Common mistakes by real estate buyers.

Many of our clients come to us after a string of disastrous attempts to navigate the property market themselves. Here are some examples of common mistakes that we come across.

• Giving the selling agent too much information. Putting you at a disadvantage when negotiating.
• Not giving the selling agent enough information. How many people have missed out on a property because the agent did not know they were interested? The art is in knowing what to say and when.
• Panic in a rising market and buy foolishly. As Louis Christopher said last week, “Remember lemons are very hard to sell in bad markets." But we see plenty of them selling at the moment.
• Panic in a rising market and don’t buy at all. Of course the market will level off at some stage, but how much will prices rise before that happens?
• Keep increasing their offer without a counter-offer from the vendor. This is not the way to negotiate with an unrealistic vendor.
• Leave too much time between getting an offer accepted and being ready to exchange contracts. And leaving the door open for another buyer to snap it up.
• Allow the auctioneer to create a rhythm. Before you know it you have bid over your limit.
• Let the fact that other people are bidding confirm what the property is “worth”. Instead of doing your own research.
• Believe what the agent is quoting for a property. Buyers largely determine what property sells for in this market and there aren’t many that tell the agent what they are prepared to spend.

There are many pitfalls for the unwary and the weary. And it is so easy to get caught up in the general frenzy and lose sight of what represents value for you.

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

Why out-of-towners need expert real estate help.

Here is a little story about buyers from Brisbane and buyers from Melbourne trying to secure property in Sydney’s heady real estate market.

Just before Christmas last year we had a client come to us after finding a property they liked in Rozelle. These buyers had recently moved to Sydney from Brisbane and, although renting in the area, had yet to come up to speed with the local dynamics of this market.

This particular property had ample internal accommodation, double parking and city views, so it was easy to see why it appealed to our clients. HOWEVER, it was on a busy corner, lacked privacy, had limited usable outdoor space and was neither contemporary nor period in style. In short, this was a property that would be difficult to sell in a “normal” property market, particularly as it was of a style that generally does not appeal to Balmain/Rozelle locals.

After evaluating the property, we advised our client that $1.7M was “top dollar”. It had, in fact, just passed in at auction with a vendor bid at that very figure (and two other offers had apparently been made under that figure), however the vendors were hoping to achieve $1.8M. The agent reported to me that the vendors would accept $1.785M and I expect there would have been further room for negotiation if our clients were prepared to pay over $1.7M, however my clients decided to let the property go.

Christmas came and went, then suddenly we hear that the property had sold for $1.8M! A little investigation revealed that the purchasers had a very similar profile to my clients: they were of a similar age, recently moved from Melbourne and also renting in the area. The difference? Our clients had expert advice and avoided paying too much for a property that does not appeal to local buyers. If the Melbourne people had engaged us, they would have saved a minimum $15K – and probably more.

Postscript – our Brisbane people have since purchased a lovely double-fronted weatherboard in Rozelle at a much fairer price! Precisely the sort of property that will be easy for them to sell to a Balmain/Rozelle local when it comes their turn to put it on the market.

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

How to decide how much to pay for a property.

As real estate agents, we have a requirement under the Property Stock & Station Agents Act to undertake a thorough analysis when determining what purchase price we recommend a client pays.

There are a lengthy list of factors we take into consideration in order to comply with the Act. Some of which are:
• A detailed analysis of recent sales
• Assessment of the factors that may affect the price people are willing to pay for this property in the current market.
• Is it a property that will attract buyer interest if you need to sell it in a flat market?
• Is there an obvious way that you can add value?

However, there are also factors that are individual to every buyer. For instance:
• How long have you been looking for? Is this the only property that you have found in 12 months that suits your requirements?
• What is your timeframe – own it for 5 years then upgrade, or is this your 20 year home?
• Are you an investor or an owner occupier?

Sometimes you need to pay a premium for a property that is going to suit your needs better than anything else that is likely to come onto the market in the near future.

Sometimes, however, it is folly to pay a premium for a property that is highly likely to drop in value when the market levels off. Knowledge is power and the more you know about the suburb you are buying in, the better decision you will make.

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

To buy or not to buy, that is the question.

So, the market is positively boiling and you don’t want to overpay for a property that is going to drop in value once official interest rates hit 7.5% or 8%? So, you decide to sit on your hands and wait until the market drops.

Right strategy? Or costly mistake?

The answer is, like everything in property, not straightforward.

Firstly, the decision to wait really hangs on the timing of the next market slow down. We all know it will happen, but when? Many economists are suggesting that we will experience strong growth for the rest of 2010. If this is the case, then there is no point waiting for prices to gain another 10%+ before easing off a little – get in the market now and enjoy some capital growth!

