Have you ever been to an auction and seen a bidding frenzy that led you to ask “Why would anyone pay that much for this?” Have you found a house you love, but are not confident about how much you should pay for it? Are you scared you will end up paying too much for your dream home?
The one thing most people are not prepared for is the emotional impact of the buying journey, and this is not surprising. After all, your new home will be a lot more than bricks and mortar – it is where families grow up, dreams are realised and memories are created. We experience many of the fears listed above because, in more than almost any other area of our lives, this is where our hearts and our brains intersect, and that can be hard to rationalise.
Whichever way you look at it, buying a home is exciting. If you can go into the transaction feeling confident it will make dealing with the conflict between emotion and sound business practice so much easier, so we have come up with 3 of the most commonly asked questions and 2 solutions for each which will help you achieve that level of confidence.
“What is this property really worth?”
Let’s start with the big one. You’ve found a property you love, but what should you offer? We know the market is not oversupplied with properties and it is likely there will be other interest at some point, so this is where you need to ensure you are aware of 2 things.
Firstly, have you done your research – visited other properties, searched the web and seen what else is happening in the area? There is plenty of information out there and you can also ask the agents you are dealing with for information on other recent sales which are the best gauge of current market values.
Then, ask yourself “What is it worth to me?” You see there is no exact value for any property, anywhere in the world. The price it sells for is likely to be within a reasonable range of values which your research will demonstrate, however depending on what is most important to you; it could be worth more or less than the next buyer.
One important thing to remember – while your heart should not rule your head, you also need to consider how disappointed you would be if someone else paid more and what your likelihood is of finding a replacement option. If you are planning on owning a property for say 5-8 years, which is relatively normal, and it appreciates in value by just 5% per annum, a $450,000 home will increase in value by $120,000 – $200,000. Spending an extra $5,000-$10,000 now will seem inconsequential against the many benefits of living there during that time.
“I’m nervous about bidding at auction – how do I handle this?”
Once again this is about being prepared so you can be really confident about what is important to you. This will also help you to shut out the actions of others around you on the day and any emotional doubts you may have when the bidding gets competitive. Your bidding strategy is not the most important thing, although if you want a few tips about this, you can find some here. There are only 2 numbers you really need to know on auction day, provided you have the discipline to make a decision and stick to it. These are “How much would I love to buy it for?” and “What would I be prepared to pay not to miss out on it?
“It’s not perfect – should I still buy it?”
This is the easiest question of all to answer. No one has ever bought the perfect house and some have spent millions of dollars trying to achieve that ideal. Again there are only 2 things you need to consider to give you the level of confidence you need.
Make sure you have carefully reviewed the building report. All houses will need some maintenance pretty much all of the time and it is not up to the current owner to fix every creaking floorboard or overgrown garden bed. So long as you know what you can live with and what you can afford if there are items you have to address immediately, compromise is not only good, but essential.
In addition, you need to know what is really non-negotiable for you and your family (perhaps it is location, number of bedrooms, backyard etc) and what you can adapt to in order to obtain the home that will deliver on those dreams.
So there are 6 strategies you can employ to go on your property search with confidence. Even with all that behind you, there may still be times where you will find the search challenging, however with perseverance, a realistic mindset and a confident approach, when you secure that property it will be exhilarating.