Yahoo Finance 3 extreme tactics Aussies are using to secure properties
Australia's 2021 property market had gotten off to a flying start for 2021 with demand surging and prices going through the roof.
Our property prices rose 2.1 per cent in the month of February, recording the fastest month-on-month rise in nearly two decades, CoreLogic data revealed last month.
In the capital cities especially, prospective home buyers have rebuilt their confidence in the market and are now flocking to buy a home with a frenzied approach which you could say mirrors the toilet paper panic buying of 2020, and some are taking the process to extremes.
So what is this crazed property buyer behavior driven by?
In short, buyers are overwhelmingly concerned that if they don't buy now, prices are going to rise to fast, too quickly, at which point they'll miss out on buying a property altogether.
So, what are some of these tactics and are they a smart move?
Aus Property Professionals director Lloyd Edge points to three of the most extreme tactics that prospective buyers are doing to secure a home in the current market conditions.
"At the moment it really is 'a jungle out there'," he said.
1. Buying before auction
With prices constantly increasing in the property market, cashed up buyers may still fear that their favourite property will be snapped up by someone else at the auction, Edge explains.
"Increasingly, buyers are preferring to pay “what they have to” in order to secure a property before the auction rather than wait it out and lose out on their dream home."
"We are seeing offers that are hundreds of thousands above the price guide in order to secure a property before auction because the home buyer is frustrated on how they keep missing out."
This behaviour is typical in very popular suburbs where there is a large turn out for the open home inspections which will feed on the fears and anxiety of the buyer so they are prepared to offer much higher than the price guide in order to secure the property early on.
2. Door knocking
In the heat of this market buyers are outweighing supply and this is even more so the case in the most desirable locations.
It's unsurprising then that properties that sit on the popular suburbs and streets are being snapped up off-market or as soon as the 'For Sale' sign goes up, which isn’t giving home buyers much of a chance to secure a property in the locations they want to live, Edge explains.
"In order to get a property in a desirable area, some buyers have resorted to door knocking to see whether home owners are thinking of selling,"
But what is most surprising is it seems that this tactic actually works.
"There will be some home owners who have seen what the house down the road has sold for, and start to ponder whether they should also consider selling up to take advantage of the great market conditions."
By door-knocking, buyers are getting in touch with these types of sellers and meeting them in person which creates an emotional connection and they can discuss a private ‘win-win’ sale where the seller avoids expensive agent fees, the annoyance of open homes, as well as be able to dictate their own sale and settlement conditions.
3. Outbidding a buyer
Outbidding, or even guzumping a buyer means that once a seller has agreed on a sales price and even if the deposit is paid, someone comes and offers a higher price which is then accepted by the vendor causing you to miss out on the property.
It's a pretty extreme tactic.
"This can happen after you’ve verbally agreed on the price which the seller has accepted or during the cooling off period but before the exchange of contracts occurs. A property sale is only legally binding once a contract has been exchanged between both parties, so before this exchange happens there is a possibility to guzump a buyer if you are able to pay more for a property," Edge said.
But the good news is that if a buyers wins at auction, gazumping can't happen because the property will go to the highest bidder on the day without any cooling off period.
"This tactic can be very brutal and can be considered unfair or unethical, but it isn’t illegal in most states of Australia. In fact, the ACT has anti-gazumping laws requiring all the relevant documents to be attached to the contract. In the current market, we are seeing gazumping happening more frequently due to the rife competition and the anxiety of buyers feeling like they will miss out on obtaining a home altogether."
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