Or, if the Reserve Bank does decide to rapidly increase interest rates sooner rather than later (though some macro environmental forces seem to be keeping the brakes on its plan to return rates to “normal” levels) , those who buy now may find that they have bought at the peak.

An essential component to this decision making process has to be your time frame. If you are looking to buy a property and renovate for a quick turn-around, then riding the property cycle is extremely risky – but get it right and it could be very profitable. If you are buying an investment for the long term, then as long as you are careful that you buy a quality property and do not get caught up in the current buying frenzy, you should be able to ride out future peaks and troughs in both the sales and the rental markets (assuming of course that you have not borrowed up to the hilt).

Lastly, if you are buying your “20 year home” you might find that suitable properties are few and far between. Your decision whether or not to buy really depends on when you find the right property. If that is now, then pull out all stops and go for it – depending on what you are looking for and where, another may not come up for another 6 or 12 months!

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

Buying off the plan or brand new

When buying a brand new apartment or townhouse the thought of being the first to live in a property can be pretty tempting. But what are the pitfalls?

History is the often the best predictor of future performance when it comes to property values. So it will be hard to gauge which properties and developments are likely to offer the best growth.

Here’s what else you can’t tell with a brand new building:
• Quality of the build (the faults will not have yet revealed themselves)
• Quality of finishes and the way they will wear
• Natural light (unless it is complete)
• Future warranty claims and possible legal battles
• How the building will be accepted/regarded by buyers in the long run
• How tightly held the building will be
• What percentage of apartments the developer will hold onto and whether they will flood the market in 5 years time

You may find you get better value in a nearby building which is only a few years old…

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

Image courtesy of freefoto.com

A rising market is not the time to upgrade!!

Look at this scenario…

This time last year, you believed your house was worth $700,000. Now, prices in your suburb are reported to have increased by 10%, which makes your home now worth $770,000. You have just had a promotion and are keen to climb the property ladder. The trouble is that your next house, having been worth $1,000,000 a year ago, is now also worth 10% more - $1,100,000*. So, if you upgrade now, you’ll be $30,000 worse off than you would have been last year, plus the extra stamp duty. You will be better off when the market finally slows down…

* assuming you are looking in the same area or one with comparable sales growth.

If you would like more information on buying property in Sydney go to www.gooddeeds.com.au

Image courtesy of Luigi Diamanti http://www.freedigitalphotos.net/images/view_photog.php?photogid=879

A rising market – time to downsize!!

Look at this scenario…

This time last year, you believed your house was worth $2,000,000. Now, prices in your suburb are reported to have gained 10%, which makes your home now worth $2,200,000. You have just decided to retire and take on some consultancy work. The good news is that your next house, which would have fetched $1,000,000 a year ago, is only worth $100K* more than it was back then – now $1,100,000. So, if you downsize now, you’ll be $100,000 better off than you would have been last year and certainly better off than if you wait for interest rate rises to take effect and price growth to slow again. Time to jump!!

* all things being equal, which may not be the case if you are looking in a completely different area.

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

Image courtesy of Michal Marcol http://www.freedigitalphotos.net/images/view_photog.php?photogid=371

Can you still buy something close to Sydney's CBD for under $500,000?

Last month RPData released a report listing median house and unit prices in Sydney. Surprisingly, there are two suburbs within a 10km radius of the CBD where you can still buy a house for less than $500K – Sydenham & Tempe. You just have to put up with a bit of aircraft noise…

You have a lot more options if you are wanting to buy an apartment. Due to an abundance of 1 bedders and studios, the City of Sydney Council area has the highest number of suburbs (20 in total) where unit prices are under the $500K mark. A further four suburbs can be found within the North Sydney local government area (LGA) and two each in Leichhardt and Woollahra LGAs.

The opportunities are diminishing, however as property values continue to rise, so how much longer we will have the chance to buy anything under $500,000 close to the CBD is anyone’s guess… Only yesterday, an article in the Sydney Morning Herald predicted further rises – and the median house price for Sydney is now $607,000, with the median unit price still under the half million mark at $457,000.

Click on this link to read that article: http://www.smh.com.au/business/house-prices-to-rise-further-but-theyre-worth-it-says-rba-20091125-jrta.html?autostart=1

For more information on buying property in Sydney: http://www.gooddeeds.com.au/

Fellas, don’t let the women to do all the house hunting!

This is a common scenario we come across: two people are buying a property together and one does all the legwork while the other takes on the role of devil’s advocate. This is often, though not always, the woman in a heterosexual relationship - we have also come across other partnerships suffering from this same imbalance.

Does this sound familiar? After some lengthy research and time spent inspecting numerous properties, she has educated herself about the market – enough to identify a property that she thinks they should buy. Then he takes take a look, says he doesn’t like it, dismisses it quickly, showing no appreciation for all the hard work that has got her to that point. Then she has to go through the whole process again as he becomes educated about the market and what they can buy for their money. By that time, prices have gone up and they can no longer afford what they originally wanted!

