moving forward because with supply issues in the East it’s questionable when another opportunity of the same calibre will come up again.”
Rubinstein then told us that smart buyers trying to get into the Australian property market should “look for opportunities where there is a spike in new listings.”
“The boost in supply means more options for buyers and this puts downward pressure on prices.”
So: now you’re sorted on not buying like a real estate agent, but rather like an informed buyer, you might like to know if now is really a good time to buy? Check out the following articles to learn more.