8 TIPS TO EASE THE PAIN OF BUYING
by Neil Jenman
Reading time: Apx 8 minutes
If it really is the best time in years to be selling a property then surely, it must follow, that the opposite applies: It must be the worst time to buy.
Certainly, in many areas, prices have never been higher. And yes, prices have reached the point where the sanest word to describe them is probably “madness”. When tiny one-bedroom terrace homes in inner-Sydney are selling for more than $1.5 million and even homes in far flung suburbs are nudging a million dollars, it’s tough for buyers.
But, what to do?
If you are a buyer now, do you rush in and buy whatever you can before prices go higher or do you bide your time and wait for prices to fall?
The problem with the above question is that no one knows the answer.
One thing is for sure, however, is this: In an over-heated market where madness seems to have taken the place of sanity, you shouldn’t be buying unless you absolutely must.
Never has it been so hard for home-buyers.
Seriously, where do you even begin?
Well, obviously, you choose your preferred area and type of property.
Okay, so you look on-line and start finding properties that match with your requirements. But do they really?
Try finding properties for sale with an honest asking price these days. Oh no, it’s all about “expected selling range” or “price guides”.
Despite attempts by legislators to instil honesty into price quoting, properties are still selling hundreds of thousands of dollars about amounts quoted.
And the price of property is not the only thing booming. Excuses are also booming as agents blame “the market” when properties sell above the price they quoted.
It’s the same excuse, by the way, that the same agents give sellers when properties sell below the price the sellers were quoted.
No matter which way it goes, today’s agents have the perfect alibi for their lies to both sellers and buyers – it’s “the market”. Yes, the market, always the market.
But there can be no excuse for the lack of care for the feelings of buyers, many of whom turn up to auctions believing they have a chance to buy their dream home, only to see the home sell well above the price they were quoted.
Again, it’s the fault of “the market”.
And see how agents boast and rejoice when a home sells for “half a million dollars above expectations” and how they anoint themselves gurus and super-stars.
But how much sympathy do they give to losing bidders whose hearts are broken and whose wallets are walloped with needless expenses such as legal fees, surveys, building reports plus the hours invested in finding what they wrongly thought was the ‘right’ home?
Empathy in today’s real estate market is about as scarce as integrity. It barely exists.
No wonder so many buyers are throwing their hands in the air.
For sure, this is not the market to be buying a home unless you absolutely must.
There is a level of arrogance among many of today’s agents that surely means only one thing for the future – they are going to come a ‘gutser’. No hot market lasts forever. Those four great philosophical words “This too shall pass” apply to the pain of buying a home today as much as they apply to a broken romance or a painful illness.
One day, madness will stop. The market will slow down, there will be less buyer activity and prices will come under pressure, even fall. One thing for sure that will happen: Agents will be more polite to buyers. That’s the first sign that a boom is over.
Until that day comes, most of today’s buyers are likely to continue having a hard time.
Unless they find a friend. Or figure out how to ease the pain on themselves.
No wonder so many buyers are now flocking to that new group who profess to look after the buyers – buyers’ agents.
But many buyers agents are the same wolves in different clothing. They were formerly sellers’ agents – and many of them were failed agents too.
Still, if they find a buyers’ agent who comes highly recommended by other buyers, this can be a great solution for today’s buyers.
For more information on buyers agents’, see our recent article: BUYERS BEWARE OF BUYERS’ AGENTS.
If you can’t find a good buyers’ agent, and you feel you really must buy in today’s market, here are some quick tips that may help you.
First, a huge WARNING.
The internet is saturated with ads right now from people purporting to be property experts. Most are crooks. There is one who’s describing themself as a property “scientist”.
Oh please, could it get more pathetic?
Could it be more obvious that these crooks are preying on your fear of missing out?
One of the golden rules of investing is: Buy in gloom, sell in boom. If you buy in a boom, you are breaking one of the golden rules. Remember that.
And, of course, if anyone tells you they can show you how to “retire early” or how you can “pay off your home faster” be wary. These are common ‘come-on’ lines for crooks.
Just ask such experts one question: “How many people have bought property through you and sold that same property in the future for a good profit?”
