How to win a real estate bidding war without blowing your budget
Suburban markets across Australia, especially in the east coast capitals, were heating up when the social distancing requirements due to Covid_19 threw a spanner into the works.
As some real estate markets within closed states start to return to normalcy, suburban markets across Australia will heat up as homebuyers hunt for a bargain.
With all this competition, how can someone set themselves up to be a fierce contender? Here are four suggestions that prospective homebuyers need to consider in order to succeed.
1. Lock down your understanding of your own finances
It's important for prospective homebuyers to decide how much they are willing to spend before they start the on-ground house hunt. A good place to start is to check you borrowing power and you can use loansHub free borrowing capacity tool here.
What kind of questions should they ask themselves?
What is the top price point that they can manage? Do they need financing approved before hand? Are they comfortable signing contract without a finance clause if yours is the winning bid at an auction?
A buyer needs to understand their financial picture ahead of the game to know that they can do this.
2. Make a list of inspectors who can inspect the property promptly
In a competitive climate, you don’t want to be wasting your time attending auctions for the wrong property. If you find a property that’s likely to be in your budget range, contact the selling agent and ask if you could have a building inspection done prior to the auction.
You’re better off spending $600 on a pre-purchase report and finding no issues than bidding, winning and then finding out that there’s asbestos adhesive and backing throughout the property flooring.
3. Find an agent who can educate you about the area
In competitive suburban markets, the luxury of browsing neighbourhoods does not exist. If you attend an open home and then spend a few days looking up details about the neighbourhood, someone else will likely make an offer.
It's important to find an agent who already knows insider details about the area, reach out to them and be honest about what your intentions are, so they can answer all your questions on the spot.
4. Be prepared to walk away
When attending auctions, emotions are high, there's a lot of heartbreak in this market when a bidder has their heart set on a property and another buyer has deeper pockets.
When there’s competition to enter the market, people are happy to spend tens of thousands, sometimes hundreds of thousands of dollars, over the asking price for a house they really love especially when there are limited quality coming onto the market.
Sometimes buyers get anxious because they just don't know when they'll come across another ideal property. Before you decide to blow your budget, you need to remember, there’ll always be another property, and you have to make an assertive decision and walk away.
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This article via BI does not constitute advice; readers should seek independent and personalised counsel from a trusted adviser that specialises in property, a tax accountant and property design specialist.