10 ways to bag a bargain

Magnifying glass on property to bag a bargain

Everyone wants to bag a bargain when it comes to buying property. In fact, if you get a property for less than it’s valued, you can end up reducing your Loan to Value Ration (LVR) which can mean you get a better rate or reduce your Lenders Mortgage Insurance (LMI), saving you even more money.

Magnifying glass on property to bag a bargain

Here are some tips to help you get that bargain property.

1. Look for eager vendors

A vendor who is keen for a quick sale will often accept a lower price. They might be under distress, going through a divorce, have purchased a property elsewhere or it could be a deceased estate.

There is no moral high ground here. It’s usually a case of the seller needing to offload the property quickly and they are willing to cut the price to do so. Instead of feeling bad or guilty about it, you might want to consider that you may be doing them a favour by purchasing the property. In most cases, if you don’t buy it, someone else will or worse, the seller may end up in a situation where it’s reclaimed by the bank and the sale is forced. This is known as a mortgagee sale.

2. Knowledge is power

Do your research. Get to know the market in the area you want to buy in. Work out what you want in a property and get informed. When a bargain opportunity presents itself, the first buyer to spot it is most likely to seal the deal. So if you don’t know what you are looking for or what a bargain is in the area you’re buying, you might miss out! Be the expert on the area and be the one to grab the bargain others miss.

3. Be prepared

Being prepared will drastically increase your chances of snagging a bargain. Firstly, get your finances in order. Arrange pre-approval before you start hunting property. Know how much you can afford and what your borrowing power is. Shop around for finance or speak to a broker to get the right home loan for you.

If you are buying the bargain as an investment property, know how much rent you need to make the property worthwhile, how easy it is to rent in the area and what, if anything, would need to be done to the property to make it rentable.

Get to know the professionals you’ll be working with when buying a property and form a relationship with them. Most people love to share their opinion and expert knowledge. Talk to valuers, real estate agents and get their opinion on the area and what to look for. If you develop this relationship, when a bargain comes up, you’ll be able to call them for advice. Or, in the case of real estate agents, if a bargain comes up that suits your needs, they are likely to call you to close the sale quickly!

Along with this, have pest and building inspectors you trust whom you can call when needed to inspect the potential bargain property.

4. Get known

Once you’ve done your research, know what you want, what it should cost and where it’s located, get out there and get known. Most agents keep tabs on buyers who are serious and ready to buy in their area. For an agent, a buyer who knows what they want and has their finances sorted makes their job easier. If the agent knows what you are looking for, they can call you when something comes up and sometimes seal the deal without even having to advertise the property! This saves everyone time and money. You land the bargain you want, you save the seller from having the home foreclosed by the bank and you reduce the amount of work for the agent, plus increase their chances of being referred to friends and family by yourself and the seller. It’s a win for everyone.

Only approach agents and other professionals when you are serious about buying. Time-wasters are frustrating in any occupation, and in real estate, you will quickly be shafted if you are wasting anyone’s time.

5. Think outside the box

Bargains are not always as obvious as the run down 3 bedroom home you can renovate and flip for a profit. Think outside the box and look at other options such as the capacity to subdivide a property, buying a small block of units to renovate and sell individually, purchasing your neighbours home if your area is zoned for units.

Think creatively and you may find there are more bargains than you first thought.

6. Look for growth potential

Look for things like new infrastructure, zoning, transport or industries growing in an area which is likely to push prices up. Examples include a university extending its overseas program, a bridge or other road changes reducing the commute from the area you are looking at to the CBD or new industries such as warehouses or mining coming in. Getting in before these changes drive up prices can see you grab a bargain.

7. Buck the market trend

Have auctions slowed down with fewer bidders in your area or is it a time of year where more people are on holidays and not interested in the property market right now? Keep an eye on the subtle changes and you can be ready to pounce on a property while others are distracted. Do your research and if you know an area is good or has all the right elements for growth, you might choose to buck the trend.

8. Stick with the basics

Your bargain isn’t a bargain if things go south quickly. Avoid things such as main roads and being near rail lines. If you need to sell your bargain quickly later, these things make it harder.

9. Work the conditions

Be flexible and make a contract more favourable. If you have fewer conditions, for example, if you can waive the cooling off period or safely take out the finance clause, a vendor is likely to be more interested in your contract than others. Ask the agent what the buyer wants in the contract. If you are flexible with your requirements and can cater to theirs, it might place you ahead of the competition. Do your research and get professional advice first though.

10. Long listing can equal big savings

Generally, a well-priced property will sell quickly. When a vendor is overconfident and prices their property too high, it can sit on the market for too long, putting off potential buyers.

Keep an eye on properties you think are overpriced, especially in cooler property markets. If you seeing being advertised week after week with no offers or the price is reducing, try your hand. The vendor could be sick of the process and willing to let the property go for much less.

If you want to bag a property bargain, talk to our brokers to get your finance sorted before you go searching.

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