Unsure how to proceed in this market? How FOMO has made place for FOOP

For the last number of years, the Sydney market has been hot hot hot, with clearance rates into the 80% and most buyers having high stress levels in the fear of missing out (otherwise known as FOMO).

But how the tables have turned in recent months… An election, world affairs, the opening of borders and of course the much discussed continued increase in interest rates have changed the landscape of property buying in a very short period of time.

Now that we are now well into a market that has softened with regular clearance rates in the low 50%,   FOOP - Fear Of Over Paying ( first coined at a Real Estate conference in San Francisco May 2016) is back with a vengeance.

The uncertainty of what lies ahead with interest rates is a major factor with this of course, and where a good broker or financial advisor is worth their weight in gold. After all, it looks like we are in for a few more rate rises at least and you need to ensure you can service the loan for at least the next number of years, also carefully considering potential setbacks (like sickness) and wonderful things (like having a baby) that life likes to throw at us at any time! It is not easy to get out of a property in a hurry and there are considerable costs involved in doing so, so it is always wise to proceed with caution.

As a consequence, more recently we have been getting quite a few enquiries from potential buyers who have found their perfect property but are rendered incapable of moving forward and purchasing the property as they have a real fear of over paying. Gone are the days of throwing too much money at (in my opinion) sometimes questionable properties and with agents upping and lowering price guides left right and centre, it is no wonder buyers are left scratching their heads as to where to find true value when it comes to buying.

A lack of recent sales (due to overall lack of supply) adds to insecurity about value and prices as there are no recent sales to compare the property to, and so the average buyer out there has no idea what the property is really worth and how much they should pay.

The final nail in the coffin of buyer confidence appears to be the lack of other buyer approval, with whom they can confirm they are doing the right thing. Picture this- you are interested in buying a property, and where last year there would be 20 people registering at auctions, now you may only be competing with one other buyer, if there is even anyone else there at all. The lack of social proof scares some buyers off and leaves them not purchasing at all.

After the heady years we have had behind us, I think it is a good thing that buyers are using their heads rather than their hearts to make property decisions. In my time I have had to push back on many clients wanting to throw way too much money at properties that were simply not worth it…

So, if you are in the market to buy now, make sure that your FOOP isn’t causing you to miss out on great property because of the above factors. I do believe that the current market is definitely working in buyers’ favour, so don’t get too scared off and get to work.

Make sure you know all there is to know about the property, such as the true condition of the building (by commissioning a B&P or Strata report), what is going on in the surrounding area (DA checks are a good place to start), but also what the terms and conditions are in the contract (a great conveyancer can help with this) Research recent sales so you have a clear understanding of the particular micro market your chosen property stands in, and once when you are feeling confident, and comfortable do go ahead! It is an excellent market to buy in and you may buy yourself a very reasonably priced property that will suit your needs for a very long time to come!

If the above sounds daunting and you need a little (or a lot!) of help, an experienced buyer’s agent will be able to help you put pricing and due diligence into perspective and give you the confidence to move forward on your dream home! Contact us today.