Almost all of us have been affected financially by the COVID-19 pandemic. Personally, I have been touched on several fronts – but perhaps the most difficult was the sale of my property.
This house is offered for sale for $ 875,000.
Today, my real estate agent reluctantly sent an offer:
“As the market is clearly in decline, we would like to make an offer of $ 675,000 for this property subject to building inspection. Finance 14 days. Deposit of $ 10,000 in cash. »
I have been a real estate journalist for almost 15 years, so I am not surprised by this low-ball tactic. But I am disappointed that there are already bottom feeders on the market, seeking to profit from our collective pain and misery.
It is obvious that this buyer has adopted the scatter gun approach: he sends dozens of messages, maybe hundreds of real estate sellers and makes low-end offers of 25% or more below the asking price.
The fact is that the buyer clearly did not do his research. We are not yet entirely at the “pandemic price”…
1. "The market is clearly going down"
Is it? We are at the very beginning of this pandemic, and the only thing that is clear at the moment is that everyone has left the market, buyers and sellers. Demand has gone down, but so has supply. When buyers are forced to sell, they may be inclined to accept a low-ball offer. But overall, the fundamentals of Australian real estate are solid. As real estate analyst John Lindeman confirms, "leading indicators suggest that real estate prices will continue to rise in our major capitals despite the pandemic, and that they could increase sharply a once the coronavirus becomes old news. "
2. This crisis is based on health
This is a health crisis resulting in an economic crisis, rather than a financial crisis on its own. Once the Earth has resumed its axis and that confidence will return around employment and incomes (as long as it takes), the real estate markets will stabilize. And once the pent-up demand for property is unleashed, we will likely see the values ??increase. "The three years after the last Australian recession and the GFC led to a sharp increase in median house prices in 8 of the 8 capitals and most regions," said Simon Pressley, head of real estate market research and general manager of Propertyology.
3. Finances in 14 days?
Anyone who can get approved, processed, and settled financing in 14 days must be a magician. Last week, I interviewed a senior executive at a bank who admitted that his bank, one of the Big 4, had received more requests in a week than usual in 12 months! Offering quick financial terms in your offer is one strategy that people are using to make their offer more attractive, but it is not realistic at the moment.
What to do with a low-ball offer?
Fortunately, we are not in a position where we are desperate to sell, so we have swept it away.
But what if your situation is dire? There are other sellers on the market who are desperate, stressed, anxious, are not sleeping. They must care for any potential indications of interest. These are the sellers that worry me because they can interact with buyers who feed on the bottom as if they were offering some sort of solution – when in reality they are just trying to take advantage of the Someone’s dire financial situation.
So what can you do from here?
First of all, try to adopt the mindset that this is just business. Nothing personal. It's really personal, I know! We had shed blood, sweat and tears in our house, not to mention the funds flowing, as we spent two months letting endless contractors cross our house at 7 a.m. for renovations and repairs. A low-ball offer looks like a slap.
But it is a time when facts and figures are your ally. Your situation may seem hopeless, but there are many things you can do before resorting to Plan S: selling your home for a massive loss. Think clearly about your options:
Can you rent your house for the next 6 to 12 months and move in with relatives?
And if you rent it, then rent a cheaper place yourself?
Can you rent a room to get cash?
If you have committed to two properties, can you offer one for rent for the next 6 to 12 months?
If you are engaged on several properties and the financial obligation seems overwhelming, can you restructure your finances? This can unlock some value / equity in your property.
Can you refinance an interest only loan?
Or can you refinance a loan at a lower interest rate?
Can you request a mortgage payment for six months?
Conclusion: There are a number of avenues that you can explore before you embark on the path of offering low-ball deals on your property. If you are overwhelmed, stressed and unsure of the next step, contact an experienced mortgage broker or real estate advisor for advice on the best way to move forward.
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