August 1, 2019 | Latest insights for buying Melbourne property in 2019
Most property economists believe the worst of the housing downturn is over, with a stabilisation of the Sydney and Melbourne real estate markets and property prices now leveling. The Melbourne property correction has seen the median price in Middle Melbourne sitting at less than $900,000 for the first time in almost three years. This has created ideal opportunities for those wanting to ‘trade up’ into more coveted Middle Melbourne areas and obtain larger accommodation.
A major factor contributing to the improvement of Melbourne’s property market is the significantly lower stock levels with 25% fewer properties for sale compared to this time last year. There has also been many incentivizing announcements and changes made with the recent Federal Election, Major Bank’s easing the assessment criteria for new loans, two interest rate cuts and future tax cuts planned.
Assuming you are in the market to buy a Melbourne property right now when stock levels are so low (especially A-Grade real estate), you need to work with whatever tools you have available. Our team at Beckett Property have developed some tips to help you buy a property in a tightly held market and this is based on our extensive experience as leading Buyers Advocates in Melbourne.
Before beginning your search, you must build a road map first:
Property – Identify all the features you require in a property that will suit both your immediate and future requirements. This might include the style/era, number of bedrooms, bathrooms, off-street parking, dwelling size, orientation etc. Put these features into two separate columns which are titled ‘must have’ and ‘like to have. This will help you to prioritise what is most important to you and what you won’t compromise on.
Position – Is the property accessible to your lifestyle, friends, family, recreation and work? Where do you see yourself and your loved ones creating great memories? Once you have devised your ultimate list, you then need to research whether or not your budget can facilitate it. If not, you must work out what adjustments need to be made and possibly start considering other regions.
Price – More often than not, the dream house we want and the house we can actually afford are two different ideals. Be objective and realistic about your budget and what you can afford. Get an understanding of the prices in the area by finding out the suburb median price, attending as many inspections/auctions as you can and analysing recent comparable sales data.
Although there are a number of resources that you can use to find property listings such as Realestate.com.au, Domain and Real Estate View, you need to liaise with Real Estate Agents and Buyers Advocates as they are the greatest source for off-market (non advertised) properties. In a tightly held market, this is vital.
Ask the Selling Agent strong and qualified questions to help you assess the competition on the property;
- Why is the property for sale?
- How long has it been on the market for?
- How many people have attended the OFI’s during the campaign?
- How many people have conducted second and third inspections?
- How many building inspections have been conducted on the property?
- What terms have been requested by other parties? (deposit or settlement etc)
- How many buyers are you expecting to compete?
- Are you accepting offers prior to auction?
There are multiple methods of sale available in the current market place. Your first step is to identify the exact method of sale so you can structure your best acquisition strategy:
- Understand your limit and stick to it – do not get carried away during the emotion of the auction.
- Stand in a position where you can assess your competition and you can also be seen by them.
- Do not fidget or look around too much as this shows signs of nervousness and inexperience.
- Be confident and project your voice when bidding.
- Large, opening bids are often good to cut the emotion out of the auction.
- Counter bid immediately. This will ensure that the other person feels you are in control and that you are definitely there
to buy the property.
- Read the momentum of the auction, look at your competition and gauge if they seem nervous or not.
- Raise and decrease the increments of bids when necessary.
BUYING MELBOURNE PROPERTY BEFORE AUCTION
- Making a calculated ‘uncomfortable offer’ forces the Selling Agent to second-guess whether they will receive such an offer
if they continue with an auction. Be careful as you do not want to pay well above the property’s market value doing this.
- Timing is essential. Offers too early into a campaign will most likely be rejected due to the Selling Agent and Vendor
feeling they haven’t tested the market enough. Submitting an offer in week 3 or week 4 of the campaign is more than likely
your best chance.
- Make your offer subject to a deadline (24 hours for example) to ensure it’s taken seriously, and that the vendor cannot
revisit the offer should nothing higher come up.
- Make an unconditional offer to strengthen your position but make sure all your due diligence is complete beforehand
(mortgage pre-approval, building inspections etc).
- If your offer is rejected by the Vendor, request an explanation as to why as this will help you to assess your competition.
- If your offer does stop the auction and is going to be accepted by the vendor, be prepared for the Selling Agent to leverage
(shop around) your offer with other parties to try get them to pay a higher price.
- Negotiate the first right of refusal as part of your offer so you have a second chance just in case your offer is beaten by
The benefit of a private inspection is the ability to connect with the property in a more meaningful way. Here’s some property buying advice if this is the method of sale.
- Ask the Selling Agent what the terms of the sale are – is there a closing date and time? Are they offering the first right of refusal? Does each buyer have one chance only?
- Be polite, courteous and clear with your dealings with the agent. They are the conduit between yourself and the seller and it is in their best interest to see the sale go through. Keep them on your side.
- Make an unconditional offer to strengthen your position but make sure all your due diligence is complete beforehand (mortgage pre-approval, building inspections etc).
- Ask the agent to give you an indication what level the competition’s offers are.
- Submit your offer right before the cut-off time lapses as this way most of your competitor’s offers would have been submitted and you can work with the agent to try find out what price level your competition is around.
CONSIDERING BUYING PROPERTY IN MELBOURNE?
It is hard work buying a property under any market conditions and people often don’t have the knowledge, experience or time to invest in buying the right property. Plus, it’s easy to fall into the trap of making decisions based on emotions or conditions rather than based on a well thought out plan. This is where Buyers Agents can add significant value to the process.
If you are considering buying Melbourne property, consider Melbourne’s leading buyers advocate – Beckett Property; to provide you with the sound advice you need to make confident decisions. For a free consultation provide your details below and one of our expert advisors will be in touch.