BUYER MISTAKES

4 COMMON MISTAKES BUYERS MAKE WHEN PURCHASING PROPERTY

B Y CHRIS GRAY, CEO, YOUR EMPIRE

Whilst most people think that they are completely logical when it comes to buying a home or investment property, unfortunately many get carried away with emotions and end up making a decision they may later regret.

Property is often the most expensive transaction you do in your life and can make up to 75% of your wealth on retirement and so it’s important to try and get it as right as you can.

I’m an ex accountant and so being unemotional is probably easier for me, but it’s something you can learn to do too.

1) Paying the wrong price

I’m constantly surprised at how many property experts are out there, there seems to be one in every household, especially when it comes to knowing how much to pay for a property. Even if they haven’t been in the market or bought anything for years, they instantaneously seem to know what a property is worth.

Methods include basing it on what the agent (who works for the vendor told them), what a free or $50 online app is telling them (the algorithm hasn’t done a personal inspection), what they overheard someone else saying, or just putting their thumb in the air and applying a set discount or premium. And they do this in about 2 minutes!

My team and I have been buying the same types of property in the same areas for over 20 years and have bought literally hundreds. Even though we think we know the price, we still know there can be some emotion in there and so we pay an independent valuer $660+ each time we even consider putting an offer in. And even though the valuer knows the areas inside out, even he takes 2-3 hours to inspect it, prepare the comparable sales, do strata checks to confi rm the actual sizes and then prepare a calculation.

The only way to really know what a property is worth is to have been inside lots of comparables that have sold above and below the property you’re targeting and to do detailed calculations based on price and yield.

Paying the wrong price can set you back years or even decades as it means you’re not able to extract the equity and keep repeating as quick as you might otherwise be able. Compounding is the eighth wonder of the world and the real key to wealth creation. You’ve got to buy the right property at the right price.

2) Not taking action

There’s always something that will stop you getting into the market. This year it’s COVID. Last year it

was the election. Before that it was the Royal Banking Commission and serviceability issues. Prior to that it was because we were in a boom. Next it will be possible tax changes. Then it will be rising interest rates. After that it could be your job security or the kids going off to private school.

For many people they still argue with the fact that property is expensive and sure it is, but do you really think that the history of the last few hundred years will suddenly reverse and the long-term trend will be down?

Whatever you bought 10 or 20 years ago will almost have defi nitely made money. Property is always expensive today, but it’s nearly always cheap when you’re looking back on today, many years later. So even if you do continue to make the above errors, ensure you just do something, as often time heals most mistakes.

3) Buying something pretty

Most buyers are highly emotional when they buy property. They typically want to buy something they could see themselves living in, even if it is for an investment.

Sales agents are great at selling the dream and the better a property is marketed and styled, the more it could be hiding major defi ciencies.

I’ve had a good friend fall in love so much with the décor in a unit in Sydney’s Eastern Beaches, they completely ignored the fact that it had no parking which would have been an absolute nightmare in the heat of summer. The agents crammed everyone into the unit for the auction, the room was electric and that’s exactly what you don’t want.

If you want a more stable and solid investment, speak to the property managers and sales agents about what buyers and renters want in the area and what they avoid. First play the hand of a buyer, then pretend you’re a seller and see if the advice changes. Sticking around the median price of an area will increase your chances of always fi nding a tenant or a buyer as it means the majority of people can afford the price point.

Buying something pretty can include buying something for fi nancial reasons such as purely rental income. Have a high rental yield which covers your mortgage and the other costs can seem really attractive but if it doesn’t grow in value, will you be able to retire off that extra $50 a week? High rental yield areas are often further out of town and could be in one industry towns that are reliant on tourism or mining etc and that’s when you could fi nd your property halving in value, just at a time that you don’t need it.

I’d much rather buy an ugly duckling that’s in the right location and ticks all the boxes of parking/double bedrooms/small block etc rather than paying the same price for the beautiful property that’s further down the road. I can always renovate my property at a later date, but you can’t move the beautiful property to improve its location.

4) Timing the market

Most property buyers try and time the market perfectly when they get:

1) High capital growth 2) High rental yields

3) Low interest rates

4) Easy to borrow money from the bank.

5) Easy to fi nd property

I’ve been investing for over 25 years and I’ve never seen a time when you get all 5 and so my golden rule is to buy when (1) I’ve got the deposit, (2) I can get a mortgage and (3) when I’ve got enough cash buffer to hold on for the next few years.

Buying property yourself can certainly be cheaper than outsourcing to an expert as you don’t have to buy any fees. However, sometimes spending a couple of percent on hiring a local buyer’s agent who is slightly more unemotional and unconnected, can pay dividends of hundreds of thousands of dollars over the lifetime of your property.

ABOUT THE CONTRIBUTOR

Chris Gray is CEO of Your Empire, a buyers’ agency that buys homes and investments for time-poor people – searching, negotiating, renovating and managing property on their behalf. Chris has spent over 10 years as the host of ‘Your Property Empire’ on Sky News Business channel, where he’s interviewed various heads of property research companies and major industry fi gures. Chris is a qualifi ed accountant, buyer’s agent and mortgage broker. For more information visit www.yourempire.com.au, www.chrisgray.com.au and follow Chris on Twitter: @ChrisGrayEmpire.

NEW C21 OFFICE OPENS IN BURWOOD NSW

An experienced team of real estate professionals have opened an agency in Sydney’s inner west under the Century 21 brand.

Burwood real estate business after service and care that is unmatched”. Fellow Director Jada Vi offers six years of real estate experience said each member of the team brought a wealth of knowledge and skills that complement each area of real estate.

Directors Eugene Ganke, Jada Vi, “Our combined focus will be to Betty Lu, and Ricky Kong are a team ensure that the sale or management that are passionate about property. of our customers most valuable Together they will operate the and utmost care.” having worked together in different The new team believes there roles across independent and is a gap in the local market for franchise agencies. Cantonese and Mandarin speaking “We are incredibly excited to be They will offer sales, property partnering with the bold and management and dynamic Century 21 project marketing brand whose vision and values really “Our combined focus services with an emphasis on resonated with will be to ensure that delivering us,” said Mr Ganke who has over 10 years the sale or management of our customers most exceptional service. of industry experience. valuable assets are given the highest priority and The offi ce will be rounded “It’s great to utmost care.” out by Betty have received so Lu who has much support to start experience in real our own agency. We look estate and running her forward to growing with this global own business, and rising star Ricky brand for many years to come Kong who in his fi rst year with a and leveraging their processes major franchise made the Top 100 and platforms to deliver a level of agents list on GCI. assets are given the highest priority agents which they will aim to fi ll. Century 21 Chairman and Owner Charles Tarbey is pleased to have this young team come together under the C21 brand and is confi dent of their success.

“The passion and drive that these individuals have for real estate is inspiring. By leveraging the strength of the C21 brand, training and technology, I am sure they will achieve their immediate goal of being the best agency in Burwood,” Mr Tarbey said.

The new offi ce will benefi t from the continued partnership that Century 21 have with Bauer Media across the Home Beautiful website and magazine.

With the majority of that audience owning or paying off their own home, having ownership in sight or looking to invest, the initiative not only showcases C21 properties to consumers with an interest in property, it also generates strong buyer and seller leads for the network.

The story New C21 offi ce opens in Burwood NSW, fi rst appeared on Elite Agent.

Article Link: https://eliteagent.com/new-c21-offi ceopens-in-burwood-nsw/