How to take advantage of a changing property market

The Victorian real estate market has been in a state of flux for the past couple of years. From legislative changes, to restrictions on international buyers, to stricter bank lending criteria to general market variations. It's been tough for buyers and sellers to get a grip on what they need to do to be successful.

It’s times like these that successful people accept that times are different, and are prepared to change their thinking. Here are five tips to help you thrive in a dynamic property market:

1. Keep in touch with agents. 

In times of uncertainty, people will often hesitate or wait. I’ll often hear prospective buyers say, "I'm happy to survey the market online and wait until something's advertised". However, at the moment there are a large number of motivated sellers out there who aren’t quite prepared to commit to a marketing campaign.

A year ago, in most cases a vendor would only sell a property off-market if they felt they were going to get a premium price before going to auction. Now it's different. An initial off-market exploration will often produce an offer that leads to a sale. At the very least, vendors are prepared to get a realistic assessment of where their property sits in the marketplace, even if they don't want to put it on the market at that price.

The best way for buyers to keep their ears to the ground is by staying in close contact with their agents. Over the last few months, I've sold half a dozen houses off-market to buyers I introduced to the properties privately. There are many opportunities out there; savvy buyers can pick up properties at reasonable prices.

2. Bravery and patience will be rewarded. 

There is much speculation currently regarding the state of the property market and the prospects for growth over the next 12 months.

Purchasers of family homes in and around the private school belt typically live in them for 10 years or more. Even if those buyers don’t receive capital growth for the first year or two, it typically comes back at some point in the ownership cycle.

Obviously, no one wants to spend more than they need to. That's just human nature. Unless you’re speculating, though, it makes sense to treat home ownership as a long-term investment.

From my time in Melbourne property the dips in the market have historically been brief and those who have been brave enough to buy in tougher conditions have been handsomely rewarded in the long term.

3. Speak to your bank.

It’s important at any time for prospective buyers to know how much they can borrow and hence what they can afford to buy. This is especially relevant now when the banks are looking closely at their lending policies. What you may have been able to borrow a few months ago is likely to have changed, and the approval time required for the loan likely to be longer.

If the right house comes along, you will be in a stronger position than buyers who are sitting on the fence if you have your ducks in a row.

4. Mind the “buy/sell” gap. 

I know a couple with a house in Kew. Eighteen months ago, it may have realised a price in the vicinity of $3.3 million. Whereas today, it would likely sell for around $3million. Now this may seem like an inopportune time for them to sell. However, given they are seeking to upgrade, their next home that might have cost them $5m back then, they may pick up for mid $4m today.

It can be a good time now to upgrade – be a “buyer/seller" – as long as you keep an eye on the relative property values.

5. Seek professional assistance or guidance.

If you are a buyer who isn’t experienced and/or comfortable representing yourself in a negotiation, you should seek the advice of a buyer’s advocate or a selling agent you feel you can trust. Buyers seem to forget sometimes that vendors are paying the selling agent's fee, which means they’re there to represent the sellers, first and foremost. Thankfully I've had good relationships with many buyers over the years.

Even if you don’t want to pay to engage an official buyer’s advocate, you can be represented by a real estate agent who works independently from the agency selling the property. I often bid at auction for clients when they're interested in properties being sold by other agents. Only last month I attended an auction with a client for a property they were interested in. After the property was passed in to us, we engaged in post auction negotiations and secured the property. The client was grateful for my assistance and said it likely saved them around $200,000.

There are many and varied scenarios that can play out in both auction and private sale negotiations. Just as financial advisers help us with other investments, we should enlist experts to help us with one of the biggest financial commitments we’re ever likely to make.