29 Jan 2021

Fools rush in: Buyers need to keep a cool head as the property market heats up

With buyer’s agents around the country witnessing ‘busier than usual’ January buying conditions, many are warning home buyers and investors not to rush their property purchase.

Industry sources say buyers are thicker on the ground and buyer enquiry numbers are up on previous years by a significant margin. Real estate agents are working around the clock and are being highly responsive to inspection requests.

2020 was a tumultuous year for the real estate market in the grips of a recession and the early signs are showing that pent up demand is playing out with some buyers showing desperate behaviours.

Real Estate Buyers Agents Association (REBAA) president Cate Bakos said rushing a purchase during a hot selling season was a critical mistake to avoid.

“Nationally our members are seeing higher inspection numbers, a heightened number of bidders and offers, tighter days on the market and stronger prices this January than ever before,” she said.

“Buying safely is paramount and if the situation doesn’t allow, we firmly believe that a buyer is better off letting an opportunity go, than risking a rushed purchase if the proper due diligence can’t be done in time.

“Purchasing in a hot market requires fast decision making but it should never lead to irrational decision making or tardy due diligence.”

Ms Bakos warned that buyer desperation was dangerous and could result in regretful purchases and overpaying.

“If buyers let FOMO (Fear Of Missing Out) bite too hard and buy irrationally, not only could they be paying too much for a property, but they could be buying the wrong property,” she said.

“With a rushed purchase it’s easy to miss a red flag that could lead to losing a deposit or dire financial costs later down the track.

“There are also those buyers who are determined to buy a property that’s low in demand. Their strategy is to avoid competitive situations fearing that competitive conditions spell over-payment but tread carefully as this philosophy can end up costing a lot more than overpaying.”

The common red flags that are more likely to be overlooked in a hot market include zoning issues, restrictive covenants, electrical and plumbing problems, troublesome neighbours, expensive special levies and obscure titles.

REBAA recommends the following homebuying checklist:

  1. Physically inspect the property
  2. Review all neighbourhood development applications/approvals (can be  done through Council Planning Office)
  3. Get a title check
  4. Do a comparable sales analysis
  5. Get a rental appraisal (if applicable)
  6. Review AGM minutes (if applicable)
  7. Get a legal contract review
  8. Conduct neighbourhood reconnaissance
  9. Get a building & pest inspection (include in this an independent plumbing & electrical check)
  10.  Understand the level of competition and the time available to complete  due diligence