13 tips to trading up in a hot property market.
Climbing the property ladder can be a tricky manoeuvre in boom times but there are some simple steps to put you ahead of the pack.
1. Sell then buy, or buy then sell? It’s an age-old dilemma but you need to evaluate the market to make a call. Selling first is typically a good strategy in a flat or falling market, and gives you certainty about what you can spend on a new home. But in a rising market, a buy first-sell later strategy can maximise your sale price. And there’s another advantage – having a property in your back pocket can give you an edge, which leads neatly to the next tip.
2. Dangle a line: In a hot market buyers need to stand out from the pack. Your existing property could do the trick. Let agents know you’re trading up and will need to list your old home when you secure a new property. Listings rather than sales are the pain point for real estate agents at present. Although you’re not obliged to list with anyone, it should give agents an extra incentive to keep you in the loop and let you know about suitable properties they may have coming to market.
3. Finance first: It sounds obvious because it is obvious, but ensure you have finance arranged before you start viewing properties. You don’t want to fall in love with a house and end up scrambling to put an offer together. In a market where agents are fielding bids even before the first open house, you need to be able to move fast and understand your limits. Have a deposit ready to go. And speak to us if you need assistance with your finance.
4. Put experts on standby: Line up trusted professionals – from solicitors to building and pest inspectors – to run a ruler over any property or contracts as needed. When you see something you like, you need to be able to move fast to lock things in.
5. Consider a buyer’s agent: It used to be just a US or high-end property trend, but buyer’s agents are becoming increasingly common in the mainstream property market. Many are former real estate agents themselves, so you’re paying not only for their knowledge but their connections. With a growing trend towards selling off-market, buyer’s agents can help you jump on properties not widely advertised. They also commonly bid at auctions to remove buyers from the stress and emotion of the process.
6. Do your homework: Know your property and know the market. Don’t just look at listings, stay across recent sales by checking the sold tab on realestate.com.au and searching target suburbs. You should also find out as much as possible about any properties you are interested in before making an offer. CoreLogic’s property data service can help you find out who owns a property, how long they have owned it and what they paid. It may also tell you if they own any other properties. It may be helpful to know if vendors have bought elsewhere.
7. Make a strong offer: A hot market is not the time to play games. Signal you are serious and open with a strong offer. When there are multiple buyers in the mix, vendors are unlikely to be drawn into an extended negotiation of offer and counter-offer.
8. Offer to delay possession: While it may not necessarily cost you anything, offering the vendor extra time to move out could be an attractive proposition, particularly if they have sold before rebuying.
9. Be flexible with settlement: Ask the agent whether the vendor would prefer a short or longer settlement and try to accommodate this in any offer if you can. Sometimes something as simple as this settlement term can make all the difference when a vendor has several similar offers.
10. Put a deadline on your offer: While it is very much a sellers’ market at present, this tactic can return some power to buyers. Submit an offer with a deadline of 24 hours to receive a response. It lets vendors know that you are a motivated buyer and that there are other properties you are interested in if they are not serious about selling.
11. Work the agents: Develop a relationship with the strongest-performing agents in your suburb. Get on mailing lists and call them every week or so to check in on new listings. Nurturing a personal relationship may give you an edge to get in for early property viewings or off-market listings.
12. Cut out the middleperson: Why wait for someone to list before you offer to buy? Some professional real estate investors swear by conducting letterbox drops in their favourite streets or suburbs asking homeowners if they are interested in selling. This can be a good starting point if you’re looking at a tightly-held suburb.
13. Lastly, don’t let FOMO rule your decision making. There’s a difference between being quick to act and being hasty.
Looking to upgrade? Call anytime to run through your finance options for trading up.
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