Buying property is different in every city, with practices, legislation and campaign styles varying from state to state.
To better understand your marketplace, we’re going to break down the most common buying processes in Melbourne and Sydney, Brisbane and Adelaide, and outline what buyers need to keep in mind when purchasing a home in their capital.
Melbourne and Sydney buyers
Auctions dominate inner and middle ring suburb’s property sales in Melbourne and Sydney, with Melbourne considered one of the auction capitals of the world. The vast majority of transactions in these two cities are undertaken at auction to the extent that it’s almost a spectator sport; it’s not uncommon to see large crowds of spectators outnumbering buyers.
Despite their high prevalence, some buyers are still ill prepared for auction day. Some key things that buyers need to keep in mind when buying at auction are:
- Getting familiar with the auction process – In the lead up to bidding, go to auctions to get a feel for the environment and pace of a live auction. Auctions can be an intense emotional experience for the uninitiated and some buyers can be overwhelmed by the speed of the bidding process. Acclimatising will help buyers keep their cool.
- Conduct research – Understand the market demand. Buyers should research sales results for similar properties in the area to really understand the market interest for the property they’re looking to buy. Price guides from selling agents will be useful, but sales data will help considerably. To get a good feel for affordability in an area of interest, buyers need to ensure properties they compare are as similar as possible.
- Probing – Buyers shouldn’t reveal their budget to the selling agent, however they need to ‘probe’ the real estate agent prior to the auction in order to gather information and knowledge about the expected interest, which will assist in determining bidding strategy and the next course of action in the negotiation.
- Legal check – Buyers need to get the Contract of Sale documents checked by a solicitor prior to the auction. They must make sure that they’re fully aware of what they’re buying, as there is no cooling off period at auctions.
- Finance – Ensure they have pre-approved finance before bidding. This is crucial to land the winning bid, but it can be amazing how many people don’t do this before auction day.
Auctions are also popular in Adelaide, but they occur in certain areas more than others. According to NPB South Australian State Manager, Adam Stone, auctions are particularly popular in the inner city suburbs closer to the CBD than they are in the outer areas.
For buyers purchasing at auction in Adelaide remember to:
- Be familiar with the deposit requirements to secure the property and the settlement period. Again, being aware of these conditions is vital to be successful come auction day. Buyers can negotiate variations of these conditions prior to auction, but they should get all negotiated terms confirmed with the selling agent in writing.
- Conduct due diligence on the property prior to the auction. This should not only include having an understanding of the anticipated value of the property, but also having a building and pest inspection conducted. As an auction purchase is on a cash unconditional basis it’s important that buyers are thorough and know exactly what they’re buying.
- Register to bid- Like NSW auctions, buyers in Adelaide will have to register to bid prior to the auction and place bids using numbered paddles.
Buying in Brisbane is typically a different process to the southern markets. The most commonly used sales method is ‘Sale by Negotiation’, with buyers submitting an offer to the sales agent and then negotiating the transaction. Auctions are common, but not as prevalent as other cities. Finally, ‘Sale by Tender’ involves buyers submitting an offer to the sales agent, which will be presented to the vendor in a sealed envelope at the same time along with all other tender offers.
However, following a recent change in legislation, selling agents are now no longer allowed to quote price ranges or guides for properties that are marketed under an auction campaign or a ‘no price’ marketing method. The new laws were passed in late 2014 as a way of eradicating underquoting, and buyers instead rely on data from comparable sales or quick bank automated evaluations to ascertain property prices.
To make the buying process as easy as possible, Brisbane buyers should:
- Ascertain the value of the property. Analysing comparable sales or seeking a bank valuation will give buyers some degree of insight into the potential value of a property, but they need to be careful as to what they are comparing. How closely do the properties compare? For example, is one north facing, and the other west? Is there car parking on site? Are the bedrooms larger in one than the other? Importantly, how much are the differences worth in price? Remember to be discerning when sourcing data on comparable sales. How current is the data and how much information is provided?
- Get expert advice on the negotiating process to avoid paying too much when purchasing by Sale by Negotiation.
- Similar to Adelaide, Brisbane auction buyers will have to register prior to the auction and bid using numbered paddles.
Although buying property is different in every city, the one constant for buyers is to seek expert advice and guidance before making a purchase to be fully aware of all factors involved.