Getting purchase-ready the RIGHT way

So often, we find that buyers have been searching the listings and attending the open for inspections, only to find that the properties they thought were in their grasp are flying past their budget.

Some blame the agents. Others blame underquoting. The reality that in most cases in the early weeks of their searching, they are looking in a sea of properties that they can’t afford.

They are looking in either the wrong locations, or for the wrong dwelling.

Despite misleading quote ranges and price tags, there is a much better way for buyers to be fully prepped and searching with a feasible and realistic expectation.

There are two critical things that so many buyers don’t do. They are simple, but not always easy.

The first is to be finance-ready. This doesn’t just mean having a deposit and a clear idea of what magnitude of funds could be borrowed. It means being auction-ready. This relies on having deposit funds on hand, ready to transfer, a rock-solid, reliable pre-approval, (or high level of confidence from the broker/banker that an auction purchase can be made), and a familiarity with the repayment schedule.

Those who only half do this important step get unstuck when the ideal property comes along. Scrambling for pre-approval and checking the inbox at 4.55pm on a Friday in the lead up to an auction the next day is nobody’s idea of fun. It’s stressful at the least, and really devastating for some when the promised pre-approval doesn’t come in due to bank assessment queue delays. Likewise, it’s a complete disadvantage for a buyer who is trying to purchase a private sale property when competing with an unconditional buyer.

I’ve seen some vendors accept unconditional, lower offers to the tune of $50,000 lower.

That’s an expensive penalty for not arranging pre-approval sooner.

The second task that so many don’t take on is a feasibility test. This is simple, but does often take a few hours. We think that’s a small effort to make in the scheme of things. A purchase worth hundreds of thousands of dollars deserves a few hours of research.

The purpose of the feasibility test is to ensure that the search has every chance of success. There is little point going to market wth a budget that is insufficient for what the buyer wants. If the budget is fixed, the buyer needs to be prepared to acknowledge what they can actually afford. Often, buyers find themselves wasting the weeks away in a moving market while steadfastly trying to pursue properties that are destined to sell beyond their budget.

We use a reverse engineered approach with a search engine.

The first step is to look for the product you want, in the locations you favour. If the product appears in the sold tab of the search engine within your budget and within the last two months, your search strategy can be confirmed as a feasible one.

If the sales exist but are far more historical at your price point, this may likely indicate that the market has moved past your budget for this product.

If matching sales don’t exist, you are looking either in the wrong area or for the wrong dwelling type. The options are to either search further from CBD, or to downgrade the dwelling type. In this above example, the buyer could either consider moving further down the train line towards Chelsea, or they could turn to apartments and explore whether Mordialloc offered any compelling apartment sales to compare to.

When you do find a suitable potential example property, it’s important to check it more closely to ensure it’s not a compromised property with a low sales result. Missing this detail can skew your expectations and set you up for a fail. If the property is on a main road, train line, facing something you’d rather not live near, or audibly close to a noisy facility, it will need to be disregarded.

In most cases, bargain buys are bargains for a reason.

This type of property is not one that will help in the feasibility test. It’s best to contrast and consider desirable properties.

This townhouse above sold for $700,000, but it sold during Melbourne’s lockdown, and in a much softer market. The same property in today’s market would likely eclipse $750,000 and could in fact land closer to $800,000.

In addition, for any buyer who is hoping to reside closer to the heart of Mordialloc’s township, this location may not appeal. A dwelling closer to village and station will sell for a higher price than a dwelling further away.

This is where checking the map and the google street view is important. All of this can be done from a PC at home – buyers don’t need to pound the pavement or waste petrol visiting curbsides.

Buyers need to be prepared to reject dwellings that have compromises that could impact broad-buyer appeal. One of these examples might be the vista, such a this one in Geelong.

The process can be quite iterative, but once it’s completed thoroughly, the buyer’s chances of success are improved tenfold. To satisfy a feasibility test, we require at least five suitable example properties with sale prices within budget, required criteria and map-matching, all falling within the last three months.

Once the buyer’s feasibility test is completed, they will find that the properties they are targeting are broadly all within budget.

It’s a nice way to reduce heartbreak and eliminate wasting precious time in a moving market.

Contact us for our free Purchase-Ready guide.