It’s true, the local property market is in hot demand right now. There is an abundance of buyers ready to purchase and even though we are expecting more stock to come on the market over the next month we are currently experiencing record low listings.
As far as sellers go, people generally aren’t selling locally to upsize, downsize or change their lifestyle, but rather, the properties coming on the market are those who are moving out of the area, deceased estates or separations.
Buyers on the other hand are out in droves. The majority of these buyers are first home buyers and out of area buyers seeking to secure the lifestyle that the Upper Northern Beaches has to offer and take advantage of the record low-interest rates and cheap lending.
So, as a result, our open homes are seeing a record number of groups through and stock is selling fast. A most recent example is 32 Therry Street Avalon Beach which had 68 groups view in its first open, coming from all over Sydney and subsequently sold five days later 3 weeks before its auction date.
I fully understand that in this current climate it can be an anxious time being a buyer.
Perhaps you have sold and are trying to buy back in, or maybe it’s your first home and there is more competition than expected. Whilst at times it can be discouraging, there are ways to position yourself so that when your desired property becomes available you can move swiftly and put your best foot forward, hopefully securing your home.
Here are my top tips to help buyers who are currently seeking to purchase on the Upper Northern Beaches.
1. Make yourself known to the agent
This is not a climate to hold back. If you are keen, declare your interest to the agent. Not all agents communicate with high levels of efficiency. If they don’t know you are keen on the property they may leave you in the dark and negotiating a sale with other more vocal buyers.
For example, in the last few weeks, my father in law purchased a property in Avalon Beach from another agent. He asked for my advice in securing the property as it was the only one of its type on the market. My advice was for him to ask the agent this question at the first open…
“If I wanted to secure this property today what would I need to do?”
The agent was upfront and clear about the vendor’s situation and the preferred process of sale. I encouraged my father in law to move quick and act fast on the agent’s instructions. He had his solicitor on the phone that afternoon, offered full price and the contracts were exchanged within 24 hours… brownie points for the ‘son in-law…
In this market, It’s also good to be clear with the agent about your budget capacity and at what level you are willing to let the property go. Other things to be upfront about are your loan approvals versus cash capacity and timing of your preferred settlement, this way, as competing offers come in the agent can keep you informed, help you understand the vendor’s expectations and let you know if the price guide changes.
Also if a property is scheduled for auction, enquire from the agent if they are willing to sell prior, you may want to make an offer but be aware you may not be the only person making an offer.
2. Know your market
Research the market and know what you want. Stay up to date with what comparable properties are selling for. There are movements in the market every quarter so what something sold for 6 months ago, or even a few weeks ago, may not be what it would sell for today.
It’s important to be researching on the ground as well as online viewing as many properties in person as you can. This helps you not your solidify what it is that you want, and what you could compromise on, but also gives you a greater understanding of what qualities increase the price and decrease the price of a property in the Upper Northern Beaches, for example assessing the properties location, aspect, quality of finish, floor plan, neighbourhood, condition.
3. Have your finances ready to go
As stated above, properties are selling quickly, so there is no time for delays or hold-ups when you find something you want to buy. Make sure all your finances are in order before you start your search so that you are capable of purchasing.
Key Questions –
Is your loan approved or pre-approved?
- Are you and your broker sure of your budget limitations or capacity to stretch if needed?
- Are all your details and documents up to date? Always make sure that your bank is up-to-date with all your financial information, any changes (even small ones) can affect your borrowing capacity.
- How quickly can you offer and exchange? Get confirmation from the bank/broker, that if the desired property comes to market you are certain your loan will come through and you can make an offer swiftly and confidently, and if accepted by the vendor, you can exchange ASAP.
I, unfortunately, do see trouble and stress on the other side of exchange when finances are not approved or in order. If a settlement is delayed or falls through there are hefty fees and large deposits can be lost. No one wants this scenario! Be ahead of the game, stay in close communication with your broker, make sure all your finances are spick and span, ready to go so everyone is happy through to settlement.
Do you have a cash deposit ready? To exchange contracts you will need a cash deposit ready. These funds need to be available and accessible. Usually, the deposit is negotiated and is between 5-10% of the purchase price.
Have you calculated the stamp duty and fees? Stamp duty and other fees such as solicitor are an additional cost to the total purchase price. It’s important to calculate the stamp duty and have that factored into your budget/loan. You can calculate stamp duty here.
