The market has now well and truly corrected!! The balance has been restored to the market place, being that we now see approximately one buyer for one person selling. Last year, there were usually three buyers for every property being sold and this is why auctions did so well. Until the market settles, probably sometime later this year, then good negotiations will be the key to not only getting a good price, but also being able to secure the property in a timely fashion.
Do you know what to do if the Real Estate agent calls you on the Thursday night before auction and says, “We have an offer that is enough to purchase the property you are considering. It will be sold tonight, would you like to still purchase it.” This will happen more and more often this year. We have already had agents ringing us to ask if we would do a deal prior to auction. A 63% clearance rate includes all properties sold before auction, sold after auction and passed in and sold on the day. This can make the real rate of “sold under the hammer” closer to one in five or 20%. Negotiation will play a far greater role this year in the property purchases than it did last year.
Do you know what to do when the auctioneer passes the property in on your bid? Do you understand that the auction is now over and that the deal will be concluded via private treaty? The auctioneer is no longer simply an orator accepting bids from people who will outbid each other to win the property. He has now changed his persona to a supremely experienced negotiator who is not working for you. You have now let him know that you want the property enough to be the highest bidder and he will now attempt to do the best possible deal he can. No matter how good a negotiator you are in the business you are in, I would suggest the auctioneer would be equivalent to a “Queens Counsel” and you are there representing yourself. He has probably negotiated a couple of hundred properties last year. How many did you negotiate last year?
Vendors do not sell a property based solely on price. It is the overall deal that counts. What is the settlement period, what is the deposit amount, is there a finance clause, is the contract subject to a building inspection, are there outstanding matters of agreement that need to be resolved or is it a simple contract note that everyone understands.
Vendors will also have accurate information regarding the market. Information only Real Estate Agents, Valuers or anyone in the property industry has access to. Just having some Valuer General Data from a $50 report that is usually 3-4 months old (Valuer General Data is updated at settlement not purchase) is not going to give you similar information to that, which the real estate agent has given the vendor. If you know what this information is, and you analyse it correctly, then you will be able to have a very good educated guess at the bottom figure the vendor is likely to agree to. Information is the quintessential element in be able to negotiate from strength.
If you are considering buying property in the next six months, or you have tried to purchase unsuccessfully, why don’t you give our office a call. We offer a no obligation first meeting to anyone who is interested in buying property. I guarantee it will be the most enlightening hour you will spend in your entire property search.
Ian James