Tips for buying in a hot market

The property market is changing all the time. New selling conditions confront – and confuse – buyers on a daily basis. To be successful, purchasers must overcome all kinds of strategic challenges, with those best able to read the tea leaves well placed to win the deal.

Buyers’ agents go all over their stomping grounds, so they have a wider view of the market, without preconceptions or emotional attachment to any particular property. Ideally, they never sell property – only help buy it - so they are independent. And, not being paid by selling agents or developers, they have no conflict of interest.

Property Observer asked a few for tips on buying in a ‘hot’ market.

"In a hot or cold market the key is to be prepared, but in a hot market you don’t have the luxury of time,’’ said Rich Harvey, managing director of Sydney buyers’ advocate Propertybuyer, which he founded in 2001.

"For example, in a hot market you might not have time for multiple inspections, or even to call your wife to arrange to get her over for a quick inspection.

"To buy successfully it’s important to have all your ducks all in a row. You have to know the current condition of the market and do your research extremely well.

"This includes having a solicitor or conveyancer ready to act promptly, with documents prepared, and you have to have had the property thoroughly inspected by various trades experts – such as for plumbing and electrical faults, termites and building permits.

"But the most important thing is to have clear finances in place so you can make an unconditional offer to the vendor. This will greatly improve your chances on the day.’’

In Melbourne, Frank Valentic, managing director of Advantage Property Consulting, based in the Elwood, St Kilda  and Ormond areas, said buyers should stick to a budget but be prepared to push themselves an extra $10,000-$20,000 to ‘’beat the competition’’.

"Buyers should avoid the trap of getting over-emotional in negotiating or bidding by having a family member or professional assist them. They should also make offers prior to auction to get around any emotional issues.

‘’An important tip is to have finance pre-approved in writing and a full 10% deposit ready so as to be able to make unconditional offers.’’

Mr Valentic said buyers’ agents had access to off-market opportunities and ‘distress’ sales creating more opportunities.

"Hopeful buyers should do their due diligence by attending auctions to get a good feel for the market and a feel for what a property is worth. They should stay in touch with local agents in their preferred areas so they are the first to learn of new listings.’’

Over in Perth, Gavin Hegney, executive chairman and founder of the Hegney Property Group, can draw on 30 years’ experience in Western Australia’s property industry. He’s seen three booms, three busts and three market cycles, so he knows his onions.

"My first thought is that buyers shouldn’t be aiming to buy in a ‘hot’ market. However, if they must, it would be best to look for the reasons behind the spike in prices in one sector and try to anticipate where prices will rise nearby - then take advantage.

"For example, why pay more for one type of product in a ‘hot’ suburb when, with a realignment of their thinking, they could buy a different type of property nearby, and reap the rewards later.’’

Mr Hegney said buyers should try to quantify what a property is really worth – not what they are being asked to pay for it. ‘’If people know what a property is worth they should have the confidence to buy in a ‘hot’ market.’’

He said buyers should also be able to anticipate rising prices near pending developments, such as around the Barangaroo South precinct on Sydney harbour. They would then benefit from any ‘hot’ market the big development later generates.

Ben Reid, of Vendor Advocacy Australia, said too many prospective buyers went in ‘green’ and did not have a clear understanding of what they were buying and where to get it.

"You’ve got to do your research,’’ he said. ‘’Too many go into a suburb with no idea of values. It really takes two or three months of actively looking and searching in an area to be educated enough and to get a good idea of market conditions.

"My overall No. 1 tip is to look for the best location, location, location. Also, look for property in consistently performing suburbs, or those close by which will benefit from that proximity, such as Thornbury near Clifton Hill or Bentleigh near Brighton in Melbourne.

"Stay away from property on main roads, near power generation sources or tunnelling, such as around the new East-West Link."