Don't leave your financial brain in neutral: A few traps for the inexperienced buyer

The best description for the market right now is BIG. Real BIG. Which is not abnormal for this time of the year, nonetheless, it feels bigger than the last few years.

BIG in all aspects:

• BIG deals
• BIG price
• BIG demand
• BIG supply

Is this much choice good or bad?

In many ways, as Westerners we are brought up to think choice means freedom and freedom means happiness. On that logic there should be a lot of happy buyers out there right now.

Are there?

For many buyers there is simply too much choice for them to act. What do we mean?

If you are new to the market and you have a softly/softly or analytical or cautious personality then quite possibly you are finding the Inner Melbourne market a bit daunting right now. Too much information, too many options to weigh up and too much.

There is a solution and that involves professional advice and a bespoke plan tailored to your real needs and wants. First step suggested would be to slash the number or options you consider and restrict the freedom of choice you apply to yourself. Wow, I’m practically a communist you say. Cutting back will help you, not hurt you, I promise.

Thinking Apartments

The resale apartment market is as strong now as it has been for many years and this is mainly due to the combination of the baby boomers losing their kids, agents knocking on doors offering incredible money and the continuing strength of the overseas Asian market.

We like apartments as lifestyle buys, however just because you’ve got money in the bank shouldn’t mean that you put your financial brain into neutral. There are a few traps for the inexperienced player.

1. What is the going price per square metre? Is it $8,000 or is it $12,000. Oh, the selling agent will let you know as it’s hard to find pricing. Are you crazy?
2. What is the size of the apartment? Oh, it feels like 250 square metres says the agent? Are you fair dinkum?

Even though we love buying family homes at auction it’s only part of what we do. We also buy apartments for clients in highrise inner Melbourne or low-rise suburban.

Five concepts to encourage you to get professional buying help

1. At 50 you have more years in the future than your working life in the past. This won’t be the last home you buy – in fact, far from it for many of you.
   
   
2. Some apartment types have historically had a lot lower growth than inner Melbourne homes – although this information is hard to find. Your nest egg needs to be protected.
   
   
3. A $3 million apartment that you value at $14,000 per square metre on new build rates as opposed to $11,000 resale per square metre rates means a $600,000 calculation difference.
   
   
4. An apartment that you accept as 210 square metre, but in fact measures up at 190 square metre, means an overpaying of $220,000 at $11,000 per square metre.
   
   
5. Most apartments are not transparently sold via auction, so it’s pretty easy to buy poorly and be $200,000 over value instead of buying well and being $200,000 under value. Do that a few times and come 70 you will be living well or living poorly. The only thing you had to do differently was get some independent, professional, buying help.

Another $1 million in your back pocket for free, due to a good decision. Even though you and I are getting older, $1 million should still mean something.