We all love the idea of landing a bargain property, but for most home buyers, the real issue is whether they are overvaluing a place and paying too much in the process. 

Buying a home is exciting, but it’s perfectly natural to be nervous given that you are likely committing to spending hundreds of thousands of dollars (or millions!). But with a bit of research, and some other handy tips, you can help protect yourself when the bidding or negotiation begins. 

Why it is important to pay a fair price

Paying above the odds for a home can have serious financial impacts. The more you pay, the more you may need to borrow to fund the purchase. That can mean paying higher loan repayments, potentially leaving your budget stretched, especially if interest rates rise. 

The worst case scenario is you get caught out by a bank valuation that comes in lower than the purchase price, leaving you facing a funding shortfall. 

The question is – how do you know if the asking price for a home is in line with the market or if it is completely over the top?

Research helps you nail the market

One way to understand what a home is worth is to have a pre-purchase valuation. This involved a professional valuer examining the property and arriving at a value based on factors such as the location, size and condition of the home. The catch is that a valuation can cost between $200 to $600. It also takes time to organise and in a fast-moving market, the delay could see you miss out on a property.  

A cheaper option is to do plenty of your own research. Websites like realestate.com.au or domain.com.au can show the median house and apartment values for individual suburbs. This will give you as good starting point, though as each home is different, you will need to drill down further. 

Factors that can impact market value

Some factors can see broadly similar properties have very different market values. Things to watch out for include:

• The lot size a house sits on.
• The number of bedrooms and bathrooms.
• The condition of a home.
• Availability of parking (off-street parking is a plus!)
• Orientation. North-facing homes receive more natural daylight, and so often require less artificial lighting or heating. 
• Energy efficiency. PropTrack found that three out of five (59%) buyers say eco-features such as solar panels are important to help save on power bills. 
• The street. Be wary of streets that become a commuter parking lot on weekdays. 
• Views and outlook.
• Zoning and planned developments. 

Bearing all these features in mind, check out recently sold properties like the one you are interested in buying. Pay particular attention to the final sale price, not the asking price. It is the selling price that sets the market. 

Don’t be afraid to negotiate

If you have done your homework, you should have a reasonable idea if the asking price of a place is close to the mark or if it is wishful thinking. Remember, you may also have scope to pay less by negotiating on price. Bear in mind though that the longer negotiations take, the greater the danger of someone else jumping in and snatching the property. 

Get in touch with us about pre-approval

Give us a call to discuss some of the benefits of home loan pre-approval. It can help you act quickly when you see a home you are interested in buying, and it sets a buying limit so that you can negotiate with confidence. 

Phone: 1300 855 022
Email: clientservices@zippyfinancial.com.au

Zippy Financial is an award-winning mortgage brokerage specialising in home loans, property investment, commercial lending, and vehicle & asset finance. Whether you are looking to buy your first home, refinance or build your property investment portfolio, the team at Zippy Financial can help find and secure the right loan for you and your business.

About the Author:   

Louisa Sanghera is an award-winning mortgage broker and Director at Zippy Financial. Louisa founded Zippy Financial with the goal of helping clients grow their wealth through smart property and business financing. Louisa utilises her expert financial knowledge, vision for exceptional customer service and passion for property to help her clients achieve their lifestyle and financial goals. Louisa is an experienced speaker, financial commentator, mortgage broker industry representative and small business advocate.   

Connect with Louisa on Linkedin.   

Louisa Sanghera is a Credit Representative (437236) of Mortgage Specialists Pty Ltd (Australian Credit Licence No. 387025).

Disclaimer: This article contains information that is general in nature. It does not take into account the objectives, financial situation or needs of any particular person. You need to consider your financial situation and needs before making any