We need to go all the way back to the first reporting week in February before we find reported sales to the REIV dipping below 1000 (with the exception of public holiday weekends, Labour Day, Easter and Anzac Day). Even the number of auctions is on the rise with 475 reported to the REIV this week. A clearance rate of 81% is neither here nor there, it is the fact that we can assume that in excess of 1000 properties a week are being reported as being sold (there will be a lot more that go unreported).
What we need to look at, however, is the quality of what is on the market. We successfully secured 3 properties on the weekend and were out bid at another 3. Every property had multiple bidding after the each was declared on the market. Only one property sold lower than we expected. All other sold for ranges with 2-3% of expectation.
If we digest the above information, we can assume there is plenty of property and that it is easy to buy. This is incorrect. Most property currently on the market is what I would call – average or below average. Locations that are not fantastic, properties that are not finished and or need a substantial amount of work, or the vendors are not being realistic. The smaller amounts of great property that are on the market are the ones attracting huge prices above reserve.
The other key indicator that we have a fickle market is the fact that none of the quote ranges are similar. At the moment, $550k – $600k can mean the agent is after low $500’s, Low $600’s or has a reserve of $700k. If you are currently attempting to purchase property you need to choose wisely. Once you have chosen a property you need to assess it accurately. If you base your bidding or offer on the quote range you could easily be $100k out from what the property is actually worth. This is not as much of an issue if you are short of the final bid. That just means you wasted your time in going after the property. What would be many times worse is if you overpaid by $100k.
Just remember if you have a pre approval from your bank this is always subject to a valuation by the bank. If you have overpaid and the property is valued far less than you purchased it for, the bank may not give you finance. Alternatively, you could be up for tens of thousands of dollars in Lenders Mortgage Insurance.
Before you purchase any property give us a call. We offer a free no obligation first meeting. Whether you decide to use a professional Buyers Advocate or not, that meeting may save you many thousands of dollars alone.
Ian James