Experts say that you make your money in real estate when you buy, as that’s your opportunity to snag a good deal. It makes sense, then, that the best place to focus your search is in areas where the local property market has all but bottomed out. So how do you know just where that is?
We’re all chasing that dream property investment: you know, the one with fabulous tenants, strong rental returns and a value that grows higher by the day?!
Pinpointing this illusive piece of property isn’t as difficult as we might think, says Lisa Parker, buyers' advocate from Parker Investment Properties.
“A bottomed out area can represent the best opportunities for savvy investors who are using add value strategies, or buyers who are prepared to get in and hold for a while,” she says.
“Personally, I love buying in these markets, depending on my strategy or my clients requirements. I have little competition, I can get more off the asking price as vendors become more willing to sell, and I can negotiate terms and conditions I wouldn’t be able to in a hotter market.”
According to Parker, if you want to isolate a region where property values have bottomed out, you really need to study the market.
“Properties will sit on the market for a longer, and prices will slowly be reduced the longer they sit on the market,” she says. This is your first indication that properties may be ripe for the picking.
“Also, the number of people attending open for inspections willbe low – that is, less than six groups at one inspection.”
You can also judge how well the market’s moving on the level of sales activity. For instance, in a busy market, properties will sell within a day, or a few days, or up to two weeks, according to Parker. “In slower markets, properties will sit for six to eight weeks without a bite,” she adds.
All of these pointers are signs of a slow property market that may have reached its floor.
But one of the biggest indications that the market has bottomed out will be the attitude of local real estate agents, Parker says – as they’ll actually begin to pay you attention!
“Agents will actually follow you up after you have made an inquiry or visited the property. In a busy market, properties sell without the agent having to do a lot of work, however in a quieter market, buyers are not so quick to act,” she explains.
“Selling agents need to work a little harder and entice buyers to come forward with an offer, as there is not the same sense of urgency from buyers in an area that has bottomed out, compared with areas which still have a lot of interest.”
If you’re in the market to buy, then this is your chance to snag a bargain. “If the agent gives you an indication that the vendor will accept less than asking price, or they entice you to ‘just put in an offer and see how you go’, you will get the sense that they are a little desperate,” she says. “In many cases this turns people off, but it can be a good opportunity if you are willing to go against the crowd.”
It can be confusing to know whether to get a variable rate or fixed rate mortgage, and what features are important. That's why it's important to not only check the right rates, but make sure that you're getting the right features in your home loan. Get help choosing the right home loan