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First homebuyers caught in a bottleneck?

By AngryHenry - 13 July 2009 69

I’m currently trying to break into the housing market, this weekend we put down another offer on a house that ended up going for much higher than the advertised price and effectively found ourselves in another ‘Claytons’s Auction’ (the auction you have when you’re not having an auction). Whilst unable to confirm a final price I have a fair idea it was possibly $40 – $50k in excess of the price the property was advertised at. So why advertise it at that price in the first place? We are talking close to half a million dollars for a place that was in Kambah, and not a decent part of Kambah either.

Now I could be wrong but if the price being offered to pay for the house is in substantially in excess of what the bank values the property at doesn’t that mean that the loan won’t be approved? Is this because if the person all of a sudden can’t afford to make the repayment then the bank wont be able to sell the place and make back the money they need to in order to cover the loan amount?

It’s this damn first homebuyers grant. Because of it supply does not match demand and suddenly people are competing to enter a maket that they may not necessarily be able to remain a part of once interests rates rise and their repayments all of a sudden increase. Perhaps at that stage their loss will be my gain. Although I don’t forsee prices actually dropping in the near future.

Agents should start to realise that all of us going to these open homes are starting to become familiar with one another (I have seen several people numerous times at different exhibitions). The other day I was told my offer on a property was the third highest and later ran into some people at another exhibition that also put in an offer on the same place and were told exactly the same thing. Clearly we were being lied to, I am not naive in that I know real estate agents cannot be trusted no matter how nice they seem. 

I just find the whole experience at the moment quite demoralising.

Still if you’re in a posititon to sell your property and make a decent profit on your investment good on you!

Circle of life, hakunah matada and all that.

What’s Your opinion?


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69 Responses to
First homebuyers caught in a bottleneck?
ant 2:25 pm 13 Jul 09

As for the house going for more than the advertised price, it could be that the owners advertised it at a bait price to get buyers through the door, and then played the “we have had a higher offer” game with interested people, who end up interested in a house that normally they wouldn’t have looked at due to the higher price range.

The thinking being, that the hunter instinct and emotion lead people to then try to buy a house that costs more than they had planned to afford.

ant 2:22 pm 13 Jul 09

miz said :

Just wish it were possible to buy a home on one income.

Me too. I was watching a show where a home was described as “great first home, affordable” and it was just shy of half a million bucks! My god.

Peewee Slasher 2:20 pm 13 Jul 09

Miz, it is possible to buy a house on one income. Just depends how much you earn ;).
Putting that comment aside, I noticed the thread begins with someone buying thier first home, valued at $500K, in an area they denigrate afterwards. Beginner homes start at $350k.

I did buy my home on one income. It was tough. I didn’t go out to eat or to the cinema. Spent many years wanting to. It’s possible, but doesn’t suit everyone.

djk 2:17 pm 13 Jul 09

screaming banshee said :

Then the other problem here is having your offer accepted then being vulnerable to gazumping for a couple of weeks. Having purchased properties both here and in QLD I think QLD have a much better system whereby your offer on a property is a contract (usually subject to finance and pest/building) and once accepted the seller is bound by that contract. In saying that having the building reports provided by the seller down here is a fantastic idea.

It is possible to have a contract exchanged on the spot in the ACT as soon as your offer is accepted, however it is just not done that way 99.99% of the time.

screaming banshee 1:45 pm 13 Jul 09

At the end of the day a property is worth whatever someone is prepared to pay for it. But if someone has made an offer well over the ‘assessable’ value of the property for whatever reason they may find that they bank doesn’t value it as highly and they could be in a position where they are unable to obtain finance. If this is the case you might find that you receive a call from the agent in a couple of weeks asking you if you are still interested in the property.

Then the other problem here is having your offer accepted then being vulnerable to gazumping for a couple of weeks. Having purchased properties both here and in QLD I think QLD have a much better system whereby your offer on a property is a contract (usually subject to finance and pest/building) and once accepted the seller is bound by that contract. In saying that having the building reports provided by the seller down here is a fantastic idea.

Avy 1:40 pm 13 Jul 09

What astrojack says applies whether it’s a legitimate auction or a ‘Clayton’s’ bidding war: bumping the price is the goal.

PickedANickname 1:38 pm 13 Jul 09

Both those agents you mention peterh are great! So +1

TP 3000 1:36 pm 13 Jul 09

May I ask what part of Kambah this house was in? I know that my next door neighbour was going to have an Auction on 1 August, but the for sale sign now has a sold sticker on it. The street in question runs off Manheim Street KAMBAH.

Izzyduck 1:34 pm 13 Jul 09

astrojax – need to read more carefully. This was not an auction, just a normal listing where the agent decided to run a “clayton’s auction” pitting proposed purchasers against one another.

peterh 1:32 pm 13 Jul 09

We have just exchanged on the sale of our house in kambah, and the new house in deeper tuggeranong. (woohoo!) We didn’t get more than the asking price, but we were comfortable with the offer. We had a look in kambah as well, to see if we wanted to stay in the area. It was cheaper to move away from kambah. The estate agent is the same guy who sold us the kambah house – he sold our house again. He has many, many properties on the books, and will take the time to help people find the house that they are after.

The property that we have purchased was from a relatively new estate agent in town, but there were a couple of things I noticed about him:

1. he wasn’t pushy for an offer
2. he let our kids play in the backyard, whilst we had a look at the house
3. once an offer was made, he was very accomodating to assist us with our specific requirements re exchange and settlement.
4. Every time we spoke to him, he was pleasant, and sounded happy to hear from us.

I know it doesn’t sound like a lot, but it speaks volumes when you are trying to sort out the tangled web that is real estate in canberra.

The gent that sold our house was Rob Matheson at LJ Hooker Tuggeranong. The gent that we bought our new house from is Col Macintyre, from colin macintyre Real estate.

Try speaking to these guys about a house. they may be able to assist you.

astrojax 1:19 pm 13 Jul 09

it was possibly $40 – $50k in excess of the price the property was advertised at. So why advertise it at that price in the first place? We are talking close to half a million dollars for a place…

while i don’t have any argument per se with your thesis, henry, there is always the perspective that an auction is designed to maximise an owner’s hope of selling for the highest price, so a 10% boon over the arbitrary r/e-priced reserve isn’t necessarily out of order.

but as i said, agree. c’est la vie eh? and agree generally with ferret on r/e’s as a species…

and it isn’t so much a first home buyer’s grant, as a first home owner’s bribe, innit?

VYBerlinaV8_the_one_ 1:18 pm 13 Jul 09

I suspect the local market for FHB’s will soften a bit at the end of the year. It might be worth saving between now and then and searching early next year. I’ll be out bargain hunting early next year for sure.

Banks valuations on new properties will usually come in at ‘sale price’ unless there is a dramatic variation from market (eg house being sold on the cheap to a family member).

miz 1:14 pm 13 Jul 09

Just wish it were possible to buy a home on one income.

miz 1:13 pm 13 Jul 09

Get someone you know to go along and appear interested in the same block.
When a colleague recently put in an offer for a property, the agent later rang to say they were also considering another offer. My colleague found out this was bullsh*t after her Mum (different surname) inquired about the property and was told about the one and only offer – which was her daughter’s.

This was an agent in Sutton, but I expect they all play these games.

Growling Ferret 1:10 pm 13 Jul 09

Real estate agents are sh*tbags. Everyone knows that.

As for affordable housing, our sub-prime crisis is coming

http://www.crikey.com.au/2009/07/13/are-we-paying-too-much-for-the-australian-dream/

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