If you aren’t going to engage a professional to do the work for you, you really need to spend equal time in the property hunt and have a clear idea of what you want and what compromises you are prepared to make.

For more information on getting help to buy property: www.gooddeeds.com.au

A political writer gets it right about property.

It is very rare that a political reporter makes what I regard a valid and pragmatic point about the property market. However an article in last Sunday’s Sun-Herald by Lisa Carty about Sydney’s suburban dwellers complaining about lack of public transport sure made sense. Following are some of the points that I felt most relevant to buyers:

“The people who buy in the north-west [of Sydney], and the south-west for that matter, are able to buy a family home for far less than those who choose to live closer to the city.

“People who choose to live on the fringe pay much, much less for their homes than those who choose a smaller place – even a unit, God forbid – with better services, closer to the city.”

“The choice for Sydneysiders is stark – you can hold on to your suburban dream and the money you’ll save on real estate you’ll spend on transport.

“Or you can spend a lot more money to buy closer to the city but pay comparatively little for transport, and save yourself hours on the bus or in the car.”

“But the fact is no one made them move to the frontier – it was a choice they made. Sadly, it seems many of them underestimated the real costs, in time as well as money.

“In a perfect world, everyone would have access to great public transport but in our imperfect world, only the filthy rich live without compromise.”

Couldn’t have said it better myself.

Contact me at info@gooddeeds.com.au if you would like a copy of the whole article.

For more information on buying property in Sydney http://www.gooddeeds.com.au

Home buyers - Do the opposite of what everybody else is doing.

Last year at this time the market was as flat as a pancake and we were recommending people BUY BUY BUY, but what did the vast majority of buyers do? Sit on their hands. Here are some quotes from our prospective clients at the time.

“It is such a transitional market right now, I think I’ll wait and see what happens”
“There is so much uncertainty in the market, I think I will leave it until early next year unless something changes dramatically.”
“I doubt the market will be rising quickly, and there will be more product next year than right now.”
“I've put my plans on hold for a bit because the market will probably drop even further.”

Do you think these people regret not taking advantage of a buyers’ market?

Now everybody seems to be buying and (maybe it is bad for business to say this but…) maybe we should now be sitting on our hands. Our goal at the moment is to purchase AT market value, not over it and we are advising clients to be very wary of paying over the odds at the moment.

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

How to handle auctions.

With such high clearance rates at the moment (reported to have been over 70% for three months running), more vendors will be choosing to auction their homes rather than offer them for sale at a price. And competition can be fierce when there is little quality stock out there as well as first home buyers in a rush to buy before the end of September.

We speak to so many buyers about auctions – most hate them – and there are a myriad of opinions on how to best handle them. When bidding for our clients we take into account many variables including who the auctioneer is, who the selling agent is and how clever they are at auction negotiations, how busy the inspections were and what the vibe was, information gleaned from the selling agent about vendor motivations, likely competition levels and, of course, what the property is worth. Here are just a few of our ideas – remember that every auction is different and one technique will not be useful in all scenarios.

Have a clear idea what your budget is and what the property is worth to you. This is the golden rule. Do not deviate from this and you should not get drawn into a bidding war that will result in you overpaying.

Try being the first bidder. This goes against conventional wisdom, which is not to bid until the property is called “on the market”. You have a better chance of controlling the auction if you start it with a strategic bid. But that is the key – this opportunity must not be wasted.

Don’t wait until the property is called “’on the market” to bid. How is it ever going to reach reserve unless people bid?? Seriously, we have seen plenty of properties sell under the reserve at auction after a bit of frantic negotiation between agent and vendor. And not all auctioneers will call the property “’on the market”, so you need to be careful here.

Stare down your opposition. A confident stance can do wonders in out-psyching other bidders and making them think you have bottomless pockets. We see many would-be buyers stop bidding prematurely because they believe the other bidders will stop at nothing.

The highest bidders right to exclusive post-auction negotiation is only a courtesy. The agents and vendors are able to negotiate with any interested party once the property has passed in. They will usually offer the highest bidder the first right of refusal, however there may be other parties suddenly making offers. By leaving the negotiations until after the property has passed in often vendors harden their stance and a good buying opportunity could have passed you by.

For more information check out our website: www.gooddeeds.com.au

Which Sydney suburbs are the best places to live?

Recently there was an article in Domain titled “Why we live where we live”. The article didn’t specify which suburbs are “best” but the first person to post a comment named Mosman, in Sydney’s Lower North Shore, as their number one suburb. This prompted an avalanche of comments in which Mosman was given a caning!

