Market News – Monday 25th February 2008

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People buy and sell properties everyday. Whether it be a buyers market or a sellers market. Vendors still want to sell their properties and yesterday morning will have woken to the headlines in the Herald Sun “Home Buyers Bolt” and The Age “Is the boom over?” Are property prices going to start a free fall? Is the median price going to drop between 20% and 30% this year? OF COURSE NOT!

Vendors will realise they can not ask “over the top” prices for their properties. Purchasers should now become more discerning. Some purchasers bought property last year and didn’t care what they paid. Doesn’t every property go up by 30% every year? OF COURSE NOT!

This year smart investors and owner occupiers alike will move in to buy good property at fair and reasonable prices. Good Properties are houses that are well located, in the median to upper quartile of the suburb, are well built and maintain most of the attributes that a larger segment of the market find appealing.

After choosing the “right” property then you need to assess it correctly. Listening to the Real Estate Agent and using only his information for this task can be fatal. The way an agent quotes or gives you certain examples of previously sold properties which are bias toward making you think the property is worth more than you should pay is not illegal or immoral. It is not even “under-handed.” THAT’S HIS JOB. If you were paying somebody to sell your home would you want them to assist the purchaser, who is not paying them, or would you prefer they attempted to do the job they were hired to do: SELL THE PROPERTY AT THE HIGHEST POSSIBLE PRICE. Any purchaser wanting to assess a property correctly should get professional advice from somebody with their interests in mind.

Once you have located and assessed a property, and it suits your needs, you then need to negotiate with a professional negotiator who is working for the vendor. If you have assessed the property correctly, then you can deal from strength. If the market is a little shaky and the vendor a little nervous then putting in a legally binding offer before auction at a price that is both fair and reasonable should get the vendors representative talking to you in an amicable fashion. Putting in an offer that is ludicrously low will almost never buy the property before auction. Human psychology shows us that people need to “lose” before they will lower their expectations. In other words, failure at auction will help lower the price but it increases your risk of purchasing the property.

It looks like we will have a short window of opportunity to push some vendors who may be a little nervous of impending interest rate hikes and now the prospect that everyone will desert the property market into some better deals for the purchasers. Until the collective media writes a banner headline “boom time for Melbourne Property” or the like, negotiations for property will move back to an even keel not really favouring either party.

Ian James

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About the author

Ian has been operating his own businesses for more than 25 years. During this time the self taught lessons of building the business, dealing with staff, suppliers, clients and economic woes have been invaluable. Ian is a fully licensed Real estate Agent, a member of the REIV and registered with the Business Licensing Authority.

Buying property is not just sticking up your hand and outbidding your rival. It is an emotional, fiscal and psychological decision that needs to be planned and well executed. Ian is usually involved in over three hundred property negotiations per year; ranging from the $250,000 first unit purchase for a young couple to multiple million dollar residential developments. Ian's business background and endless numbers of negotiations make him one of the industry's leading negotiators.

Ian is married with two adult children, living in Patterson Lakes. He is a keen fisherman when weather and business allows the time.