Since mid-2022 increases in house loan interest rates have sent shivers through the Australian real estate market. What will happen next? Nobody really knows.
While higher rates have reined in the galloping market, the real estate market is still very active. Despite the rate and price volatility that the Sydney market has experienced over the past year, people are still trying to sell their properties.
People who really need to sell a property are known as “motivated sellers”. Spotting one can give a potential buyer extra leverage in the buying process.
Reasons for motivation
Some property owners (particularly investors) may advertise a property in a “hot” market to see if they can sell it for a significant profit. Most of these vendors hold onto their assets when markets are soft or unpredictable. And if they can’t get a great price, they don’t sell.
On the other hand, motivated vendors list their property no matter what state the market is in. Why? Some potential driving forces include:
Financing other purchases
Whether downsizing, upsizing, or moving to the Northern Beaches, the owner needs to sell because they need to buy somewhere.
Some people (mainly investors) could require money to pay off debt or invest in other company endeavours. They might need more cash to cover cost-of-living increases. Or they might simply wish to buy a boat and retire!
Common reasons for a fast sale include moving for a job or selling due to a separation or divorce. Asking agents why vendors are selling is always worthwhile, even though the answers may not always be forthcoming. Agents require a sale and want the highest price so their commission is bigger. Sometimes, especially if there is little interest in the property, they reveal everything.
Of course, there are also sales by the state trustee, mortgagees, and estates of the deceased. The seller – which may be a bank or even the state government – wants a quick transaction.
Recognise a motivated seller
There is no exact science behind this, but be aware of these indicators and keep probing the real estate agent.
Short terms of settlement
Faster settlement times could indicate that the vendor needs the money or needs to close the sale right away.
The owner may be willing to sell the property quickly if there’s a short span between listing for sale and the final sale date or auction. A typical campaign is around 6 or 7 weeks.
If a home, apartment, or unit is vacant or contains outdated furniture, it may be an estate from a deceased person or a place with an expired lease.
When you inspect a house, it is simple to determine whether someone is currently residing there. Does the refrigerator have food in it? Is there shampoo in the shower? A vacant property is expensive for the owner; they might really need to sell.
Does the vendor live locally? Check pre-sale documentation. Chances are those who don’t live in Sydney or nearby won’t be simply testing the market.
Negotiate with knowledge
Buying a home is always competitive. But if you know that the vendor has to sell, it puts you in an excellent position if your offer is even close to their expectations. If the property is passed in to you at an auction or you are able to make an early offer, you are in the box seat.
Make a call to Mortgage Broker Sydney. Our helpful brokers will assist you in organising your money, and we can also provide guidance on spotting market worth. We can help you find the best home loan for your circumstances and even assist with all the paperwork.
The best part is that our service is completely free for you. Keep in mind that if you do secure a loan, the lender might charge you application fees and other charges. Give us a call and confidently climb the property ladder.
Michael began his career in the finance industry over 35 years ago. He progressed through the ranks at the CBA in both retail and corporate lending, culminating in a senior position as a Corporate Relationship Executive. His decision to leave the bank in 2003 to become an independent mortgage broker was driven by his desire to assist everyday customers break through the jargon of the banking world and access the best loan products in the market. His experience is wide-ranging from helping first time buyers to large commercial enterprises. What Michael doesn’t know about home loans, simply isn’t worth knowing!