It's not easy being a homebuyer in the current market. If you're not attending an open-for-inspection alongside 20 other hopefuls, then the chances are all the well-priced homes on your short list will have been snatched up by competing buyers before you've even seen them. In some parts of the country, sellers are in the driving seat as demand outstrips supply.
Homebuyers must be ready to act fast when they see somewhere they like. Here are some tips if you are hoping to buy.
Get offer ready If several people make an offer for the same property the seller will usually favor someone who can definitely seal the deal - and that means someone who has their finances in order. This means getting pre-approved for the mortgage loan you need for the property. To get pre-approved, you must complete an official mortgage application with the lender of your choice. The lender then conducts an extensive check on your financial background and credit history, reviews your employer references and verifies the loan you can afford based on current loan affordability criteria. In other words, the lender is prepared to loan you a specified amount of money and all that remains is for them to be happy with the property you find.
This process can take some time, from weeks to months. Often buyers do not take this delay into account and may miss out on a property. Communicating your deal-readiness to the seller can make a big difference. If your offer doesn't have to be contingent on obtaining financing, then you will be in the position to move quickly and secure the perfect property. Serious buyers combine pre-approval with a large money deposit. Sellers also regard buyers with some chips on the table as safer bets, as they're less likely to default on a contract.
Do I buy before I sell? If you need to sell a property in order to buy, then consider how you will tie the two deals together. Competing with other homebuyers means submitting an offer with as few conditions as possible, and a seller in receipt of multiple offers is more likely to have a preference for the buyer who can settle the property purchase in a shorter period of time. If you have to sell your home first then your offer may not be accepted. Selling your old home will likely be easier than buying a new one in a hot seller's market.
Organize your finances so you have enough money to cover the relatively short period of time that you own two homes. Friends and family may help you with a down payment for your second property, or you can take out a short-term bridging loan to "bridge" the period between closing on your new home and receiving the money from the sale of your old one. Be very careful as bridging loans can be expensive. If you buy first then you also take the risk on how much you will sell your current home for, but the cost and risk may be worth it to secure your ideal property.
Ok you have decided to sell your home first before you buy. But is your home ready to sell. Some agents will tell you that buyers can see around the issues in your current home, so they don't do anything. Presenting your home at its best, will always get better results. On top of that buyers often like to use any flaws to negotiate the price down.
Often very simple steps can give your house amazing market appeal and salability. Deal with an agent you can trust and one that also gives that extra advice on the presentation of your home.
So you have sold your old house and have your finances in order. What Next? Knowing what you want before you start your search cuts down massively on wasted time. Tell your agent exactly what you are looking for, and what you might compromise on, and concentrate your efforts on properties that fit the bill. So, if you need a three-bedroom house with a garage, don't let your agent waste their efforts on properties with street-only parking. Ask your agent to notify you of suitable properties the day they are listed and, most importantly, view properties that match your requirements immediately. Failing to do so may lose you the home.
It's not all about the money. Sometimes it's about speed or fitting in with the seller's plans. Sometimes it's about building a rapport with the seller or making a good first impression. To succeed on these counts, ask yourself, what are you prepared to do to advantage the seller? Can you close quickly, saving the seller money? Could you delay settlement, giving the seller time to find a new home? Can you forgo the cooling off period? All of these strategies require pre-planning. You'll need to contact your inspector, Conveyancer or Solicitor before you put your offer in to make sure they can move quickly on the due diligence. Then, write a good cover note to the seller, emphasizing the fact that you are happy to fit round their plans.
Sellers who get the impression that you are a finance-approved buyer who is fully committed to buying their property are more likely to accept your offer. Don't panic Losing your leverage in a seller's market is a horrible situation for homebuyers, but remember, by making yourself offer-ready, formulating a plan and sticking to it, you put yourself in the best possible position to secure your perfect home.
Article written by Adrian Bartholomeusz. He can help you get started with a flat rate fee. Call 0406 568 344
Adrian is the Principal and owner of Utopia Real Estate (Sales and Leasing) in Sydney's Northern Beaches