Paying the right price for your property

How do you know you are paying the right price for your dream home? Are you paying too much – what is it really worth?
None of us want to pay more than we have to when buying our first or subsequent property. Houses and units are expensive and the way prices are going the average property will be beyond the means of the average Australian in the not too distant future. The last thing you want to do is waste your time and effort pursuing properties that you can’t afford to buy.
Estate agents are under the microscope for under quoting – the practice where the property’s advertised price is materially lower than the eventual sale price. It is not uncommon for homes to sell for between 10% to 30% above their marketed value. So on a home with an asking price of $300,000, buyers may end up paying between $30,000 to $90,000 more.
This can lead to a lot of time wasting by prospective buyers as they pursue properties they ultimately cannot, and probably could never afford. Plus there’s the disappointment and emotion behind losing out on a property you had you heart set on and thought you had a decent chance of buying.
So what’s the solution? Basically you need to inform yourself as much as possible before you get serious about a particular property. The starting point of course is to speak with the selling agent to get a feel for the vendor’s expectations. You might even consider putting in an offer (even if the property is up for auction) and see what happens. You might pick it up for a bargain, or your offer might be rejected. At least you’ve established what the seller’s base line price expectation is.
Next check out what other properties are selling for. Go online and check out sales listings and attend a few auctions to get a feel for where prices are going. The other thing you could do is to buy an independent property valuation report. This will provide you with the valuer’s estimate of what your property is worth, supported by historic and current sales data as well as the valuers view on the property itself, taking into account its individual characteristics and features.
The problem with an independent valuation is that they can be relatively expensive – anywhere between $300 to $500 each. So if you are looking at a number of properties, costs can quickly add up.
There are other forms of independent reports that are considerably cheaper. These are computer based and the good ones provide detailed and comprehensive analysis of a property and its surrounds. They can sell for between $50 and $100, meaning you can get some useful property intelligence on multiple properties for a much smaller outlay. (Check out a special I’ve been able to find - detailed Residex property reports for only $25 – they’re normally $75!)
The key to working out how much a property is likely to be worth is to make sure you get as much independent information as possible before getting too serious about a property. For-armed is forewarned. But remember, a property is worth what somebody will pay for it.
My tip:
When looking to buy a property, try and be as objective as possible. Don’t get carried away with emotion and don’t over-commit. Research the market thoroughly and look to establish a property’s value through independent means.