What opportunities does a slowing market offer buyers?

We are starting to see increased media accounts of slowing housing price growth, falling auction clearance rates and lower borrowing figures. Call me a cynic, but I often see these stories before we see any evidence at “ground level” of a slowing market. However, they often end up being self-fulfilling prophesies. As buyers start to read more negative property stories, they begin to believe them. Add this to a healthy dose of wishful thinking (haven’t we all been wanting prices to drop?) and we begin to see caution creeping into the market.

What happens when buyers are cautious? Usually the first thing we see is a fall in auction clearance rates. People suddenly no longer want to compete for property. We hear the phrase “we’ll just wait and see what happens.” Instead of deciding what they are prepared to pay (then bidding over their limit), the punters wait to see what price the vendor wants and then decide whether that represents value or not. So, if you are the only buyer prepared to bid at an auction, the power is actually in your hands to negotiate a good deal.

If a property is passed in at auction then advertised at a reasonable price, you can still see competition as buyers will react to a well-priced property. However, if it is perceived as being over-priced, buyers will not make offers. Then the property gets a stigma (there must be something wrong with it). Often these turn out to be great buys after spending a long time languishing on the market.

For more information on buying property in Sydney go to gooddeeds.com.au.

Why would an agent quote one price to me and something else to another buyer for the same property?

The language of real estate is ambiguous. This is due mainly to the fact that every buyer interprets information differently. Agents need to make a judgment call on how you are likely to interpret what they say before they say it.

Confused??

How much do you add on to an agent’s price guide? 10%? $50K? $100K? It is a personal thing and varies greatly from buyer to buyer. Usually the amount you add on is a direct result of your experiences in the property market. The agent doesn’t know how much you are going to add on, so he/she is going to quote the lowest figure they can get away with in order to increase the chance that you will think it is within your budget.

Now for the other buyer. The agent may know them better than you. This buyer may have missed out on another property sold by this agent. Maybe the agent has appraised their home and is familiar with their buying requirements. If there is more trust in their relationship the agent can afford to be more honest, hence a different price guide.

So, what is the solution? If you are not dealing with an agent where you have built up a trust relationship, you need to know your market. Do your own research and make up your own mind on the price.

For more information on buying property in Sydney go to www.gooddeeds.com.au.

Choose property that out-performs the median growth rate.

Many of our investor clients come to us looking to buy in the next “hot spot”. Many others are looking for proven locations with above average median price growth.

However, even in these “safe” suburbs, buyers can go wrong. In every suburb there are properties that perform above and below the median. The trick when buying property, particularly when the purpose is for investment, is to identify the traits that mean a property will at least match the median growth rate for that area.

Local knowledge is essential. For example, corner blocks may be favoured in one suburb and shunned in another. Or buyers in one suburb can be seduced by the charm of weatherboard cottages, yet in another location they are seen as sub-standard homes.

When buying in a sellers’ market, you will find that almost every property generates some level of competition amongst buyers. When the market cools, the only properties that generate buyer competition will be those that are capable of performing at or over their suburbs median growth rate.

For more information on buying property in Sydney go to www.gooddeeds.com.au.