Property

Before hitting the pavement, it pays to do a bit of research on current house prices. You can keep an eye on sale and auction results in the papers, or buy reports on specific suburbs from researchers like Australian Property Monitors’ Home Price Guide (homepriceguide.com.au). Talk to real estate agents and attend auctions.

A little compromise

If prices are looking a bit rich in your suburb of first choice, you might consider moving your target just a few kilometres to a neighbouring suburb. You could save a substantial sum by living alongside, rather than in, a trendy suburb.

Or you could lower your sights, from a freestanding house to a semi perhaps – it all comes down to how willing you are to compromise.

Help with house hunting

You could also narrow down your search by using a buyer’s agent or advocate. Popular with wealthier buyers and those overseas or interstate, advocates are also used by people at the lower end of the market who don’t have the time or inclination to house hunt.

Buyers’ advocates act on your behalf, sniffing out properties that meet your criteria and, if you wish, making an offer or bidding at auction on your behalf – all this for a fee, of course.

Advocates argue that they save buyers time and money (even after their fee), by filtering out unsuitable properties, by knowing the market and by helping you to stick to your price limit.

They argue that real estate agents have a conflict of interest because their role is to achieve the best result for the seller, not the buyer. Estate agents may suggest properties and offer advice, but in the end keeping you happy is only with the aim of keeping the seller happy and earning their commission.

Make an offer anyway

When you’ve found a property you want, contact the vendor through the real estate agent and make an offer – regardless of whether the property is for sale at a set price (known as private treaty) or going to auction.

Even if your offer is accepted, neither you nor the vendor is legally bound to proceed with the deal until a contract is signed. While the agreement is only verbal, the owner can still accept a higher bid – you’re in danger of being “gazumped”.

You may have spent a small fortune in surveys, solicitor’s fees and other costs in the meantime, but that’s not their problem. The only recompense you’ll get is the return of any non-binding “expression of interest” deposit you’ve paid.

Get it in writing

The answer is to get things in writing, quickly (but still with care). If you’ve got a building and pest inspection already to hand and you’re sure you’ll proceed, you could offer to waive the five-day cooling- off period to get things moving straight away.

When you exchange contracts, you’re not only agreeing to buy the property, you’re also agreeing to be bound by the terms and conditions of the contract – so make sure you’ve read every page. Look to see what’s included in the price: those fancy blinds and the dishwasher could be excluded.

After contracts are exchanged, you usually have four to six weeks to “settle” or finalise the sale, perhaps longer. You’ll need this time to insure the property, sign mortgage documents, pay stamp duty and complete arrangements with your lender.

If you’re selling an existing property, the various lawyers involved should be able to juggle settlement dates so that everyone moves home at about the same time.

Prepare for the auction

An auction pits a number of buyers against each other at a specified time and place. The main difference between a private treaty sale and an auction is that private treaty generally allows for a cooling-off period whereas an auction doesn’t.

If the property you want is being auctioned, you’ll need to have your finances in place beforehand. When the hammer falls on your bid, you’ll have to pay a 10 per cent deposit on the spot. (This is when a deposit guarantee bond can come in handy.)

Most properties being sold at auction have a reserve price that is the lowest amount the vendor is prepared to accept. It’s not usually revealed, but if the highest bid falls short the property is usually “passed in”. Generally, the highest bidder is then offered first opportunity to negotiate with the seller through their agent.

Pace yourself

Auctions can be stressful, and it’s possible to get carried away, so once bidding is under way, it is up to you to decide in what increments you’ll bid. Even if the auctioneer wants bids to rise by $10,000 a pop, you can chip in with any amount you like – $1000, for example.

Some people suggest standing at the back of the room so you can see what’s going on. If there’s a bidder you can’t see, ask the auctioneer to identify them. You don’t want to be the victim of dummy bids being made by parties friendly to the seller.

In NSW, rules require bidders to register upon arrival at an auction to guard against dummy bids. However, the seller has the legal right to make one bid. See the website of the consumer rights body in your state for local rules.