Best Buyer Wins – Every Time
Few people would be surprised to learn that the Dunedin residential market continues to be a sellers’ market, with a shortage of listings and many more buyers than properties available.
Even though sales have been humming along around 250 per month, the listing numbers have hovered around 450 in Dunedin for the past few weeks. That’s around half the number that might be expected to be for sale in late autumn (see our monthly market report on www.graemepennell.co.nz).
In one of my recent deadline sales, 13 buyers made written offers on a Pine Hill property advertised with a price indication upwards of $239,000. All offers were over the price indication, some by several tens of thousands of dollars. Four offers were unconditional (that is, not subject to conditions) and, unsurprisingly, the vendors chose the best of the unconditional offers, knowing that when they signed, the property would be sold.
So that got me thinking on how the many buyers who offer and miss out in a market like this can be more competitive. For some it is a long road to eventual success. A Dunedin lawyer told me recently of a first home buyer client of his who had made 19 offers unsuccessfully. Another had made eight unsuccessful offers before finally opting to make an unconditional offer a significant margin above what he thought the property was worth. He was the successful buyer.
In a rising market, there is reassurance for buyers that in a year’s time your property is likely to be worth more than you paid for it — though, hopefully, you will not be thinking of selling in such a short space of time and incurring the costs involved. Many buyers I’ve talked to who bought 12 or 24 months ago are now thankful they did extend themselves. Others, still looking and on our buyer database, are kicking themselves they didn’t offer more months ago because now their dollars are not going as far. They are having to offer more for lesser property.
This all leads to a rather obvious conclusion: to buy any property in competition in a rising market, you have to be the best buyer, that is, pay more than anyone else and on better terms. Because, obviously, there can only be one successful buyer. In short, buyers who continue to miss out should re-examine how they can make their offers more competitive. Accepting that Kiwisaver-dependent buyers are at a disadvantage over buyers who are not, can the working days for finance terms and other conditions be reduced? Can they be satisfied and removed before making an offer? Will your lender allow you to go unconditional? Is a relative willing to go guarantor to get your offer over the line? And how about re-thinking your offer price? If you had to pay a few more thousand dollars to get the property, could you? Would you?