Is your conveyancer on call? You will need a solicitor or conveyancer ready to read the contract for sale, advise you, negotiate terms, transfer deposit, have contracts signed and exchanged for you. I would advise you let them know you are actively looking for a property just in case you see the right thing and have to move quickly. If you need help finding a solicitor or conveyancer I can send some local contacts.
*Terms to know (see bottom of the article) – Offer & Acceptance, Gazumped, Exchange of Contracts, Cooling-off period, 66W, Settlement.
4. Turn up at auction to bid
Many properties at the moment are selling by auction rather than private treaty (if not sold prior) so it’s good to be auction ready. Many buyers worry about the auction process, but it tends to be the most transparent and fair way to buy a property. You can see the competition, you know where you stand, and everyone who has registered is given the chance to bid.
Prior to the auction meet with the agent and be very clear about your intentions. You want the agent to work alongside you to help you buy the property.
*Terms to know (see bottom of the article) – Reserve Price, On the market, Passed in, Vendor bid, Settlement date.
5. Register for off-market opportunities
In a seller’s market, many great properties may not even make it to market before they’re snapped up.
One ‘off market’ property I am currently managing is this property in Clareville (link). I will be showing it this Saturday if you want to enquiry about viewing.
If you do everything in your power, and you still miss out, don’t fear, properties are always coming to market and these trends do go in cycles – seller’s markets don’t last forever, they do at some point cycle back into buyer’s markets.
If you are looking to buy in the Upper Northern Beaches and would like help finding the right property you can contact me on 0424 053 355 or on email.
If you’d like to track the value of your home, compare recent sales and find out how much your property is worth in the current market, you can get your free estimate here.
HELPFUL TERMS TO KNOW
Contract of Sale – The contract of sale is a legally binding agreement between the owner and the buyer of the property. A contract for sale covers all the legal matters, rights and conditions of the sale/purchase. The contract must contain a copy of the title documents, drainage diagram and a current Zoning Certificate (section 10.7) issued by the local council.
Offer & Acceptance – If you make a verbal or written offer, you are one step closer to owning the property but it doesn’t mean that you have finalised the sale. Before exchanging contracts, the seller may negotiate with other buyers for a higher offer, even if you have made an expression of interest payment.
Exchange of Contracts – Exchanging contracts legally completes the process of buying a home. Up to this point, the agreement is not binding and both you or the vendor have the right to change their minds.
There will be two copies of the sale contract: one for you and one for the seller. You each sign one copy before they are exchanged. This can be done by hand or post and is usually arranged by your solicitor, conveyancer or the agent.
At the time of the exchange, you will be required to pay a deposit.
Gazumped – While gazumping is not illegal it is an incredibly disappointing experience for the unsuccessful buyer. Gazuming occurs when a seller accepts your offer, however before you get a chance to exchange contracts the seller decides to sell to another party and exchange contracts with them. While at times this is outside the agents control a good agent will communicate very clearly your position and what is required for you to secure the property and avoid such a situation.
Cooling-off period – a standard contract comes with a 5 business day cooling-off period after you exchange contracts. During this period, you may get out of the contract as long as you give written notice.
A cooling-off period does not apply if you buy a property at auction or exchange contracts on the same day as the auction after it is passed in.
If you use your cooling-off rights and withdraw from the contract during the 5 business day period, you will forfeit to the seller 0.25 per cent of the purchase price.
66W Certificate – is a document signed by the buyer’s solicitor or conveyancer that waives all the buyer’s cooling-off rights. This usually happens when the buyer has completed all their checks and due-diligence.
Building and pest report – This is a written report on the current condition of a property and possible risks. It’s designed to provide you information about the property so you are fully informed of any potential concerns relating to the condition of the property. Sometimes these have been prepared in advance by the selling agent.
Reserve price – The lowest price at which the vendor is willing to sell at auction. If the bidding does not reach this number, the property does not have to be sold.
Passed in – If a property does not reach the reserve price, and the vendor does not want to reduce the reserve price to the current highest bid, the property ‘passed in’, meaning no sale is made.
Settlement date – The date that the buyer completes payment to the seller in full and takes legal possession of the property. The settlement date will be specified in the contract of sale but is typically between 42 days after auction or date contract were exchanged.