The Blog How to avoid buyer burnout in a hot real estate market
How to avoid buyer burnout in a hot real estate market
Given there is such momentum in the Perth market right now, there are many people who are experiencing buyer fatigue. If you’ve missed out on a property or two, there are many ways in which you can make your offer stand out next time. From putting your best offer forward to getting your finances in order, here are our top tips for avoiding buyer burnout in a hot market.
Before you even start looking for your dream home, get all your ducks in a row on the finance front. Know what your borrowing capacity is, how much your stamp duty will be, how much deposit you’ll require, what the repayments will be and get your pre-approval sorted too. Sellers will often overlook offers from buyers who have neglected to do their due diligence on the finance front.
If you are making a cash offer, make sure you are honest in making that commitment. If you’re borrowing the money from the bank and have a pre-approval in place, you’re still borrowing the cash – you don’t physically have the cash which ultimately renders it a ‘subject to finance’ offer. Conversely, it’s a very different story if you have a line of credit sitting there to utilise – or you’ve physically got the cash in the bank. In this circumstance you are making a legitimate cash offer.
There is nothing more frustrating than a seller accepting a cash offer only to receive a call from the bank wanting to value the property not long after the contract has been signed. Furthermore, it’s risky for a buyer to make unconditional cash offers when they don’t actually have the cash – you could risk losing your deposit and more.
Be realistic with your offer. Many people are relying solely on online valuation apps (that feature out-of-date values) when coming up with an offer. This inaccurate data often undervalues homes and particularly in the current market. Talk to agents about what homes have recently sold for and don’t be shy – a good agent will tell you what you need to know so that you are in a better position when it comes to your next offer. When gauging values, the sold section on realestate.com.au is helpful too.
Do not make an offer including a building inspection that is ‘subject to buyer’s satisfaction’
While a building inspection is normal practice when purchasing a home, if you make the condition “subject to buyer’s satisfaction,” it is very off-putting for sellers. The purpose of the building inspection condition is to identify any major structural defects with the home and in our opinion, the standard REIWA ‘pre-purchase inspection for major structural defects’ annexure is adequate for this.
The purpose of a building inspection is to identify major structural defects, not maintenance or non-structural items like leaking showers, peeling paint or a small crack in a wall. Of course, if you do have a concern about a particular element like these mentioned, you can always insert a specific condition relating particularly to that concern.
Reports provided by independent and qualified inspectors under the REIWA standard annexure are completed to the Australian Standard (Australian Standard 4349.1-2007 Pre-Purchase Building Inspections) and if a structural default is found, the seller is obliged to fix it for the sale to go through. However, if a buyer stipulates that they will only buy the home if the report is to their satisfaction, it can create too much volatility and uncertainty for the seller about the contract. An offer that is ‘subject to buyer’s satisfaction’ means that the purchaser could pull out for any reason. Understandably, most sellers won’t look favourably on this type of offer.
In this market, to be taken seriously and look attractive, we would recommend that you offer under standard building inspection terms as most sellers will opt for a buyer who isn’t seen as high maintenance.
Put your best offer forward
In a multiple offer situation, you really need to put your best offer forward as the seller can only accept or negotiate with one buyer – playing buyers off each other is not allowed. So, if an agent asks you to put your best offer forward, it usually means that there are multiple offers being presented.
After making an offer, try not to set an unrealistic time frame around when the seller must get back to you. Requesting an answer right away is off-putting for sellers, especially when there are multiple interested parties looking at the property.