Knowing what a property is worth is central to avoiding paying too much for it. It’s about doing your homework, knowing what you want, knowing the market and making sensible offers.
Set a benchmark
Ensure you speak with your mortgage broker to get clarity on exactly how much you can borrow, and this will help you set a benchmark for making an offer. When in the researching stage of looking to put an offer in for a property, ensure you have a budget in mind.
Deciding on what you think the property is worth before starting the negotiation process will allow you to negotiate effectively by knowing your ceiling and not going over that number!
Look at comparable sales
Comparing nearby properties that have sold recently is the best way to assess an acceptable price for the property you are looking at and provides a valuable bargaining tool when you are negotiating with a seller or agent. Make sure the properties are comparable, with a similar land size and number of bedrooms, so you aren’t measuring apples against oranges.
E.g., If a 3 bedroom, 2 bath and 2 garage on an 800sqm block around the corner sold for $650,000 2 months prior, odds are the 3 bedrooms, 2 bath and 2 garage on an 823 sqm block you are looking at will be around the same price.
Keep in mind current market conditions
The property market is always changing, so doing this research once and sitting on it for a few months will offer little help. Going to open homes and auctions regularly will help you get insights about the current state of the market and how much certain properties are going for.
Expand your search
Don’t limit yourself to a particular area or suburb. Look around to expand your options. You might find your dream property just a couple of suburbs away that still meets all your needs.
Don’t exceed your financial capacity
If you’ll be taking out a loan to purchase a property, it's a good idea to seek pre-approval before you start making offers.
Aside from meaning that when you do eventually make an offer it will be taken seriously by the seller or their agent, having finance sorted out means that you can be sure of what your stamp duty and associated costs are, and exactly what price range you can consider.
Remember, even if a lender approves you for a particular loan amount, it doesn’t mean you have to accept it – a higher loan amount means higher interest charges over the life of the loan, increasing the total cost of the property purchase. Only ever commit to a loan that you can afford alongside your current income and real expenditure.
Speak with your local mortgage broker so you can be updated and informed. Sparks Finance is willing to help you understand the sometimes-daunting property buying and finance process in Bathurst. Don’t hesitate to give us a call.
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