Houses in Australia’s major cities are now some of the most expensive in the world and real estate agents’ tactics are regularly inflating prices. Here’s six ways to avoid over-paying
According to some recent studies, the median house price in Australia’s capital cities is, on average, 6.7 times higher than the median household income. This makes it among the top five most expensive property destinations.
This will come as no surprise to anyone currently attempting to purchase a house in any of our major cities. A shortage of new land releases and strict planning and development laws mean this situation is not set to change any time soon.
Warwick Brookes, president of the Real Estate Buyers Agents Association of Australia (REBAA) says tactics used by real estate agents who work for vendors also make a major contribution to forcing buyers to pay too much.
“That’s their job,” he says. “They’re not your best friend. They are working for someone else to sell the property for the highest possible price.
“Essentially what happens is if a vendor’s agent knows someone will over-pay they will make them over pay and it’s fairly easy to make someone pay 10-15% more than they should.”
Brookes says there are six steps that all buyers can take to improve their prospects of negotiating a lower price for their next property.
“In times like this it is more important than ever that buyers research the market, find out how much they can comfortably spend and stick to their budget,” he says.
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RESEARCH THE MARKET
This is the best way to make sure you don’t get hoodwinked by vendors’ agents. Brookes says the starting point should be to decide exactly what you want in a property and where you want it to be located.
“Most people buy a house on average once every seven years and they buy based on emotion, on what they want and they are more likely to pay more for something they really want.
Avoid casting your net too broadly. Comparing similar properties in different suburbs, for example, means you may not be comparing apples with apples. Likewise, if you limit your research to looking at properties a vendor’s agent tells you are comparable, you may end up mislead about how much you need to pay.
The best way to find out what is really going on in a market is to attend auctions and ask agents what prices recently-sold properties have actually fetched. You might have to talk to a few competing agents to get the real story about recent sales.
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GET BUILDING AND PEST INSPECTIONS
It’s essential to get professional building a pest reports to understand the total cost of any work you will need to do on a property but don’t fall into the trap of paying for these expensive reports on properties you can’t really afford.
“If a home is quoted as being in the $400,000 to $450,000 range most people believe they will be able to buy it for $400,000 but, in fact, the reserve is over $450,000. The agent knows you can’t afford to buy it but they want you involved to create competition with other potential buyers and inflate the price,” says Brookes.
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