First homebuyers take heed with overheated prices in rush back to the market

September 12, 2013 | Media Release

In the post-election scramble back to the property market, Perth buyers’ advocate Property Wizards warns buyers –particularly first homebuyers – not to fall into a trap of paying an overheated property price in the fear of missing out.

“Buyers must learn from previous mistakes made as the heat returns to the property market,” according to Property Wizards buyers’ agent Liz Sterzel.

The recently released CommBank Home Loans report reveals that one in five homebuyers handed over much more than they had initially budgeted on their last property purchase, Ms. Sterzel notes.

The report discovered that property buyers simply panicked in the face of competition; scared they’d miss the boat if they didn’t act quickly, she says.

“First time buyers also believed that even paying an overheated price would be cheaper than renting,” Ms. Sterzel adds.

“It also uncovered that more than half of the buyers surveyed negotiated the price before they had undertaken their due diligence.”

Ms. Sterzel explains that for first homebuyers this can be a big risk given they have very little experience in understanding the ins and outs of due diligence, not to mention additional clauses they could negotiate in their favour, rather than the seller’s favour.

“They might know the basics like the building and pest inspection but not have a clue of what else they should be investigating prior to buying. It can end up being their costliest mistake ever.”

Ms. Sterzel is already observing that the number of days a property is on the market is declining, and so is the property discounting by sellers.

“These are all signs that prices will continue to creep upwards,” she says.

“Buyers need to be prepared to act quickly but not naively this time. They must research the market thoroughly and seriously consider enlisting the professional services of a property buying team – including a buyers’ agent, solicitor and mortgage broker.”

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