Five things homebuyers get wrong in a buyer’s market
A buyer’s market feels like the moment many buyers have been waiting for. Fewer competing bidders, longer days on market and vendors who are more open to negotiation can feel like an exciting break for a buyer. In reality, a softer market brings its own set of traps, and the same mistakes tend to resurface every time conditions shift in buyers’ favour. Here are the top five challenges that many buyers fall prey to.
1. Assuming every property will attract a huge discount
Markets are not monolithic. A buyer’s market at the headline level doesn’t mean every property, in every suburb, at every price point has decreased in value by the same magnitude Segmentation is key to understand. Tightly held, updated family homes on quiet streets, well-located townhouses with good floor plans and properties close to quality schools or transport often continue to draw solid competition even when the broader market is subdued. Compromised stock, such as poor layouts, main road frontages and apartments in difficult buildings tend to carry the brunt of any softening.
Buyers who expect a blanket discount can miss out on the very properties they want most, because those properties aren’t being discounted the way the headlines suggest. Understanding which segment you’re shopping in is the first step to reading the play and assessing the likely selling price accurately.
2. Trying to time the market
Picking the bottom of a cycle is extraordinarily difficult. Economists, analysts and seasoned property professionals regularly get it wrong, and they watch the data every day. For an inexperienced buyer, trying to call the precise turning point is far more likely to lead to paralysis than profit.
Markets rarely announce their bottom. By the time it’s obvious that conditions have turned, competition has usually returned and the window has narrowed. A better approach is to buy when your finances, your timeframe and the right property line up, rather than waiting for a signal that may only be visible in hindsight.
3. Focusing on a bargain buy rather than a suitable buy
A discount feels like a win, but a cheap property that doesn’t suit your needs is rarely a good deal. The bigger question is whether the property will continue to serve you, and appeal to the next buyer, in five, ten or fifteen years.
Future proofing is critical. Will the home accommodate a growing family or a change in work arrangements? Does it have the land content, location and scarcity that underpin long-term demand? Is there anything about it that will always limit its appeal? A well-chosen property bought at a fair price will almost always serve you better than a poorly chosen one bought at a bargain.
The right property at a fair price will always be a better buy than the wrong property at a discount.
4. Inaction due to fear of catching a falling knife
Many buyers hold back because they’re worried prices will keep falling after they buy. It’s an understandable fear, but it’s worth thinking through what a fall actually means for an owner.
If the market does lose further value in the months after you purchase, that loss is purely on paper. A loss only becomes real when it’s crystallised by a sale. If you’ve bought a property that suits you and that you can comfortably hold, short-term movements in value have little practical impact on your life. This is exactly why point three counts for so much. A suitable, well-located property with elements matching your must-have critieria gives you the satisfaction of knowing you’ve selected the right property, and regardless of what the market does, your home will continue to serve you well. Both now, and into the future.
5. Becoming known as the buyer who low-balls every offer
In a buyer’s market it’s tempting to put in aggressive offers out to agents. Negotiating firmly is sensible, but there’s a big difference between a well-researched offer and an insulting, low-ball offer on every property you shortlist. Some will call it a numbers-game, but agents will quickly identify the buyers who are wasting their time, and/or offending their vendors.
Agents talk, and they remember buyers. The person who submits unrealistic offers time and time again quickly earns a reputation, and agents can become disenfranchised. That can cost a buyer dearly. Agents are often the gatekeepers to pre-market and off-market opportunities, early notice of price adjustments and a frank read on what a vendor will genuinely accept. A buyer who has built goodwill is far more likely to get that phone call.
Heeding the opportunity
A buyer’s market can offer genuine advantages: more choice, more time for due diligence and more room to negotiate. The buyers who benefit most are the ones who get familiar with their local market (including the segmentation within the market), resist the urge to try to time the market, prioritise suitability over discounting potential, and act on a property with deliberation and research.
My mantra is to well, buy for the short, medium and long term, and let the market do what markets do.
