When it comes to buying property,
cool furniture and non-essentials like this uber-cool library can ruin
your chances of making a rational decision.
Source: Supplied
BUYING your dream home is a process that’s bound to stir up strong emotions.
Endless Saturdays spent at auctions — and the frustration of
watching someone else seal the deal on what looks like your ideal abode —
can take their toll.
But the worst trap a homebuyer can fall into
is letting their feelings take over the transaction, an experience
that’s all too common, especially in Sydney’s hyped-up property market.
Whether
it’s high ceilings and polished floorboards, a luxurious second
bathroom, a wine cellar or a French provincial kitchen that captures
your heart, keep in mind that the fundamentals of a property’s value may
have nothing to do with these trimmings. Nor do the designer
furnishings installed by interior decorators, whose bread and butter is
extracting more money from you.
A Commonwealth Bank survey of Australian buyers in 2013 found many
admitted to being influenced by emotional characteristics of the
property up for sale — and 44 per cent paid more for a property simply
because they “really liked it”.
With properties selling as much as
10 per cent over the price guide the norm, it’s hard to know when to
walk away, especially once buyers get caught up in the theatre of an
auction.
The ever-present FOMO (fear of missing out) can push a house hunter over the edge and into dangerous overspend territory.
Keeping emotions in check when an auction is under way is easier said than done.
Source: News Corp Australia
Property expert Peter Boehm, author of
The Great Australian Dream, said first home buyers were particularly vulnerable to being led by their hearts.
And the number one tip he has for them is to “check your emotions at the door”.
“Buying
a property is an emotional experience, because it’s probably the
biggest investment you’ll make in your whole life,” Mr Boehm told
news.com.au
“It’s
going to be with you for some time, so it’s got to feel right. But the
problem with that is that something that might feel right, might be out
of your capacity to buy.”
He said many first home buyers “start looking at properties they shouldn’t, and then they get discouraged.”
They
might show up at a few auctions and be quickly outbid, or have an offer
on their dream property rejected, then become disheartened by the whole
process.
“Unfortunately, the reality in today’s world is that you’ve got to be pragmatic,” Mr Boehm said.
The
best approach, he said, was to understand your buying power, set your
budget, and only look at suburbs where the median selling price is
within it.
And once you are at the auction, “never bid with your heart”.
“You
could end up being a slave to your mortgage and your first home could
be a trap, it could be like a prison,” Mr Boehm warned.
Keep in
mind that a sophisticated auctioneer will be working to draw you in, get
your confidence, and generate competition among bidders.
“It’s their job to engage with you and talk about all the good points of the property.”
In your dreams: you may one day be
swinging from the Venetian glass chandeliers of this $6 million Mt Eliza
mansion, but if you’re a first-time buyer, it’s unlikely to be yours
soon.
Source: Supplied
Psychologist Sarah Godfrey said emotions were an inevitable
part of making big purchases, but you could minimise their impact by
being aware of how they affect you.
“All our decisions are emotional, no matter what,” Ms Godfrey said.
“Studies should that we can’t actually make a decision unless we can get a sense of how we feel about the options.”
It’s just how we’re wired, she said.
And
skewed decision-making often reared its head in distinct ways at
auctions, where Ms Godfrey said there was four personality types to
watch out for — in yourself and others.
1. The competitor:
“This is the person who is in it to win. It doesn’t matter if they want
the house or not, they just don’t want you to have it. They get caught
up in ego and pride, because you are bidding against them.”
2. The dreamer:
“The buyer who walks into a house and is off in fantasy land — women
are particularly bad at this. They fall in love with a person’s
lifestyle or status and are mesmerised by a clean and
beautifully-decorated house.”
3. The adolescent: “Wants it
now and doesn’t want to think about the long-term implications, driven
by impulse and immediate gratification. Not realistic about price or
essential characteristics of the property.”
4. The narcissist: “This
is the person who has the real estate agent tearing their hair out.
They believe they should get the house at a better price than anyone
else and will not back down, they are grandiose and will fight to the
last $1000.
Ms Godfrey said that while we’ve all got a bit of
these archetypes in us, watch out for them or you might make a decision
you will regret.
If you’re standing next to someone who appears to
be “bidding without thinking” in a bid to get one up on you, “step back
and think. Why is this person bidding this way? Is this becoming a
battle?”
Don’t be swayed by the art and wine collection — it doesn’t come with the house.
Source: News Corp Australia
Sydney buyer’s agent Marcus Gould knows how easy it is to make the wrong decision in the property market.
“We take the approach that if you’re buying a property as your primary residence, you should see it as an investment,” he said.
“That’s what having an arms length buyers agent on your side is good for; it gives you that advantage.”
While
it’s his job to remove stress from the process by taking over the
search, Mr Gould has some tips for those who want to go it alone —
starting with “do your research”.
“You’ve got to understand the suburb you’re buying in,” he said.
“Which streets are selling for a higher price, and why? Some streets are better than others; do your due diligence.”
This
means looking past the shiny floorboards and tasteful furnishings which
the agent has carefully ensured will capture the eye.
“The
beautiful furniture and styling, it’s all there to make you want to buy.
You’ve got to see past that and look at the quality of the structure,”
he said.
“It’s important to look at the floor plan, and check to
see if they’re common in the area. If not, you might have trouble
selling it because it’s not as suitable,” Mr Gould said.
And it might sound obvious, but take a fine-tooth comb to all the relevant inspection reports.
“I know people who get the building and pest reports and they don’t even read them,” he said.
What kind of bidder are you? Know your personality type and be aware of your emotions, says psychologist Sarah Godfrey.
Source: News Corp Australia
A good buyer’s agent will take down all the attributes of a
potential purchase and put them in a spreadsheet for you, comparing them
in detail with similar properties that have sold in the area.
“We
look at the comparable sells — not the ones the seller’s agent puts in
front of you, because sometimes they are no directly comparable,” Mr
Gould said.
When it comes to bidding at auction, he said, “we’re always there first.”
“See
how many people register, so you know the level of competition. Not all
registered bidders will actually bid, but it’s good to keep an eye on
what’s going on.”
Then, he said, look for signs of weakness in
your competitors. Mum-and-dad buyers could be spotted a mile away, and
were notoriously emotional bidders.
“When they start to bid in
smaller increments, it’s a sign that they’re coming to the end of their
budget. So if they start bidding in increments of $5000 or $10,000, we
continue bidding at $20,000.”
Finally, patience is key: it takes most buyers up to six months to secure a property that is right for them.
news.com.au 25 Jul 2015
A 'trick' can be deceptive conduct, false advertising, misrepresentation of the actual product or a variety of other false or misleading information given in order to obtain a purchase.
In Australia, it is illegal under various Acts to 'trick' people, but not many are aware or may even wish to pursue compensation as a result of a 'fraudulent' act carried out by dodgy real estate agents.
Australia the 'lucky country' (for 'tricksters').
