By Rich Harvey, CEO & Founder, propertybuyer.com.au
No one likes to compromise on a dream… and the dream of many property buyers is to find the perfect home at a bargain price.
However, Australia’s property market is already highly competitive, so this aspiration of a discount-cost creates a problem, a disconnect between what buyers think they can get for their budget, and what actually exists in the market.
The issue is perhaps most apparent for what I like to call “time warp” buyers. These are people who have been out of the market for years. On their re-entry into real estate, I find these buyers have unrealistic expectations of what their money will now purchase. They base their buying beliefs on what they know about bygone markets, not what’s happening today.
Australian property market myths often fuel unreal price expectations, hand-in-hand with a conviction that a great bargain is just around the corner.
But there’s a big difference between savvy searching for the right home and waiting eternally for an unrealistic dream. Buying sooner for a fair price will always trump waiting for a house that probably doesn’t exist. Sometimes, it’s even worthwhile paying a bit more for an ideal home, especially in a rising market.
As someone who has been in the property buying business for a long time, I know dream homes selling for the perfect price are rare. Even if you do find a bargain property, it can cost you more in the long run than a home you bought at the right figure.
Here’s why.
A cheap house will be easy on your bank account for a reason, and it’s often because there is something wrong with it. An expert buyer’s agent team, along with a qualified building inspection, can likely detect such problems. But major, expensive property issues can go unnoticed by the average home buyer,, and that can quickly turn a “bargain” into a very expensive buying mistake.
Yet another reason to choose realism over romanticism when house buying is that this purchase will likely be one of the largest and most important financial milestones of your life. You are probably going to hold onto it for many years and across multiple property price cycles. This means even if you did pay slightly above the odds for the right type of property, long-term market upticks will make it seem “cheap” in the future.
Property purchasers who are convinced that a bargain is imminent are staying out of the market, failing to commit and caught in a loop of inspections and rejections. I’ve seen some purchasers spend years making no decision to buy – trying to take a few more dollars off their next acquisition. Unfortunately, during that time, they have lost out on tens of thousands in capital gains. All wealth they could have acquired if only they’d bought sooner for the right price.
Being a property realist also reduces the emotional burn out that can come from multiple unaccepted offers and endless open homes.
I get it. Every buyer wants to grab a bargain, regardless of whether they’re buying shoes, a washing machine, or a house. But you also want the best, and most, bang for your commitment both now and over the long term, and a bargain doesn’t always necessarily give you this.
There’s nothing wrong in wanting a bargain-priced dream home. Realism isn’t nearly as fun as fantasising about a perfect property. However, the fact remains that best time to buy a house is when you find one that meets your needs, has great long-term fundamentals, and is at a fair and reasonable price for the current market.
In fact, in highly competitive markets where values are rising quickly, I have even advised some clients to pay slightly above what might normally be considered current market value to beat out the competition. Why? Because I know that in a very short time, the home’s capital gain will drive its value even higher, and the other buyers who missed out will be still hunting and living in regret.
The key to knowing when to buy is having exceptional market intel. This involves doing extensive research and comprehensive due diligence. Understanding not only the market overall, but also the specifics related to the price sector, property type and location you are interested in.
You must be realistic about what your dollar can secure in your specific market, and how well that meets your essential needs in a home or investment.
All of this is time-consuming and exhausting, unless you rely on an experienced, independent professional like our team at Propertybuyer. We understand how important your property dreams are, and we have the local knowledge, skills, networks, experience and data details to make them a reality.
By analysing your preferred property’s market value realistically, we can ensure the best possible deal and avoid typical bargain buyer downfalls. It’s the best way to ensure you get past the endless loop of exhausting property fantasy and enjoy the solid reality of owning your next property sooner.
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