The following list is by no means the result of a reliable survey but, for what it’s worth, these suburbs were also mentioned as great places to live by other respondents to the article:

Eastern Suburbs – Kings Cross, Darling Point, Elizabeth Bay, Botany, Alexandria, Bronte, Vaucluse (2 mentions!!), Watsons Bay and the postcode 2030, which covers Vaucluse, Watsons Bay, Rose Bay North and Dover Heights

Northern Beaches – Dee Why, Harbord, Narrabeen, Manly

Inner West – Annandale, Summer Hill, Balmain

North Shore – Roseville, Balmoral, Chatswood

St George – Beverley Park (2 mentions!!), Oatley

Northern Districts - Carlingford

Looks like the Eastern Suburbs tops this survey. The one thing everybody seemed to agree on is that the best place to live really depends on what life stage you are in. Common sense really…

Click on this link to read the article and the comments it provoked for yourself: http://blogs.domain.com.au/2009/07/why_we_live_where_we_live_pick.html

For more information on Good Deeds Property Buyers: http://www.gooddeeds.com.au/

Location, Location, Location - how to choose a suburb to buy in

If you are buying a property to live in, the factors affecting suburb choice are markedly different from those involved in deciding on an investment location.

Some of the key factors in choosing a location for your home include:
· Your local knowledge – are you already familiar with the area? Do you know people who already live there?
· Availability of transport to work – good roads or train/bus links.
· Proximity to good schools – particularly if you are relying on the public education system.
· Lifestyle – what is close by for you to enjoy during your leisure time?
· Affordability – the bottom line…

When advising investors, we encourage them to consider the following:
· Buy as close to the CBD as you can afford – you can usually rely on consistent demand from tenants.
· Good transport links – especially train.
· Walking distance from cafes and shops – tenants need reasons to live there other than just being close to work.

For more information on property buying, see our website: www.gooddeeds.com.au

Strata levies - low levies can be a false economy

Sometimes when pensioners or investors dominate the ownership of a building or complex we see historical pressure to keep strata levies low. The discretionary portion of the levy is the sinking fund contribution, so when building issues arise, or upgrades are required, there is no money in the pot. So, what happens next? Either the issues are ignored, the building begins to look shabby, or a special levy is struck. And, if you are interested in capital growth, all these outcomes can negatively impact the value of a unit or townhouse.

It is now mandatory for owners’ corporations to undertake a 10 year maintenance plan and levy forecast. Those buildings with low levies will face sharp rises if the recommendations in their report are adopted. Those buildings that have been responsible in their financial management and avoided the temptation to keep levies too low will see much more modest increases.

For more information on buying property: http://www.gooddeeds.com.au/

Strata reports - often a long list of repairs is a good sign

When you read a strata report that documents a litany of building issues it can be easy to be scared off a property. And sometimes it is a warning of impending inconvenience and cost. However, it can also indicate a pro-active strata manager and an owner’s corporation that cares about maintaining their investment. In addition to the list of problems, look for a concerted and continued effort to address the issues. And keep an eye out for potential special levies. This is a sign that there has not been sufficient sinking fund levies in the past to cover these expected repairs.

For more information on how to avoid pitfalls when buying property: www.gooddeeds.com.au

A shameless plug… why use a buyer’s agent?

Here are just a few reasons:

You don’t sacrifice your weekends and family time.
Searching for a home can become all-encompassing and takes over your life!

We have access to unadvertised listings.
Though, to be honest, motivated vendors are those who pay for advertising. Unmotivated vendors want more than their property is worth – however your perfect property might just be owned by such a vendor and this could be the only way you are going to find it…

Selling agents often give us information that they won’t share with the average buyer.
Our lack of emotional involvement means we won’t have a “knee-jerk” reaction. Also, selling agents know that a buyer’s agent understands the sales process and therefore comfortably share information that can give our clients a distinct advantage over buyers who represent themselves.

If you'd like to know more, go to www.gooddeeds.com.au.

The magic question – what will happen to the market after September?

Ahhhh, if only I had a crystal ball…

For those who haven’t heard, the Federal Government has announced that it will phase out the First Home Buyer Boost, starting with a 50% reduction to $3500 after September 30th 2009 and ending completely on December 31st 2009.

From my observations of recent buyer behaviour, I believe the bonus has motivated many people who were simply thinking of buying to actually get out and buy. However, a lot of first home buyers I speak to are happy to wait till after the bonus starts to shrink before they buy. So I am not sure we will see a sudden decline of buyers out there after September.

On the bright side for buyers, there is usually a lot more property available as vendors often decide to list their properties in spring. Increased stock levels usually have a dampening effect on price growth.

Even if the first home buyer segment of the market grinds to a halt, the flow-on effect will continue for some time as many of those sellers are now buyers upgrading to their second home, and so on.

Overall, it is hard to speculate as there are so many other factors in play at the moment, for instance, low interest rates, talk of recession and job insecurity… Just try to get two economists to agree on the property market outlook!