Coronabuyers: is now the time to push ahead, or pause?
Overnight, the Federal Government announced open homes and auctions were to cease this week amid further measures towards a shutdown of non-essential services.
Some agencies are jumping up and down, declaring that real estate is an essential service and they should be allowed to continue to work. I’m not sure I agree. I’m hearing from agents who are scared for their incomes, and many are still figuring out how to work in this new world we find ourselves in. But I have to consider, what’s best for buyers? Is now a wise time to be entering into a purchase or are the sidelines the place to be?
With auctions and public open homes off the table, selling agents are focusing on showing only preferred buyers though homes by private appointment. This isn’t new; it’s how I’ve been working with selling agents for years. What has changed are the vendor’s/tenant’s reluctance to have people through their home when the property hasn’t been vacated. I can completely understand their position. Not feeling safe in your own home or knowing the safety of your family would be a very stressful position during an already emotionally heightened time. What I’m hearing is that vendors who don’t need to sell, aren’t. They are shelving their plans for now, making some agents stressed about the lack of work around and we’re seeing a continuance of the short supply that has dominated the Canberra market in 2020.
Vendors who don’t need to sell, aren’t.
Sales agents are screening buyers to ensure they are in a position to buy, which means if you’re not giving them the answers they’re looking for then you’re unlikely to be allowed access to view. With a clear directive to stay at home unless it’s absolutely necessary, it seems contradictory to be out house-hunting unless you urgently need a home over your head. Earlier this month, I said there were opportunities for savvy buyers who were ready to act and hold for the long term. While that’s unchanged, I am not encouraging buyers to engage in the rush to buy whatever remains at the moment.
If you don’t need to be out and about, don’t. You might find that A-grade properties meeting your search criteria aren’t to be found at the moment anyway and with the pent-up demand continuing, prices are staying strong. “Bargains” aren’t easy to come by for properties that you’d want to hold for the long term.
There’s a sense of FOMO; panic buying has spread from toilet paper over to property.
In one article I read this morning, buyers were outbid during an in-room auction when they noticed another property going to auction at the same event. They bought it, sight unseen. This seems like madness to me - taking on significant risk in an emotionally-driven snap decision.
If you’re a buyer who is hesitating right now, please hear this: that’s completely fine. There’s no rush to buy; more properties will always be for sale in the future. So long as you have a roof over your head there is no reason to panic. Focus on what’s important right now.
We’re still yet to see the flow-on effects of job cuts and mortgage defaults (if any) on the property market, and while Canberra is somewhat insulated with many Government employees it’s unclear how the local market will respond. Investors often turn towards property when shares are volatile, however with this pandemic it’s a tricky time to be placing new tenants and managing the risks as an incoming landlord. Personally, I feel this event is quite different to the GFC. While we were affected (albeit to a lesser extent than the US), it wasn’t nearly as personal as this coronavirus. We have all been impacted, and suddenly, to an extent that we’re just figuring out day by day. If you’re feeling unsure about your job or your plans to buy aren’t well formed there is absolutely no harm done in adopting a ‘wait and see’ approach. Similarly, if you’re feeling torn with one foot in for pushing ahead but the other is unsure then the decision to pause may bring you some much-needed relief and mental space.
There will be opportunities in the future.
Buyers who are poised and ready to act once we start seeing signs of recovery will feel far more at ease if the current environment feels too stressful. The main thing to remember is, don’t buy the wrong property. Don’t take on more financial stress than you can comfortably manage. There’s no need to rush into a purchase.
If agents are pressuring you to make an unconditional offer or participate in an online auction but you’re unsure, it’s okay to say no. Sometimes the best transactions are the ones you don’t do, after all! Unconditional offers give vendors all the benefits of locking you in without having to host an auction, and you don’t get transparency like you would at a public auction. With prices remaining strong in the face of short supply, plus unmotivated vendors sitting on their hands for now, smart buyers aren’t jumping at any old thing.
Tread carefully, buy for the long term, and now more than ever, seek independent guidance and complete the due diligence before entering into a legally binding, significant financial decision.