How to buy a great property at the right price ? – Use a Buyers Agent
Here is what you need to know :
You have been thinking about buying a new home or an investment property for some time. There is a short list of locations and regions that look attractive, but your cautious as the media has been a bit concerned about rising property prices . So the question is , how do you buy a great property, at the right price, in the best location ? You definitely do not want to over pay in a strong property market.
You are time poor and concerned about having the market knowledge, experience and negotiating skills to buy right.
This is the scenario that brings a lot of people into the orbit of the buyers agent. It is their job to know what is the difference between a great property at a good price and a dud property at the wrong price.
The buyers agent is fast becoming an new essential first step in the process of buying real estate.
Ok , before we get to the pros and cons of using a buyers agent to help purchase an investment property or a new home to live in , lets address the fundamentals about buying property and what you should know or at least understand is important regardless of whether you end up engaging a buyers advocate.
Outlined below are list of the things you should seriously consider if you want to get that ideal property at the sort of price and location that will leave you well in front in any market conditions. Remember the old saying ;
” The money is made in real estate when you buy, not when you sell “.
Further into the article we will also talk about the rise of Buyers Agents , Property Mentors and Buyer Advocates as they seem to be becoming an important part of the journey of buying property at a great price in the best location, whether for just an investment property or your own home.
Buyers Agents start with Location of the property, this is a key element in buying well.
In the basics of property there are the 3 P’s. Position, Presentation, Price. Position is the first of the P’s. Buying a good property starts with the location.
Here are some properties characteristics that it pays to avoid unless there are very cheap :
- On main roads with large traffic flows and no on street parking.
- Near overhead power lines , power substations , or any other health related concerns
- Directly on a Railway line. Near to a station is ok but not directly where the train passes.
- Near Noisy Clubs , Pubs, or Event centres
- The best house in the worst street. A very ugly street is hard to overcome.
- Next to the neighbours that are going to be a headache with noise and tidiness.
Approach the following type of properties with caution :
- With Heritage Classifications that are very restrictive for renovation or redevelopement
- The Low side of the road may have water concerns but also are seen as bad luck in some asian buyers
- On battle axe blocks that may be set back a long way
- Community and Strata Titles can sometimes come with a lot of complications and obligations when selling.
Renovating a cheap property in a great location can be successful, but pay attention to the costs.
One of the more consisently successful ways to end up with a good property bought cheaply, is to renovate. However, this is not always the road to riches, as unless you do your sums correctly it can be a money pit.
Look carefully at all the pros and cons and dig carefully into the real costs to renovate. An experienced renovator of properties knows that often the faults of a cheap property are bad enough to turn buyers off. Ideally most of the issues are more cosmetic than structural, and that you can fix them relatively easily and cost effectively and dramatically lift its appeal to future buyers. The property renovators 101 guide suggests you need to be able to find around four or five six major areas about the property that you can substantially improve apart from the superficial improvements.
This is an example of where a buyer was able to purchase a run down house cheaply, renovate it and add a lot of value.
Before you sign an unconditional contrat to buy a “renovator ” , conduct a full analysis what you can do, and at what price, that will substantially increase the potential future selling price of the property.
- Can you add a granny flat at the back or side, or does the land area have subdivision potential
- It pays to get a number of insurance quotes on the property as some areas are a lot more expensive
- Go to the local city council and check on the zoning, and any approvals for previous work on the property.
- Also make sure you double-check the councils sewer plan against what you can see with the property.
- Spend the time and do your own due diligence check even if you have got a consultants report
- A comprehensive building inspection is vital. Arrange as many inspections with the agent as necessary, and take your regulator builder, not just a building inspector , and go over your renovation plan to make sure you have an accurate list of all the costs and the practicality of the plan.
So the property looks great value and the price is right , so do the numbers stack up ?
Doing a comprehensive feasibility analysis is vital to get the renovating proposition right. Add up all your anticipated costs and work them into a simple table that makes it clear what you will spend and then add in what you believe will be a good profit margin when you go to sell the property.
The table below is just a basic guide , but in reality you will need to be working with actual figures. Costs like Stamp duty varies substantially with the value of the property. The Holding costs vary with interest rates being the prime variable. The renovation costs will also vary dramatically with the extent of the renovation required.
Dont assume you know everything , bring in professionals to verify costs and strategy if you are unsure.
Even the most experienced of renovators look to professionals to pull together the renovation plan and the costing’s, these professionals can be worth the costs involved to make sure you have the right inputs and will not end up with a major problem on your hands.
You and the Buyers Agent are ready to buy a property. what is the best way to submit an offer ?
Now , this is important, only submit an offer if you have a very good understanding of all the costs and you know the deal stacks up. Don’t do it the other way around or you may end up with a big problem not a profitable renovator.
At this point should you use a Buyers Agent , Buyers Advocate or Property Mentor ?
What is a Buyers Agent ?
A buyers agent is a licensed real estate professional that specializes in searching, evaluating, inspecting and negotiating the purchase of the best property available for you at the time , at the lowest price. This type of property specialist is usually engaged at the very start of the process of finding a property.
What Fees do Buyers Agents Charge
The fees charged by Buyers Agents vary quite a bit. Commonly an initial engagement fee is charged that can be anywhere from $1,000 to $3,000. This is effectively the sign up fee for the buyers agent to start the process of detailing and understanding exactly what the client wants to buy. Following this is the success fee or commission on a successful purchase which is a percentage of the purchase price of the property involved.
This fee is anywhere between 1.5 % and 2.5 % +gst of the purchase price of the property. The value of the home to be purchased , where and the degree of difficulty of the acquisition are involved in working out the fees charged. generally the buyers agents fees are less than a selling agents commission.
What is a Buyers Advocate ?
A buyers advocate is similar to a buyers agent in that they are also a licensed real estate professional that specializes in the search, evaluation, inspection and negotiating of the purchase of a property that suits your budget and objectives , at the best possible price. This type of specialist is often seen bidding at auction or submitting offers for the purchaser. The term buyers advocate means that the advocate or agent is working for the buyers best interests rather than the seller which is what most selling agents are looking to do. A buyers advocate will put their client ahead of the seller or vendor simply because they are paying the fee and that if they do their job properly they will usually get a lot more work from that client.
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