As a buyer’s agent, I’ve seen the market across Australia change dramatically over the past 12 months. At the moment, buyers are certainly in the driver’s seat, and that’s allowing them to secure some really good deals.
The key to buying well at the moment is first identifying high-quality assets and then being prepared to negotiate hard.
A few years ago, buyers had no leverage whatsoever and were fighting it out with other buyers and being forced to pay well over the asking price. But the times have changed and, in many locations, buyers now have the upper hand in the market and that means there are some great opportunities around for those prepared to look.
When it comes to negotiating, there’s a saying that suggests whoever needs the deal the least will ultimately come out on top. This is especially true in the current market. With so many more properties for sale that we’ve seen in recent years, buyers can afford to be patient and wait for the right deal to come along.
Recently, we were looking at a dual occupancy property that was renting out for $900 per week – $500 for the front and $400 for the back. The selling agent wanted $1 million which would have equated to a yield of 4.5%. For us, that wasn’t what we were looking for with interest rates still rising.
Ironically, not that long ago, you would have had multiple offers on that type of property, and it would have likely sold for well above the asking price. That was possible in theory because when interest rates were at 2%, the yield was still sufficient to cover the costs.
However, the environment has changed. We wanted a yield of around 5-5.5%, which would mean the property was basically neutrally geared at current interest rate levels. That meant we needed to offer something far lower than the asking price. The property ultimately had a price reduction to a new guide price of $850,000-$930,000 and there were still no takers so we ended up offering $815,000 before settling on $835,000. This took a few months to play out, but the final result was a really good one for our client.
Being prepared to wait and knowing how to negotiate are incredibly powerful in the current market and buyers should take their time and wait for the right property to come along. They should also be willing to negotiate hard to secure a good deal.
It’s also important to note that just because something is cheap and the asking price is being reduced, it doesn’t mean it’s still a good deal. Buyers must focus on the quality of the asset first and then negotiate afterwards if the property fits their investment criteria.
In the long run, the quality of the asset is what will drive its value higher and grow your wealth in the long term. So, it’s important to be patient and wait for the right opportunity to come along.
By doing so, buyers can set themselves up for long-term success in the real estate market.
If you are interested in the above, feel free to reach out to a Henderson buyers agent today for more information.