Taking advantage of a locked down market
It's fair to say that prospective buyers are currently experiencing frustration each time they check out Realestate.com.au or Domain, and noticing that there is not a great deal of new opportunities coming to market.
It is also understandable why the portals are currently bereft of new opportunity, given the current restrictions in place in Greater Sydney. At present, under the Public Health Order, inspections of property are allowed to take place, however only with one buyer at a time, and in person auctions are prohibited. In the eyes of many vendors, this provides undesirable selling circumstances, so the natural tendency is to wait.
However, this is not to say that opportunity doesn't exist during this time, and for the prepared buyer, a real opportunity exists to use the locked down market to their advantage.
Generally, the end of the July School Holidays results in an increase in available stock levels, as agents list property for sales campaigns timed for a return to 'normal' for most families. At present, some agents are advising their clients to hold off on listing until the lockdown ends, to take advantage of high levels of buyer demand anticipated with the end of the lockdown, as well coinciding with the beginning of the spring/summer market which is historically more competitive than the winter months.
The reality is however, that much of the stock which was likely to come to market at the end of the School Holidays, and in preparation for Spring and Summer, is currently sitting in a holding pattern, while owners wait for the uncertainty around the market to clear, and agents are generally advertising this stock to Buyers Agents.
For the clever buyer this presents opportunity in the form of "off market" purchasing.
Off Market Purchasing generally is the result of matching the right buyer, with the right opportunity. In terms of benefit to the buyer, it often provides for a circumstance where the buyer is able to purchase property with less competition, than they may face when purchasing a property available on the general market. It also provides for the buyer to enter the property market at a time where there is a high chance of an increase in property value when the market returns to normal, potentially allowing the buyer to quickly generate equity in the property.
Often the challenge with purchasing an "off market" property, especially in the current climate, is getting the vendor to a position where they agree to sell, and frankly, unless their is some sort of special circumstance requiring the vendor to sell the property, it is understandable that most vendors choose to wait. However, there are a few 'levers' which are generally helpful to pull during this time, to make these deals more likely to occur:
When purchasing a property in a market where movement is restricted, flexibility is key. This can mean eliminating one of the biggest inhibitors, ("where will I move to if I sell") by being flexible with Settlement Terms. Recently, we have had great success when purchasing off-market property, by being flexible with the Settlement Term. Can you offer a longer or shorter settlement, dependant on the vendors circumstances? Could you offer a lease back period, where the vendor can rent the property from you if they aren't able to purchase anything for an extended period?
2. The Dollar Figure:
A common misconception that people have about purchasing property off market, is that you are purchasing for a bargain. Generally, you should expect to pay fair market value for an off market property, with the exception to the rule being a property that may be in need of a quick or discreet sale allowing for purchasing below this figure. The real savings when it comes to buying off market generally come from eliminating competition, bidding wars and auctions. Negotiations are generally handled slightly differently, too; in that you are generally working with the vendor to come to an agreement that suits both parties.
3. Work agent relationships:
Relationships with sales agents is key to purchasing in any market, but particularly in lock down. The sales industry certainly hasn't shut up shop for the next few weeks, so opportunities certainly exist. Generally, we prefer to work with agents to match buyer and property, utilising the agents relationship with potential vendors to get to a position where a purchase is possible. Having great relationships with sales agents is key to our success as Buyers Agents.
You can book a complimentary, 30 minute Strategy Call with us to chat about your prospective purchase, and how we might be able to assist you to take advantage of current market conditions.