Let’s not be under any illusions about Buyers Agents
There is an element of risk when purchasing any property, and finding the right buyers agents. It’s important to make good decisions here – perhaps even more so when buying off-the-plan. Given our natural inclination to mitigate risk as much as possible, it’s no wonder that promises and guarantees are like music to our ears.
With a lack of regulation in the property advisory space, how do you know if those promises are sound or simply too good to be true?
We’ve put together a realistic guide to what certainties you can expect from buyers agents when purchasing an off-the plan property.
Buyers agents CANNOT promise future rent
Confirming an accurate future rental return for off-the-plan properties is nearly impossible as rent is determined by supply and demand. If the development is large, there could be a sudden oversupply of stock on the market competing with your property. This means you could get far less rent than what you were expecting, which only adds to the financial burden.
Generally speaking, it is safer to buy an established property where you can confirm the property’s value more easily and be more assured of the rent return.
Buyers agents CANNOT promise final value
As off-the-plan properties are usually sold at a forecast future value, unforeseen events, such as an economic downturn, can severely impact final value. Investors may be forced to settle on properties which are not worth what they are paying for them, resulting in immediate negative equity.
If you’re getting a loan to buy the property and the property subsequently has a value less than you have agreed to pay, you may not be able to borrow enough to complete the sale. This is because the bank will use the value at the time of the loan, not your purchase price, to determine how much they will lend.
An educated estimate from skilled and experienced buyers agents is the best you can expect. Reputable buyers agents should be able to provide you with recent data to make the best educated prediction.
NOW THE GOOD NEWS
Watch Kate talk about why she became a Property Investment Adviser – a leading voice in the Australian Buyers Agents Industry.
Buyers agents CAN promise clarity and good communication
No question should be met with hostility or be ignored. Good buyers agents will be happy work openly and with transparency, and answer any questions or concerns you have.
Buyers agents CAN promise you an individually tailored plan
Even in off-the-plan investments, buyers agents should be able to explain how they have tailored your contract to suit your individual needs. The end result should be a detailed written plan customised for you.
Buyers agents CAN promise you a written contract to take home and sign
Any pressure to sign on the spot, particularly when it comes to off-the-plan sales, should read like giant flashing warning signals. No one should be hurrying you to sign. If you feel uncomfortable with the pressure you are under to sign, RUN!
Buyers agents CAN promise upfront fee disclosure
Nothing is for free. Beware the buyers agents who aren’t transparent about how they are getting paid. In life, there are few certainties. In property investment, this is particularly the case. But any shrewd buyer should expect good communication, great insights based on experience, and personalised advice based on recent data. This is never too much to ask.