The Housing Apocalypse
Over Saturday morning coffee the West told me a “return in buyer confidence” had resulted in a frenzy hitting the property market.
“Frenzy” is a great journo word. It has weird letters like “f” and “z” which only appear together in cool words. Like Fezz, and Fezzik, the giant from The Princess Bride.
Frenzy turns up in newspapers because is shorter than its key synonym, “madness”.
The sub-editor in me appreciated the yarn. It brought to mind the scene where the zombies attack the horse in the first episode of The Walking Dead. A brilliant depiction of the word frenzy.
The home-buyer in me did not like the yarn. The facts were bad: The Real Estate Institute of WA says agents are reporting shortages of properties, and it’s not unusual for places to get 15 offers on a decent property. Just *awesome*.
Although our second weekend on the official weekly home-open inner-suburbs road-trip was probably more successful than our first, it became immediately apparent we are out there in the trenches fighting guerrilla-style against a heaving zombie mob of first homebuyers just like us.
Frenzy was not that far from the mark.
We had to resort to speaking Swedish to evaluate the house, it was impossible to find a room with some privacy to discuss issues in earnest.
My Swedish being very rusty, this quickly dilapidated to sign language. We may resort to interpretive dance.
There were so many people.
People walked out of bathrooms, walk-in-robes or appeared from behind doors unexpectedly. I started imagining this was a zombie apocalypse… there could have been brain-eating competitors anywhere I looked. I longed for a box of records to throw, or a cricket bat.
We looked at four places. We liked two, and considered putting an offer on both.
Once we’d done the walk-around and were in the car en route to Mandurah (where we later celebrated the Liberal’s crushing election win… and waited with baited breath for a ruling on Collie-Preston), we discussed the relative sensibleness of putting an offer on both houses – when we haven’t even seen the mortgage broker yet.
Turns out you can get in trouble for putting two offers on houses that both get accepted. I have started a list of rules for home buying, not unlike Columbus’ Rules in Zombieland.
1. Be nice to real estate agents.
2. Be early. You get some critical one-on-one time with the agent then.
3. Put offers in one-at-a-time
4. Offer the maximum you’d be happy to pay for the property.
Ultimately it was all a moot point: Both went for more than $20K above the “from” price advertised.
Which is precisely what Lisa Calutti’s article in the West said would happen:
“Enrico and Denisa Gismondi and his brother-in-law and sister offered $24,000 above the value of a three-bedroom, one-bathroom home in Karrinyp in late January.”
The East Vic Park property we loved received 10 offers, and went for at least $20K above the $645,000 it was listed as. We didn’t put an offer on in the end…
The Mt Lawley property received three offers (excluding ours, which we did not submit), and it’s a similar story there.
Sadly, we didn’t know we could probably have afforded Mt Lawley until too late. Que Sera. Lesson on this one – if you like the house, if you can afford $25K above the “from” price, you’re probably in the right range.
Fortunately Brian, the agent for the Mt Lawley property, was incredibly helpful and it would be fair to say the Swede and I are climbing the learning curve relatively rapidly.
But here’s what I really want to know:
I understand why The Swede and I are only looking at the property market now.
There was no guarantee the Libs were going to get up, no matter what the election pundits say. I could have been left without a job, and we needed to take our time getting the ducks in a row.
But why is everyone else buying a house right now? What unseen force is at hand pushing middle income punters like myself to talk refrigerator diameter and floorboards? Has it spread just like a contagion? Is it a virus? Is this some sort of home-buying apocalypse? Are we just one of the diseased, due to turn into mortgage zombies down the track?
Surely not everyone else in the world was waiting for the State Government election result to buy a home. (Brief segue: This did lead to an odd conversation with a real estate agent, where we said “our offer will be subject to the outcome of the election.)
What secret has meant we’re trying to get into the market at exactly the same time as everyone else?
I for one do not know.
In 2007 advertised a house which ended up with 6 offers, and sold for $45K over the asking price. Unfortuantely we then had to do the same to buy its replacement.
Wow. That’s pretty intense. The whole thing is not entirely unlike a silent auction.
My hot tip – make friendly with your bank manager and put in all offers pending finance, and then if you need to wriggle out of an offer get him to write a letter on leaderhead declining you finance ‘at this time’.
You would have a scheme.
Question: Wouldn’t an official letter being denied finance go against your credit record though? Might have to be mindful using that option too often.
Absolutely no idea Wendy but probably.
It wasn’t long after this post we received pre-approval on our home loan and that was definitely the way to go. I’m certainly no expert!
For my two bits (having done this twice only, so take it as you find it), you don’t need a mortgage broker, and you may be better off without one. The main reason is that they – according to Choice – tend not to include the ‘industry’ funds like ME Bank. Possibly some hidden trailing commissions still exist, in my cynical view, to sway their recommendations! Anyway, I researched half a dozen options (back in the dark ages of 1998) and chose ME (then SuperMembers Home Loans), based on no application fee, no recurring fees and a better rate than was offered elsewhere. Also no exit fees (unless on fixed interest, I suspect). Listen to the broker, but keep ’em in mind, and the others not mentioned! You may get a discount if you’re a member of an industry super fund, too. Good luck, PBR.
Peta, this tale of yours rings all too true. I too when on the hunt for a house found many of the places that I was interested in also went for $20k more than the advertised price, in one suburb there was a spate of properties going way above advertised price to the tune of $100k or more. Such is the effect of supply and demand.
That all said, when I found the place I eventually purchased, due to the length of time this particular property had been on the market and knowing the owners were very keen to sell, I put in an offer $10k below their asking price (despite being comfortable with their asking price), and quickly agreed to meet half way and ended up paying $5k below their original asking price. What I think assisted matters in this case was that I was able to offer a 30 day settlement due to already having my finances sorted (this wasn’t the case when I first started the house hunt).
I can’t speak for the market in the West, but if you can get yourself in a position down the track to offer a relatively quick settlement (30 or 60 days), that can sometimes be enough to persuade the owners to accept your offer over someone else.
Thanks Kate. Our finances are on the way to being sorted which is good. Should have pre-approval in next few days.