Buying in a sellers market can easily feel like the odds are stacked against you, but there are several ways to get ahead of the pack and into a home faster.
Needless to say, both potential buyers and sellers have been reluctant to enter the real estate arena in Australia in the last twelve months, and many have been anxiously sitting on their hands whilst waiting for the market to stabilize. However, the figures are in – and it’s safe to say that things are definitely looking up.
Based on industry insights released in February 2021, the latest quarter indicated some of the best growth we’ve seen in over twelve months for the Victorian real estate market, with home sales up a whopping 26.1%. With buyers seeking a seachange, it’s the Mornington Peninsula that stands as one of the strongest pockets of growth nationally, with values surging 8% when compared to the same period last year. With overall growth for Melbourne predicted to hit 8-12% in the next twelve months, it’s safe to say that we are indeed sitting in the midst of a sellers market – so what exactly does that mean for buyers?
Understanding Property In A Sellers Market
The current sellers market in Australia is the result of many contributing factors, but experts say that it’s primarily thanks to record low interest rates, compounded by a change in our savings habits thanks to Covid-19 related lockdowns, and the redistribution of funds that we would normally otherwise spend on things like entertainment, dining out, and international travel.
Like many other economic related sectors, the real estate market often fluctuates as a response to world events, with the scales tipping either in favour of sellers or buyers. A seller’s market is the term that we use when demand exceeds supply, meaning vendors can usually sell their homes or properties quickly and at a favourable price.
Time on the market tends to be low, settlement turnaround times faster, and auction clearing rates high. Median home and unit prices are often higher than usual, meaning that under these conditions, vendors are less likely to have to budge price as they simply have more negotiating power. It’s also not uncommon for properties to even sell above their price, as buyers are pitted against each other. While this is great news for those trying to sell a property, it can make buying in a sellers market a bit trickier – so what can you do to give yourself an edge?
Five Tips On Buying In A Sellers Market
If you’re unsure whether you’re looking to buy in a sellers market, or a “hot” market, there are a few key factors to observe that will quickly answer your query. Just a handful of indicators can include –
- When compared with previous years or months, the number of listed homes on the market is low
- Fewer than six months’ worth of inventory is currently on the market
- Listing prices are higher than the prices of prior sales
- The overall closing percentage is higher due to more people buying homes
- The average price of homes is on the rise
- Advertisements are smaller because there is already a high buyer demand for homes
- “For sale” signs don’t last too long before they feature a “sold” sticker
While it can be relatively easy to get disheartened, fear not – as there are a few secret weapons that buyers can deploy in a sellers market in order to get into the home of their dreams faster, and within their budget.
Get A Pre Approval – As speed is often the name of the game when buying in a sellers market, the single greatest weapon to have in your artillery is having a loan pre approval ready to go. Be prepared, as you might only have days – not weeks – to get your offer submitted after viewing the home.
Keep It Simple – When looking at offers, sellers see contingencies such as inspections and finance clauses as potential reasons for the deal to fall through. To make yourself appear as the favourable option, try to keep your clauses to a minimum and only include the essentials if and when possible.
Start Strong – When competing in a sellers market, it’s certainly not the time to throw out low ball offers – you won’t be taken seriously, and you’ll miss out in favour of the serious contenders. After all, money talks and sellers are likely to be enticed by a bigger payout and even cash offers if and when available.
Be Ready To Bid – Be prepared for your best offer not to be your final offer. When buying in a sellers market, be aware of a trend that includes an escalation clause in the contract, meaning that the buyer is willing to offer approximately 2-3% more than the highest bid received. It keeps you in the game, and shows that you’re a serious contender.
Write An Offer Letter – Sometimes, it’s not just about the money, particularly if the seller or vendor has a sentimental attachment to the property in question – they want to see it in good hands. Adding a personal touch like a video or letter directly to them in your application is one way to stand out from the crowd and humanize the experience for both of you.
Are You Ready To Get Your Pre Approval?
Getting on top of your paperwork, dealing with lending providers and trying to source the best deal can be an extremely stressful experience, particularly if you’re a first home buyer – but the good is that it doesn’t have to be.
With a background in banking, finance, business development and project management, there’s no better advocate to have on your team than Nikki Berzin. As a fully qualified mortgage broker and director of Cherry Lending, Nikki is passionate about all things finance, and empowering her clients with the tools to hit their property goals is what she does best.
However, Nikki is also passionate about her community. As a Mornington Peninsula resident for over two decades, she’s also worked extensively with the local emergency services sector. With family in the police force and her own experience working as a firefighter, she understands the long hours and stress that comes with the industry – and it’s for this reason that she specialises in helping emergency service workers get into the property market.
If you’re looking to get into your first home, purchase an investment property or even want to look at your options for refinancing, the first step is starting the conversation. Get in touch with Nikki today, or call her directly on 0427 374 155 to bring your mortgage dreams to life.
