Average Houses Fetching A Million In Excess Of Reserve

From exercising overcaution to jumping lock, stock and barrel into the property market, Australian investors have really made the journey from one pole to another in quick time.  It seems that the pessimism surrounding the GFC has all but melted. Buyers are getting desperate to purchase properties- fearing that they would miss the ownership/investment bus otherwise. How else can you explain an average, 3 bedroom house in Eastwood selling for over $2.3 million? An article on news.com.au talks about the insane figure and the associated buying frenzy (call it despair if you will).

Yes, the Eastwood home in question has a 999-square metre corner block but that in my opinion is not enough reason for the house to sell a million above reserve. Naturally, the owners are a surprised lot.

I agree with the article that the combination- packed auction venue and buyer frenzy- is responsible for the sale price of $2.385 million.

Buyers’s psychology hints at despair

Buyers are ready to pay anything, go a lot overboard to procure their dream home. They have a perception that others will grab the chance if they do not show despair.

Developers not keen to buy at such high prices

Such price-pushing in case of average houses can only be attributed to buyers and investors. It is because the developers prefer to sit out of the deal after the price rockets beyond a certain point (I mean once they know that even Subdividing will fail to get them the right profit)

You can read the original article here.

Rope in a seasoned buyer’s agent

I think it is really wise to hook in a seasoned buying agent rather than be caught in the hype and pay a lot more than a property deserves. Buying high will not aid you irrespective of whether you are an investor or a buyer.

Buy high and renovation will look like a burden

A purchasing frenzy can balloon prices in a short run but when the market corrects itself, such purchases will leave a bitter taste in the mouth. Another food for thought: Properties which are bought at high stickers have nothing left in the kitty for renovation.

Buyer’s agent is the best judge

An experienced buyer’s agent knows the market, sails well through a temporary boom in demand and waits for the right opportunity. He/she is also the best judge of neighbourhoods falling within his/her arc.

Conducts Due Diligence

He/she selects property for you keeping the rental yield, council approvals, easements, renovation structure practised in neighbourhood (structural or cosmetic) in mind. This way, you stand to win in both the short and the long run.

Can you share your experience of a property deal where you paid more than was needed?