DURING the past six months the market has moved at a fast pace in many parts of southeast Queensland.
Interest from buyers is slowly moving up the price ranges and only last week Brisbane’s highest ever residential sale price was achieved in the inner city suburb of Kangaroo Point.
But there have been some bumps along the way and some buyers in the market are making the journey much harder than it needs to be.
Their eagerness to get into the market is coming at the cost of preparation.
This results in a clunky sales negotiation and many buyers miss out simply because they are ignorant about the sales process. While the vast majority are getting their advice from well meaning family or friends, the rules and market are ever changing, so subsequently this advice can be outdated and very costly.
Here’s two basic tips:
Firstly some buyers seem to be missing the obvious advantages of buying at auction. The transparency of bidding allows buyers to see and hear their competitors offers. This enables them to make informed decisions about whether they should pay more or let the property sell to someone else.
But they are hesitant because they’ve heard from someone somewhere to not bid until the property is on the market.
This is a terrible tactic — How can the property reach its reserve and go ‘on the market’ if no one bids?!
Further, some auctioneers don’t announce properties ‘on the market’.
You need to show the owner and the auctioneer you have an interest. In Queensland most auctions don’t offer the highest bidder any rights after the auction, they used too and they have rights in other states but not in Queensland.
So many auctions are paused and the highest bidder is told the price the owner will accept during the auction. This information is an excellent insight into their previously guarded expectation and it gives you the option to negotiate if you want too.
Someone once told me that a successful negotiator gets both sides to like each other. When buyers don’t bid, it sends the message that you’re a tactical buyer and that you won’t be involved in the owner’s event.
Subsequently the owner and the agent start working against you and in most cases that buyer will miss out. My advice is research the prices and auctions thoroughly. Attend as many auctions as possible, watch the strategies of the successful bidders. Talk to your agents — they won’t bite (we stopped biting around 1998).
They will give you an abundance of information instead to aid you in your decision making.
The other major area where I see buyers making errors is around their home loans. It doesn’t cost you any more money to get a preapproval, further it doesn’t cost you any money to shop around. However it can save you thousands to both have a pre-approval and shop your bank around town.
A buyer with preapproved finance can sign what is called a cash contract.
This is industry language and basically means the contract is not subject to finance. Owners and agents love these contracts, they mean less stress and more certainty. In my experience owners will take a lower price for a cash contract.
In relation to shopping your bank, many people are still under the illusion that their history with a bank means they get a good deal. That is rarely the case. Long family relationships with banks doesn’t guarantee the good rate or the great terms that it once did. Bank’s policies can sometimes make it impossible for them to compete in some suburbs, but without comparing them you won’t know whether you are substantially overpaying or you have the greatest deal in town. Speak to a broker.
There are many things you can do to improve your negotiating position, these two are free, simple and at the top of the list.
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