Trying to find – then successfully snare – a home or investment property can be incredibly stressful.

You’re out of your depth, prices have been out of control and, probably at least once, you’ve found yourself out of luck. But, for anxious buyers, the tide is slowly turning.

Property price growth is at its slowest in three years, with Melbourne the highest at an annual 9.8 per cent and Sydney at 7.4 per cent, says CoreLogic RP Data. Auction clearance rates dropped to 73 per cent and 76 per cent respectively last weekend, on APM figures. Plus the banks have neatly removed investor competition with targeted rate slugs.

It all means a shift in the power balance between buyers and sellers … and I’ve managed to persuade several brave real estate agents – people who, after all, make a living acting for vendors – to confide in us how to bag bargains.

1. Know your stuff

Research not just the prospects and prices in an area but also for your target property. Domain (a Fairfax Media site) offers decent suburb profiles and property-specific information such as sales history via the new Home Price Guide – all free. (Our fabulous turncoat agents also remind you to inspect at different times, as well as to talk to neighbours about any issues and, umm, idiosyncrasies.) The good news is that in many states agents either are, or will soon be, required to give buyers a list of recent comparable sales as well.

2. Get and double-check the guide price

No longer should you operate in the information vacuum many estate agents have preferred. In many states – including NSW, Queensland and probably shortly in Victoria – they’re now usually legally required to give a guide price in a range of 10 per cent. But even so, or if that’s not the case in your state, Domain’s Home Price Guide also estimates a property’s current low, mid and high potential price (and yield). Keep asking the agent if any guide price is still valid, too. Consumer Affairs Victoria’s guidelines say it should be updated to reflect any higher offers that have already been rejected.

3. Play your cards close to your chest

All your experience to date might have been in snaffling rental properties from hoards of other applicants – you do everything to convince them you’re uber-intelligent, successful and flush. For goodness sake, agents say, keep these things to yourself when purchasing property and downplay the worth of any existing property you have to sell. It translates to a vendor as “we’re on a golden ticket here” and you could well end up paying more.

4. Wait for auction

Bidding early has become much more popular in the boom, particularly in Sydney and Melbourne, as buyers seek to get in first. But agents are upfront in saying you have to “pay a premium” for the vendor to give up the opportunity for a competitive auction. They also report that, at auction, buyers generally bid what they were earlier prepared to pay anyway. For these reasons in still-hot areas such as beachside Sydney, some agents send 90 per cent of their properties to auction. Across the country, the Real Estate Institute of Australia says the average is 30 per cent. Regardless of the market, a pre-auction bid carries the highest risk of buyer’s remorse: you will never know what might have happened if it had gone to auction and you’ll have to live with that. The key if you decide instead to go head-to-head at an emotionally charged auction is not to breach your upper limit (see breakout). Auctions are short; mortgages are looong.

5. Combat fake offers

Fierce demand for a property? Other bidders about to snap it out from under you? Prove it! It’s a common real estate tactic to say this and make you feel pressured to put forward your best offer there and then. The Australian Competition and Consumer Commission considers it misleading or deceptive conduct to make up other offers, but you’ll rarely know. Agents say the most effective way to ensure you don’t miss out is to make an unconditional offer – furnish a signed contract and deposit cheque – reflecting what you are prepared to pay; even if this is less than a rival unconditional offer, it is extremely difficult for a vendor to pass up certainty. As one said: “A bird in the hand and all that.” It also nicely transfers the fear of missing out – FOMO – you may be feeling, to the vendor. They might not see a profit that high again.

6. Start 7 per cent below your best offer…

… But let me first clarify that this varies greatly by state, suburb and property, and obviously it’s a very different dollar amount in cheaper and expensive markets. But regardless of the market, you need to give yourself the capacity to safely bid up – because a vendor will usually reject at least one of your offers. If you max yourself out at the outset and love the place, you’ll quickly find yourself in a dilemma about whether to go beyond your sensible borrowing limit.

Agents also quietly suggest you get a vendor who has rejected your bid to put in writing the amount they’d accept; it will both prove they’ve been presented with the offer and tell you what you need to do to seal the deal.

7. Hold your nerve next time

It’s tough, I know, but don’t become increasingly desperate if you’ve repeatedly missed out. Our friendly estate agents admit they smell it a mile away. It is as indicative of a higher price opportunity as the words “motivated seller” are of a lower one. This is one piece of information, unless you’ve found yourself dealing with the same agent more than once, to keep to yourself. And, if you’re upsizing to accommodate a growing family, shop before the baby bump makes your time pressure (and nesting instinct) obvious. On the plus side, you’re more likely to have an offer accepted if a vendor knows you’ve missed out a few times: it’s very possibly, truly the highest you can manage. Calculate how much can you safely borrow

Step 1: Divide your deposit by 20 then multiply by 100. This is your upper limit with a 20 per cent deposit, a decent equity margin and one that avoids extortionate lenders’ mortgage insurance. (Divide your deposit by 10 then multiply by 100 if you are happy to borrow 90 per cent, etc.)

Step 2: Plug the amount this means you would be borrowing into a home loan repayment calculator – at a 6 per cent rate, a competitive 4 per cent today plus eight potential rate rises. Are repayments less than one-third of your monthly before-tax salary? If not, reduce borrowings until they are.

Step 3: Never offer beyond these safe borrowings plus your deposit (remembering they’ll need also to cover costs), either privately or at auction.

Read more:
Follow us: @theage on Twitter | theageAustralia on Facebook

Posted by Nicole Pedersen-McKinnon — The Age on 10th April, 2016