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With Melbourne’s property market sizzling, competition fierce and prices rising higher than the mercury in the Bahamas, it pays for buyer and sellers to know the nitty gritty of dealing in bricks and mortar.

The Sunday Age addresses some common real estate misconceptions and home truths.

Don’t buy and sell in spring. FALSE

Property always dazzles in the warmer months, with tendrils of wisteria, glistening swimming pools and verdant lawns. But autumn and winter is when buyers can really gauge a home’s appeal, minus the sunshine and artifice. For vendors, spring is highly competitive. Advertisement

You should make an offer before auction. TRUE

A vendor can instruct their agent to alert them to offers, so a shot. But don’t play games. A cooling-off period does not apply when the property is bought within three clear business days before a public auction, according to Consumer Affairs Victoria. A change of mind or second thoughts can be a risky, costly business.

Stage with fresh flowers, hot coffee brewing on the stove and bread in the oven. TRUE

Human nature is to be enamoured by finer things. A cookbook laying open on a mouth-watering recipe, besides branches of dried spaghetti at the ready in the pot, will set the scene. Think of it as dating, says buyers advocate Mal James – would you want someone who smells of cologne and comes bearing a bouquet? Or the one who didn’t shower nor floss their teeth?

You cannot afford to buy anything, anywhere, because of Chinese investors. FALSE

Low interest rates mean people can borrow more and therefore stretch themselves further during bidding. Favourable tax conditions make investing appealing, and this increases competition under among owner/occupiers and investors. More bidders can afford to come to the table.

You should hire a stylist. TRUE

A well-dressed home will generally fetch a higher price, experts say. Agents have preferred stylists on speed dial for vendors who need advice on a fancy throw rug or a fresh coat of paint. Agents are eager for vendors to imbue their home with the sort of finesse that gets a buyer’s heart racing and their finger twitching for a cheque book.

Some agents underquote. TRUE

Some give the industry a bad name, so do research on homes in preferred suburbs advertised within a budget, and keep notes on sale price versus the pre-auction price guide, comparing land size, bedrooms and condition. And in the current market, be prepared for competition on auction day to blow price expectations sky high.

You cannot interrupt the auction to ask questions. FALSE

One brazen buyer at a recent auction in Hampton stopped the auctioneer to cheekily ask about an “asbestos problem”. Anyone attending an auction is entitled to ask a reasonable question at any time before the hammer falls, so long as they are not doing so to be a disruption to their rivals – which arguably the asbestos buyer might have been. Equally, the auctioneer can decline to answer.

Eyeball the auctioneer and stand front and centre. TRUE

Buying a dream home is no time to play hard to get. Standing behind a tree in a trench coat and sunglasses won’t help the cause. Confidence is more intimidating to rival bidders than lurking like a Bond villain at the back of the crowd. Buyers’ advocates, bidding for clients, are not afraid to stand in pole position and make their intention known through confident body language.

Get a friend to bid for you. TRUE Eliminate emotion from the auction process for a greater chance of success. The energy the auctioneer creates, the sense of urgency and fading opportunity, can push a lot buyers past their budget. Anyone can bid on a buyer’s behalf – a friend or a relative, or for a fee an agent from a different firm to the listing agency, or a buyers’ advocate – and they can be trusted to stick to a prescribed limit.

If you are the successful bidder you legally have to sign the contract. FALSE

If you scratch your nose and accidently buy a house, you can do a runner. The auction system relies on trust and goodwill. The sale is only binding once the contracts are signed. But if a buyer signs the contract and changes their mind before handing over the deposit, they can be sued. It is unusual, says the Real Estate Institute of Victoria, for a successful bidder not to sign the contract.

You need to have a deposit cheque filled out and in your pocket at the auction. FALSE

A buyer can bid and sign the contracts without a cheque, but agents often try to execute the contract within 15 minutes of the hammer falling. Some are content to accompany a buyer home to collect the deposit, others will ask them to sign a promissory contract, and some will be willing to wait until the Monday after a weekend auction.

Bid late to gauge your competition. FALSE

If a buyer is doing this to give rival bidders a fright, it likely won’t work, experts say. It’s far scarier and better for momentum to bid with confidence. Strong bidding and decisiveness will leave rivals wondering just how deep their competitions’ pockets are, and is far more unsettling than waiting until the third and final call. Set the pace – don’t enter the fray at the last second.

The highest offer will always win the keys. FALSE

In cases of private or off-market sales, a buyer who can settle quickly and has their affairs in order can be enough to tempt a vendor. Private sales in particular will have conditions set out in the contract, and it can come down to the right sort of buyer whose own conditions fit the bill, not just the right price. A cooling-off period, within three business days, exists for residential private sales, but not public auctions.

Add zeros to the weekly rent amount and that is the value of the property. TRUE, kind of.

This crude formula seems to work for some newer apartments, especially around the inner-city suburbs, in which a modern $400,000, one bedroom pad is able be leased out at roughly $400 per week. However, at the higher end of the market, the maths definitely doesn’t add up. Properties leased out at around $2000 a week – considered a luxury rental in Melbourne – would set a buyer back much more than $2 million. Leave this strategy for a pub game – where we’ve heard this thrown around – not the bargaining table.

The reserve has to be set 24-48 hours before the auction. FALSE

A vendor will often set the reserve on the day of auction. This is generally because if they tell their agent their reserve price during the campaign, then the agent cannot advertise the property below that price. Not wanting to be locked in, a vendor will keep the price possibility fluid until the eleventh hour, if they wish.

You have to renovate and spend money to make money. FALSE

Homes in sought-after streets or with scarcity factor – for example, an unrenovated terrace on Beaconsfield Parade in Middle Park, which are becoming fewer and far between – doesn’t need a tart up to command top price. Call it putting lipstick on the pig. With apartments booming, developers keen on big blocks of land also don’t care what state the house is in – knock down jobs are just as coveted, these days.

If any agent says your offer – prior to auction or by private sale – has been verbally accepted by their vendor, the deal is as good as done. FALSE

Until buyer and seller have signed the contracts, the sale is not legally binding. If a more appealing offer is put forward before contracts are inked, it’s no more than bad luck that a buyer that thought they had the keys to their dream home in the bag can be gazumped.


Posted by Emily Power – Domain (Fairfax) on 2nd August, 2015