Information supplied by We Buy Houses
In many parts of Australia the property market is booming, yet almost 54% of Aussies believe that rising house prices are bad for the country and maybe not a good thing for Australia according to a November 2013 Ipsos Survey.
For the last 23 years, Australian property investment specialist and best selling author, Rick Otton, has been investing and teaching his innovative property strategies. As the founder and director of We Buy Houses Pty Ltd, his goal is to empower people with knowledge.
Disclaimer: while due care is taken, the viewpoints expressed by contributors and/or sponsors do not necessarily reflect the opinions of Your Investment Property.
Australian home prices increased 10% in 2013, primarily due to record low interest rates. Australians aged in their 30's and 40's are the group most concerned about the rising prices, followed by those who are aged over 50.
One segment of the group surveyed, are young fathers, who are anxious about their children's future ability to purchase a property.
Many first homebuyers' dreams are dashed because they believe they can't buy following the traditional model because they haven't saved up enough deposit to purchase. It's an endless cycle, the length of time it takes buyers to save for a deposit, then before they’ve saved the deposit, the property values increase and they need to save some more money and ultimately they can't seem to get ahead.
Property ownership is a belief that many still aspire to, yet at the same time property affordability continues to be a growing concern.
What if a different approach was applied to the property affordability problem? As Albert Einstein said "You can't solve a problem with the same mind that created it."
There are other ways to invest in property, matching the needs of both the buyer and seller in any property market cycle from boom, flat or down. At first glance, these strategies may appear to be unconventional because it is not the traditional way to invest that most people have been taught to use.
This strategy is called seller financing. Seller financing has been around since the 1850's in Australia. Simply, this is when a seller offers the buyer a loan, instead of the buyer going to the bank.
While there are many variations of seller finance-it's important to understand the main guiding principle: the arrangement must both benefit the buyer and the seller.
People buy and sell property for all sorts of different reasons. When you know why the seller is selling and why the buy wants to buy, often when questioned, it's not for obvious reasons such as money.
It is about the problem that the money will solve. When it comes down to it, people don't buy or sell property to make money, even though they may say that's why. They actually buy and sell for what they can do with the cash and how it will makes them feel.
People who are buying want the opportunity to own their own home and ultimately to feel security and peace that comes with ownership. People who are selling generally want the relief from the emotional concern-often realizing the financial gain that comes as a result of selling, along with piece of mind.
This is an example how it can work. If a buyer doesn't have enough deposit they can say to a seller, "I’ll give you the price you want for the house- today."
Now there are two very strong beneficial hooks for the seller: “I’ll buy it today” and “I’ll pay the price you want”. If the benefits to them are clear, they become more willing to accommodate the buyer to help finance the deposit.
Sellers may say "yes" to all or some of it. Maybe they will finance half of the deposit. The buyer may also say “look I’ve nearly got all my deposit saved but I’m short on some of the deposit, would you finance me for a number of months or few years?"
Bottom line, it depends on what the buyer and the seller agree on.
Many investors are surprised that sellers agree. But that’s because most buyers don’t know to ask the questions. If you are able to ask the right questions, many challenges regarding the deposit can be solved. In turn, helping solve the property affordability crisis.
If you’re interested in finding out more about how to give you a head start in the booming market click here for a free information pack.
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