Front-Footing The Risks Always Pays Off
If you do decide to navigate the property market this year there are key factors that will help it run as smoothly as possible, writes Jenny Turner.
1 January 2023
The million dollar question on everyone’s lips is “What will 2023 bring for our property market?” Unfortunately, despite the best informed predictions, there is no crystal ball. It will simply be a case of riding through the tsunami of uncertainty.
If you do decide to navigate the property market this year, whether you’re a vendor or purchaser, there are some key hygiene factors that will help the transaction go as smoothly as possible. Above all, organisation is key.
For vendors that means thinking beyond simply making your property look good for the market. Towards the end of 2022 more contracts were “conditional” and as interest rates hiked the perceived risk of the unknown saw contracts fall over.
In an uncertain market being transparent around disclosure in respect of your property will stand you in better stead.
Providing a LIM as part of the marketing material, investigating if a building warranty on a home can be transferred to a new buyer or getting a building inspection report and fixing any items that might be identified, are all intelligent ways of mitigating a sale falling over.
Not openly disclosing something could cause a contract to fall over during the due diligence stage. As any issue management expert will tell you, front-footing it is the key.
‘For buyers, getting organised involves conversations with your team early, especially your financiers’
For buyers, getting organised involves conversations with your team (bank, lawyer and the insurance company) early, especially your financiers. Know your borrowing limit includes taking into account the often forgotten costs of insurance, rates and removals.
Where interest rates finally land is anyone’s guess, so build in a buffer so you’re not celebrating the purchase one moment only to face a mortgagee sale the next.
While on the subject of finance, remember if your family is going to help with a purchase then get legal advice around how this is structured. There are different structuring options, for example loans, gifts or different generations involved in owning the property. The banks will take all this into account when looking at lending ceilings; but equally as important, you need to consider what this will mean for your own asset and estate planning long term.
Do your due diligence upfront before you make an offer. This might involve getting a builder through first to check things out so that it is not a condition on your offer, which ultimately makes it more attractive to a vendor.
Remember, it’s not every day you buy a house, or that a given house comes on the market. Any pre-existing knowledge can be outdated and assumptions are incorrectly made leaving people exposed.
Rely on your team of advisers rather than friends and family relaying their personal experiences.
Despite which side of the coin you find yourself, in this market you do have time on your side.
It may sound old school, but use your head over your heart. Seek the right advice and, above all, don’t make hasty decisions.