Tips to buying well as the Sydney property market cools
So, the rumours are true, the Sydney property market is starting to cool down. Sydney wide Auction clearance rates have steadily declined since May 2015, from 89% to just 59% this weekend. What this means is that vendors are not getting the price they want to sell so they are having to meet the market. In the areas I work in the clearance rates are much healthier – Eastern Suburbs 69%, Lower North Shore 69% and Inner West 66%.
I am on the frontline of real estate pounding the pavement and attending open homes auctions every week and what I’m seeing is that there are less buyers at some auctions. There is still healthy competition showing for good properties. The more “stock standard” listings are the one’s struggling.
6 tips to buying well as the market softens
- Gather Intelligence – Make sure you go through as many open homes as you can and attend auctions too. This will give you an insight into what price things are going for and how agents operate. Open homes can be a great place to hear all sorts of things about a property they can also show you the modus operandi of the selling agent.
- Do your Price Research – Researching what a property is worth forms the foundation of how you go ahead and negotiate. It is imperative that you understand value. This can be very tricky for the untrained eye and with the new underquoting laws being introduced it’s the very reason using a buyer’s agent may well be a necessity from now on.
- Assess the Situation – Once you have gathered intelligence and done your price research, you then need to know what is possible. So many buyers miss this opportunity! Instead of going directly to the agent buyers ask all their friends and family what they should do. This is not recommended. I suggest contacting the agent and asking them how they deal with multiple buying scenarios or whether or not they will take an offer prior to auction. This means that you am not going in blindly and that you are weighing up all possibilities. In a cooling market it may not be necessary to go in with a high offer prior to auction. You may want to take your chances and go to auction depending on the outcome of the last few steps.
- Buying Prior to Auction – If you are going to buy prior to auction then you need to have done all the steps leading up to this point. We use a checklist that ensures that everything is done and thought about. It is not until you get to this point that you’re ready to discuss price with an agent. I see and hear of many buyers giving verbal offers or offers on the email. You should never do this when talking price. Once you have started talking price you want to be in a position to exchange very quickly.
- Buying at Auction – There have been many times that I have made a call and decided to go to auction. In a cooling market it may be the way to go for various reasons. Sometimes it’s not the other buyers you are bidding against but the vendor’s expectations. Recently I was looking at a property on the North Shore and having completed my price research I realised that the vendor was overpriced. I took a punt and decided to go to auction on it. The property was passed in well below my client’s budget and we bought it on the night for $220,000 less than my client’s were prepared to pay.
- Walking Away – We never say that you ‘miss out on a property’ we say that you are ‘walking away’. If you are going into auction or negotiating prior to auction it is extremely important that you set a budget and have a walk away price. This ensures that you don’t end up having buyer’s remorse and you don’t overpay. I have recently been in this situation on a property that I was negotiating on for a client outside of Sydney. My client set a budget and when I started the negotiation the agent just pushed too hard, so I walked away. Three days later I got a phone call to say the other buyer had pulled out and if our offer still stood we could buy the property.
By following these steps in your next purchase you will ensure that you are not going into a deal blindly but giving yourself every opportunity to buy well. The advantage I have as a buyer’s agent is that I can expedite these steps.
If you want to learn more about buying in a cooling market please get in contact with me. Call me on 0425 221 226 to make it happen.