Low interest rates add to the appeal of the Perth property market (TIPS)
We already know it’s a great time to invest in property in Perth.
With the Reserve Bank of Australia’s decision last week to keep the cash rate at 1.5 per cent, this certainly adds to the appeal of getting into the Perth property market.
So while interest rates have stabilised, they are likely to rise. So if you’re ready to buy, the time really is now.
What should you do next?
If you haven’t already, you need to get your finances in order.
This includes establishing your finance goals and timeframe, setting your budget and developing your strategy.
TIP: Make sure you include purchase costs such as settlement fees, mortgage insurance and stamp duty when working out your budget.
You should then ascertain the type and structure of your loan. Investment property or home to call your own? Residential or commercial investment? Development or renovation project? Will you be using a self-managed super fund? Do you need to restructure your loan/s?
Once you’ve established your timeframe, budget and strategy, you’ll need to shop around for the right loan – one that aligns with both your budget and strategy. There’s no point settling for something that doesn’t suit either. And, be sure to negotiate the best rate. Then, you submit your loan application. If you don’t have the time to shop around, need to brush up on your negotiation skills, or find the loan application process a bit daunting, you can always ask for professional help.
You’ve found your property
Once you’ve defined your strategy, done your homework, found your property and really are ready to buy, it’s time to act.
If you are in a position to make a cash offer, this can certainly sway things your way. Your price still needs to be right, though, and not substantially below other offers. You also need to read the situation correctly – if the sellers are not in a hurry, they may be less swayed by cash offers.
If you’re buying via an auction, the selling agent’s team might urge you to increase your bid. Before the auction, discuss as much as you like with the agent and consider their advice and information, but during the auction, all you have to do is beat the other bidders. Focus on them, not on the agent.
TIP: Be prepared to walk away so that you don’t overpay. Pre-approved finance and a clear sense of the value of the property ensures you are able to negotiate within your budget with confidence and walk away from overbidding situations, especially in an auction environment.
How to negotiate
If you have a good rapport with the selling agent, try to find out what you can about the offers expected or already made. If there are many others, make sure to put your best offer forward first as often the agent is unlikely to come back to you, and will likely recommend the highest offer.
If there aren’t other offers, there may be an opportunity to negotiate a better price, but don’t dawdle as another buyer could turn up at any time and snap it up.
EXAMPLE: Our client was interested in a commercial property that had been on the market for months with no buyer interest. Our client read this as freedom to take their time getting their finance organised. While they were doing this, another offer came in. Luckily we managed to submit their offer during a gap in negotiations with the other potential buyer and secure it. Lesson – the other offer could have just as easily been accepted.
TIP: Negotiation isn’t always about dollars and cents; the right purchase conditions could provide the opportunity to negotiate a better price or have the seller rectify any problems at their cost before settlement.
Why the bottom of the market is a good thing
When the market has reached a low, many people feel uncertainty, which can produce opportunities to pick up well-priced properties. But, you should still focus on quality, not bargain-hunting.
TIP: We recommend looking for investments in suburbs that are likely to deliver the best long-term growth. Putting your cash into an already proven area that will achieve consistent growth or one that has new growth drivers such as the right infrastructure is often a much smarter move than investing in a slightly cheaper suburb that has little or no prospect over the long term.
Got any questions?
So if you’re ready to capitalise on the Perth property market and low interest rates, why not complete our Getting Started form to get the ball rolling.
Or, if you’ve got questions about finance, call us for a free Financial Health Check: 08·9381·7450 or download our Finance Services information.
Or, leave a question for us on our Facebook page
Or, if you’d like to learn more about property investment in general, why not read our free Get Ready to Invest in Property eBook.