5 Tips for Property Purchase in a Rising Market

Graeme Salt

Early signs for 2013 is that the property market is starting to pick up. While far from overheating, after a couple of tough years, it does appear that property prices are starting to rise. Most of this is driven by interest rates which are lower than in living memory. But there is also a raised level of consumer confidence as the World deals with the fall out from 2008’s GFC. So if you’re looking for your dream home or a well-positioned investment property, here are my tips on how to buy in a rising market. 1. Work out how much you can borrow. Pre-approval allows the banks to look at you and your credit history and determine how much they will lend you. By looking at things like your salary, your savings history and how much you want to borrow, the banks can determine if you are a good risk. Pre-approvals can last up to 90 days and give buyers confidence as to what they can afford when they go house-hunting. Similarly, if you have worked out who will be representing you with contracts etc, you are already in the box seat. 2. Work out what that property is worth Your ability to identify a good deal comes down to homework. Do your due diligence and undertake a sales comparison of similar properties that have sold in the last three months in your chosen area. A good mortgage broker will have access to databases such as RP Data that can help you get a guide for a specific property. You may also want to consider engaging a buyers’ agent. They are not cheap, but because they know what property is worth, what they save in the purchase price can offset their fees. Buyers’ agents are particularly good for the time-poor. 3. Work out what the seller wants When you attend property inspections, find out what the seller wants. Good negotiators will quickly be able to identify what are called the ‘D’ vendors who are desperate to sell due to death, divorce, debt (or financial hardship), distance, deadline or disaster (due to business or work hardship). Skilled negotiators ask many ‘why’, ‘what’ and ‘how’ questions to find ‘D’ vendors who are willing to negotiate. Use these tips to help you negotiate a good deal when you see it, and gain an edge to secure the property you’re after. 4. Negotiate with impact Found what you’re looking for? It’s time to negotiate. While not everything in real estate is negotiable, experienced negotiators can secure top-notch deals in any market. In the current hot property market, those who can negotiate can still pick up some real bargains. Often, it will take a bit of practice to work out an effective negotiating style. 5. Swift settlement If you have identified a D vendor, they will probably want a quick sale - make it clear you are good to go. If you have already arranged pre-approval, settlement can be rushed through in days rather than weeks. This is particularly the case if you have already put together the team who will be representing on the legal matters etc.