With tighter lending conditions since the Australian Prudential Regulation Authority put the squeeze on investors, buyers are taking less chance with their finance and opting for more conditional offers, according to Australia’s largest independent body of professional buyer’s agents.
Real Estate Buyers Agents Association (REBAA) president Rich Harvey said many buyers were seeking to refinance and switching to ‘principal and interest’ loans rather than ‘interest only’ for cheaper rates.
He said the current climate of lending was making it an opportune time for ‘cashed up’ buyers to make strong unconditional offers and pick up a potential bargain.
“For those that need to borrow, caution is needed,” he said.
“Many buyers are inserting finance clauses into special conditions of contracts of sale to allow sufficient time to allow banks to complete valuations and provide unconditional approval.
“If you are going to auction, make sure you have your deposit in clear funds and pre-approval ready to go.”
Mr Harvey said with slowing market conditions, particularly in Sydney and Melbourne, it was not surprising that many bidders were becoming more reluctant to buy at auction, hoping properties would be passed in and leaving vendors more inclined to accept their conditional offers.He encouraged home buyers not to be scared off by slowing market conditions and to make sure they do their research and understand market value.
“In a slowing and declining market make sure you do your homework and research your search area extra carefully to make sure you don’t overpay.
“At the same time don’t be scared off from buying – if you are selling and buying in the same market it all evens out.
“In this market, vendors are looking to accept offers from buyers that are financially sound – even if it takes a few more days for approvals.
“Buyers with full finance approval are at a distinct advantage when at the negotiating table.
“If you’re not experienced buying and selling property, get help by using an accredited REBAA buyer’s agent to negotiate well, remove emotion and save you valuable time and money by avoiding costly financial investment mistakes.”