Three familiar property heartaches and how to avoid them

Three familiar property heartaches and how to avoid them
Three familiar property heartaches and how to avoid them

Guest observation

Spring is here and with it, an air of excitement about Melbourne's residential property sector.

History tells us market activity will be reinvigorated in the coming weeks with a surge of properties hitting the market mid-October. The choices for buyers will be bountiful, but, be warned, not everyone will wind up a winner this spring.

Buying and investing in property can be tricky business. Here are three simple tips to avoid the most common heartaches when buying during the frenzy this spring.

Don't pay too much

Remember, price doesn't necessarily equal value. When buying property don't take the listing price as gospel. It's a real shot to the heart, and the ego, to find out you've overpaid for a property because you failed to do your research, or got caught in the emotion of the purchase. Research is the key to negotiating a price that is fair for both you and the seller.

Compare the property with recent sales of similar properties, or, if it's particularly unique or unusual, obtain a sworn valuation for greater certainty.

Competition will be particularly strong for family homes in Melbourne's middle ring suburbs, while $1 million plus homes and established one and two-bedroom apartments in the city's inner suburbs will be a popular choice among professional households and families.

Don't miss out

There's nothing more disappointing than missing out on a property you have your heart set on. This can be avoided to some degree by ensuring the property is the right match from the outset. Firstly, is the property's upper price limit within your budget and how much are you willing to pay for it?

While it's important to feel excited about a property purchase, don't allow emotion to impact your perception of value.

It's also important to realise not all successful purchases are just about price – offering the winning bid is also about strategy. For example, stamp duty concessions for first-home buyers, which from 1 September save buyers 50% or up to $15,535 on stamp duty costs, cut out at $600,000.

Savvy buyers who recognise this limitation know that, with a single dollar more, they can knock first-home buyers out of the race, reducing their competition and improving their chances to tender the winning bid.

Also, consider what conditions of sale will make your offer more appealing to the seller, like an unconditional offer, a higher deposit or a shorter or longer settlement period, depending on the seller's requirements.

If your purchase is for investment purposes you could also rent the property back to the current owner in need to sweeten the deal.
Buy an asset, not a liability

Residential property is increasingly complex with many things to consider to select a property that satisfies both personal and investment parameters.

Generally, the most influential factor driving performance is location. Proximity to schools and employment, transportation – including arterial roads and reliable public transport, and infrastructure such as shopping, culinary and recreational facilities is of particular importance to the majority of would-be buyers.

But, while being located within walking distance or a short commute to the above can be beneficial, being too close can be detrimental, due to noise pollution and traffic congestion.

Armed with the right knowledge and attitude, discerning buyers will uncover some of Melbourne's best performing properties this spring, reaping the rewards of their careful selection for many years to come.

Greville Pabst is CEO of WBP Property Group.


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