Property

The key to spotting the right property deal is to understand how the Australian economy is performing. Although these six new rules are useful in a softening housing market, they will also help you keep one step ahead of your rivals in a more benign environment.

Last sold

Find out when the target last sold and at what price, as this can help in devising a purchasing strategy based on the owner’s reason for selling.

Last-sale data can tell you whether the vendor expects too much in the current environment or is in distress and may wish to sell as quickly as possible.

Rose says where there is evidence of financial or marital distress, he would advise buyers to move forward “quite quickly without procrastinating” to purchase.

Conversely, he says if the asset has recorded a large increase in capital growth over four years or so, buyers should start negotiations at a lower level, as the vendor may be seeking the lottery ticket price.

Compare properties

Look at recent sales in the area, break down the floor plan per square metre as a way to ascertain value for money, and then draw comparisons. Again, this data can be obtained through agents or by doing some extensive website searches for the properties.

It also pays to pick up a listing sheet and facts on the property during open house inspections, as these include floor plans and can make comparisons easier.

Consultant Rogozik says agents are often very willing to help provide buyers with information that isn’t readily available, such as floor plans, developments and comparative sales in the local area going back weeks or even years.

Multiple inspections

Conduct multiple inspections, thinking about light at different times of the day and noise from car and foot traffic.

Kalofonos believes this can help you understand simple but important things like how the sun falls on the house, what the parking is like and where, for example, the local community health or drug and alcohol centres are.

“I’ve had a buyer pull out of a $12 million purchase because they realised that every Monday at 5am the local garbage truck would have to do a three-point turn out the front of their house,” he says.

Market timing

Market timing is also critical. Cooler periods in housing sales can be windows of opportunity for savvy investors who are likely to be watching to see what happens with interest rates and market trends.

Keep in mind that even though the real-estate sector may not be as fast moving as the sharemarket, it is still cyclical, the busiest periods being autumn and spring. The quieter months bring less competition but there may be fewer items on the market.

Investigate off-market sales

If an asset is an off-market opportunity, meaning it is yet to be advertised, ask why. Remember, just because someone’s selling it that way does not mean it’s necessarily a good buy.

Ray White Real Estate’s White says most sellers prefer to advertise widely to have the best chance at getting the price they want.

Where sellers don’t do this, buyers have good reason to question why. It might be that the sellers are motivated to move quickly but want to do so in a discrete manner through a buyers’ agent, or they may not be in a rush and want to hold out for market value.

Make a decision

If the property stacks up in value and the asking price is fair, make an offer and be confident about it. The best time for people to put forward an offer is when they have carried out the due diligence on the target and are satisfied that it meets their needs and requirements on all levels.

The style of the negotiation will differ depending on whether the asset is put up for sale at auction or via private treaty. Don’t be afraid to hold your ground with real estate agents particularly at auctions and avoid feeling pressured to increase your offer if a vendor bid has been made.

In an uncertain environment, it is more beneficial to start low when negotiating, especially if a property has been passed in. When auction clearance rates are down, a lot of properties will be selling post-auction.