How do you know how much to pay for a property? As a buyer, it can be tricky.
Offer too much and you’ll end up paying more than market value. Offer too little and you risk missing out on your dream home or investment property.
So, how do you ensure you’re getting a good deal whilst remaining competitive against other buyers? Here are some tips.
Look for recent sales in the area
Start by looking at what’s been selling in your preferred neighbourhood. Focus on the immediate area surrounding a prospective property (say within a few kilometres), as values can differ greatly within the same suburb.
Historical price trends are great for background information, but for an accurate gauge of today’s prices, focus on sales within the last few months.
Look for similar properties
If you’re wanting to buy a three-bedroom home with two bathrooms, there’s no point looking at sales of one-bedroom units. To be relevant, comparable properties should be pretty similar to the one you’re sussing out.
Features to consider:
- Dimensions – are the land area and dimensions similar?
- Location – look for properties that are the same proximity to local amenities (like schools and transport lines) as the one you’re interested in
- Interior – compare properties with the same number of bedrooms, dining rooms, bathrooms and living areas.
- Exterior – outside features should be similar, for example, both should have a garage or the same number of parking spaces
- Condition – compare properties that are in a similar condition to the one you are interested in.
Tune into the market
Property market conditions can change fast, so it’s important to keep abreast of what’s going on. A sale price from even a few months ago may no longer be relevant if conditions have changed.
One way to keep on top of local market conditions is to go to plenty of inspections and auctions. You might even like to befriend a few local real estate agents and ask them to keep you in the loop about upcoming opportunities.
It’s also a good idea to keep track of:
- Clearance rates (the percentage of properties sold at auction – a good indicator of demand)
- Days on market (how many days it takes for a property to sell)
- Median price (the midway point of all properties sold at market price over a set period).
Don’t take the advertised price as gospel
Remember, the advertised price is a guide only. This price can also change during the marketing campaign, based on comparable sales, market conditions and if any offers are rejected by the vendor.
Don’t be afraid to check with the agent whether the advertised price has changed.
Want to hear the good news?
You don’t need to spend countless hours researching – we’re here to help.
We offer a range of free property market reports to help get you up to speed with everything from the estimated price range of a particular property to local suburb information.