It doesn’t take a rocket scientist to know there is a change in the market. It does however take an astute property analyst to work out how to take advantage of the situation. Most people are worried about the proverbial “bubble” and when will it burst. The stock market is bananas and property has to be next. This is absolutely wrong. Steven Keen was promoting the 40% decline in property prices after the stock market crash in 2008. Everyone is now saying the market will crash similar to the latest stock market “correction”. The catalyst for each is totally different.
The stock market runs far more on confidence, politically intrigue, yields, tax credits, profit & loss statements and balance sheets. These are more international than national as well and are far more intangible than record of fact. The Melbourne property market is about population, number of properties and number of people per dwelling. In other words physical attributes.
Whilst May has been one of the busiest on record, the clearance rate has remained well above 70% and this, in 2007 and 2008 this would have seemed great, but for some commentators they are seeing this as part of a crash. There are enough people trying to purchase property at the moment to keep the number of sales well above 1000 per week. It doesn’t really matter whether this is by auction or private sale. We will see total sales carry through at or above 1000 per week until about August when they may start to trend back up. However for the time being the buyers will have it a little easier than the vendors for a while.
For those of you who are trying to purchase without the help of a trained, professional buyer’s advocate, you need to understand how much “wriggle room” there is in a deal. This does not mean you throw down a number to the agent and walk out hoping he calls you in a few hours or days to accept our offer of 10% below market value. He probably won’t. Negotiation is a two edged sword. Whilst pass ins at auction are now becoming extremely prevalent, vendors still have relatively high expectations for their properties. If you think that you are the only person who is interested in a property because it passed in to you, then you will be wrong most of the time. Whilst you are in the “box seat” for a short period of time, it does not mean you have a guaranteed purchase at any price.
If the property has passed into you after an auction, most agents will offer up a reserve. This number is either acceptable or it is not. This is your “first right of a deal at the vendors reserve” This number may not necessarily be the absolute minimum number the vendor will accept, however refusing it can allow an agent to speak to other parties. Be very careful how you handle the initial offer / counter offer after the auction. This is usually where the tone of the negotiation is set.
If you are not 100% comfortable negotiating a deal with an agent, consider using a professional on your side. Just remember the other team, the vendor, is. If you are thinking of purchasing property this year please feel free to give us a call for a no obligation meeting to discuss how we can assist you.