By Rich Harvey, CEO & Founder, propertybuyer.com.au
As we all saw in 2020 and 2021, FOMO fuels hot markets. The Fear Of Missing Out delivered frenzied activity with double-digit value gains across most major centres.
But 2022 has shown us if FOMO fuels, then FOPTM cools. The Fear Of Paying Too Much has resulted in buyers fleeing to the sidelines with a raft of bad news causing many to keep their power dry and watch from a distance.
But what are the facts surrounding this slowing market, and how can you take advantage as a buyer?
When the “slow” turns to “go”?
A recent CoreLogic report about market peaks and troughs revealed some telling information.
Their data showed that over the past 40-plus years, the time it takes for markets to reach their low point ranges from one month to 8.4 months. Conversely, the period it takes for markets to recover from a downturn is between nine months and three years.
Put another way, when Australian property prices turn down, it's relatively short and sharp, while the upswing is longer and more sustained.
This also means when markets slow, there’s a window of opportunity in which to act. You want to purchase your property before everyone else realises prices are starting to swing back up. Buying during the downturn ensures the best possible capital gains.
I’d suggest that we are now firmly within that magic window of opportunity, but it’s going to close rapidly.
Five ways to take advantage
Here are five ways you can make the most of buying in this slower market.
1. Finance pre-approval
Being ready to jump when a great prospect comes along is a great way to ensure you get an excellent deal.
This is particularly true in slower markets. Sellers are most interested in buyers who are finance ready. They’ve already got their lending arrangements sorted and will be able to settle with a minimum of fuss. As such, vendors are usually more flexible on price and other terms if this sort of buyer puts in an offer.
Make sure you are one of those who are good to go with your loan so you can drive an even better bargain.
2. Be an active buyer
While others sit on the sidelines waiting to see if prices will fall further, you need to be on the front foot and getting active about your buying process.
For starters, set up alerts on your favourite listing portals so you know immediately what’s come onto the market.
Be sure to have multiple potential purchasing options on your books too. You might spot a few properties that meet your needs. Track them carefully and don’t be afraid to consider all possibilities when buying.
Having a few choices as a buyer makes you less desperate and more convincing when it comes time to negotiate terms on something that catches your eye.
3. Know your market values
Take an unemotional, analytical approach to market values by closely monitoring recent sales evidence in your area too.
By staying informed, you can see which price points are moving and which are stagnating.
Just like listings, you can track recent sales via portal alerts.
Another source of up-to-the-minute evidence is local agent websites and social media platforms. Most agents will happily report recent results on their social pages as it’s shareable content pointing to their successes.
Being up to date helps you spot a well-priced prospect as soon as it hits the market, so you move quickly.
4. Agent relations
Building relationships with key local agents ensures you’re among the first to hear about a potential deal.
By attending open homes and having conversations with agent, you not only pick up great market intelligence, you’re also on their short-list to call about new listings.
And remember – selling agents are crucial to your success, so always treat them with respect.
When an agent rings with post-open home follow ups, take the time to have a chat and let them know what you’re interested in. This can lead to being told about off-market/pre-market deals.
5. Drive a sensible bargain
While it’s a buyers’ market, that doesn’t mean you can “steal” any property that takes you fancy.
First up, ask lots of poignant questions of the agent to gauge the vendor’s motivations for selling. Have they bought elsewhere? Has it been on the market long? What’s the response been so far?
Once you have what you need, formulate a position on what you think the property is worth and the types of terms and conditions you’d like based on the sales you’ve been tracking.
Now, keep this in mind – vendors don’t always have to sell. In fact, if they have the means, most will choose to take a home off the market rather than sell at what they consider a desperation figure.
While you are in the position to drive a reasonably hard bargain in a soft market, don’t miss out on a great opportunity by being too greedy. Being too aggressive with your offer can backfire, so be frugal but also sensible.
Soft markets are a golden opportunity for homebuyers, but don’t hesitate if you’re ready to act. Experience tells us great deals won’t hang around indefinitely.
If fact, the best way to take advantage is to have an expert property analyst, acquisitionist and negotiator on your side! Contact our team at PropertyBuyer and we’ll help you secure that ideal home at a great price in today’s market
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