Timing the property market is something that even the experts have difficulty doing. Veronica Morgan shares her advice.
Old timers should have the advantage over first home buyers.
Fred and Coralie had sold their family home and were hoping to be mortgage free by moving into a smaller home somewhere near Newcastle. They probably were not aware of this at the time, but they were about to be competing head on with first home buyers.
By rights, Fred and Coralie, as veteran property owners and renovators, should have had a distinct advantage over these fresh-faced property novices. There are a number of reasons why they would have been able to move quickly in the race to buy a home.
Usually people in their situation are cash buyers or only need a very small mortgage so they can buy without a valuation. Having to wait for the bank's valuer can really slow down a first home buyer so not having to get one done is a great advantage.
When it comes to renovations they are less starry eyed and have a better handle on costs and time frames. They should be able to quickly identify a property with good bones or reject a money pit. A less experienced buyer might take a lot longer to make a decision about whether they should make an offer on a doer-uperer.
But Fred and Coralie had a hurdle to overcome that they didn't anticipate. They sold their property in a buyers market. It sold not long before Christmas, when the market had been flat all year and they felt they had to accept a price less than what they wanted. How could they possibly have predicted that the market would strengthen in the new year? It's always a bitter pill to swallow when you feel like you undersold your own home and then you suddenly find yourself trying to buy in a rising market.
Timing the property market is something that even the experts have difficulty doing. If you are caught out, it is really hard not to focus on what could have been, if only you had known it was OK to wait! One common trap people fall into when this happens to them is that they are always underestimating what a property will sell for. So they keep making offers that are too low and they keep missing out to more aggressive buyers.
When the market starts moving, you need to keep up with the times. It's no use being stuck in the mentality of yesterday's values. A sellers market takes no prisoners. You will keep missing out and the market will move on without you.
This story does have a happy ending however. In the end they did find a home with plenty of renovation opportunity and a bonus: lake views!
Veronica Morgan also blogs on her website: www.gooddeeds.com.au/buyers-tips-and-the-property-market.