Unless you get an impressive and specific answer to that direct question, avoid these people – no matter how good they appear.
Second, DON’T PANIC.
Do not buy a property you don’t like. That’s the same as hitting your early thirties and getting married for the sake of getting married. Better to have no property than one you don’t like. Unless you love it, give it a miss.
Third, PAY MORE.
If you love a property, don’t try and ‘steal’ it. Too many buyers are still trying to win twice: They want to buy a home they love at a bargain price.
Well, not in this market you won’t.
If you want a bargain, wait for the next property downturn. It will happen.
But, for now, if you find a home you love – and you can comfortably afford it – and you really want to make sure you have the best chance of getting it, then do your absolute best to be the best paying buyer.
Here’s a good way to think about paying more for a home you love. If you intend to live in the home for 20 years and today that home is worth around one million dollars, consider what it will be worth in a few years. If you offer $1.2 million, you are effectively paying a 2025 price for a 2021 home.
But, considering you are going to live in it until 2041, so what?
Pay a bit more and beat the other buyers.
About ten years ago, a man bought a farm which adjoined his present farm. Being a neighbour, he offered several hundred dollars more per acre. The owner of the next-door farm grabbed the offer. He then boasted at the huge price he got. He drove around town in a brand-new top-of-the-range Ute. You couldn’t wipe the smile off his face. A few years later, the man who sold the farm met up with the man who bought his farm. Gone was the smile. Instead, the former owner said to the new owner, “You stole my place, you know.”
Yes, time soon compensates for paying a bit more.
Fourth, CONSIDER A CHEAPER AREA.
Seriously, must you live in that ritzy or ‘exy’ suburb? When you put your head on a pillow at night and turn off the light, does it really matter where you live? And besides, in a less expensive area, you will have less debt, which means you will sleep better.
Fifth, CONSIDER ‘RENT-VESTING’.
Okay, if you must reside in an area that’s become way out of your price range, then just rent in your preferred area, and then buy a home in a less expensive area and rent that home out.
One day, you can sell your investment property and then, hopefully, use the money from the appreciation of that property to ‘buy-in’ to your chosen area.
Sixth, DON’T IGNORE AUCTIONS.
Sure, auctions are unpleasant, but smart buyers know something that many inexperienced buyers don’t: At auction, you can often buy well under your maximum.
Sellers who sell by auction are almost always being short-sold. Sure, they may get a high price, but they almost never get the highest price.
As an auction buyer, if you know what you are doing, you can often buy well below what you are prepared to pay.
If you have a copy of the book, Real Estate Mistakes, be sure to follow the ‘Seven Rules for Buying at Auction’. If you don’t have the book, just email us at firstname.lastname@example.org and we will email these rules back to you.
Seventh, APPROACH OWNERS DIRECT.
There is no law that forbids buyers from knocking on the doors of homes for sale.
Don’t let agents intimidate you. If an agent is not returning your calls or is hard to contact, just knock on the door of the home that interests you and tell the owners what’s happening.
The other day, some buyers knocked on the door of a home on Sydney’s Lower North Shore; the owner showed them around, then put them in touch with the agent. The result was a sale for $7.5 million. Everyone was happy.
Eighth, PROMOTE YOURSELF.
The number one requirement of a genuine seller is a cashed-up buyer. If you have the cash – either in savings and/or pre-approved loan or you have sold your previous home, promote yourself.
Run ads online – Facebook or Gumtree, stating who you are and what you want.
And, in addition, get flyers printed and have them dropped in letterboxes of homes in the area you want to live. That’s how agents find many properties for sale.
And yet, incredibly, almost no buyers promote themselves.
Well, try it, because not only is it likely to get you the home you want, but it will also get you a home no one else has seen. You will be first in line.
And then you know what? All the other buyers will be asking you: How come you found this lovely home in this market?
Yes, it’s time to pity most of today’s buyers for what they have to endure. As in all situations of discomfort, however, there are only three options: Tolerate it, escape it, or change it.
If you can’t tolerate it and you don’t want to give up on today’s market, you only have one option left. Change your approach.
Hopefully, some of the eight tips in this article will help ease the pain of being a buyer in the hardest market for buyers in years.
We wish you all the best.
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