by Carly Susic 

Are you thinking of buying a house after lockdown? If supply increases and demand drops, so should prices. Suddenly, the home you thought you could not afford may now be within your budget. 

It’s an exciting opportunity. We all want to ‘buy low, sell high’. But beware the pitfalls. 

Today, I’m sharing my tips on buying a house after lockdown. It’s a follow up from last month’s piece on selling your home during restrictions

Let’s dive in. 

Have a strategy 

It’s exciting to realise that your money will go further in a volatile market, right? But it is no reason to wing one of the biggest financial decisions of your life. 

Quality property is a scarcity. There is a difference between buying the right property at good value and buying the wrong property for a bargain basement price . Your action plan should include:

  • having a clear list of your requirements
  • understand the volatility of the current market 
  • following the market 
  • understanding current pricing trends 
  • setting realistic price expectations 
  • planning to sell your current home prior (if applicable)
  • knowing your reason to buy (investment, climbing the property ladder, downsizing, etc)
  • not getting lured into a C or D grade property just because it seems cheap

Buying a home after lockdown (or at any time) means hard work. Now more than ever, there are off-market opportunities. So you need to understand how off-market properties work. Some off-markets are actually on the market—to the agent’s database just not on the internet. Often these properties will be overpriced and just testing the market so it pays to know your values.

buying a home after lockdown

Understand the current volatility 

Buyers have been waiting since March for quality properties. Especially over the last nine weeks of stage four restrictions. As lockdown eases, the industry anticipates that homes will come on the market and we will see a flurry of activity, capitalising on buyers’ pent up demand. That in turn should encourage more homeowners to sell. 

Many agents are planning to work through January instead of taking a break. Traditionally, spring is the busiest time on the real estate calendar and most agents holiday through January. But due to the late start, the activity of spring is likely to carry on into summer right up to Easter 2021—everything is different now. So if you are looking to buy strategically, don’t discount opportunities arising in January. 

The positive market drivers for buying now are the low interest rates, looser borrowing regulations to stimulate economic growth. Money is cheap and easy to get. However, on the negative side, we are dealing with recession, unemployment and lack of immigration. 

Mortgage holidays are ending soon and some homeowners will decide to sell to free up equity. This creates opportunities for buyers—especially for quality homes in suburbs with a low turnover frequency. 

In any market and especially in a volatile market, what you buy is important

Avoid the risk of medium and high-density properties and always think twice about buying off the plan. Carefully consider if the market is saturated—are there more homes than residents (or tenants)? Properties in outer suburbs, CBD/Southbank high rises are particularly vulnerable, as they tend to attract immigrant buyers and international students as tenants. Instead look for owner/occupier appeal in well-established suburbs

As always supply and demand drives the market. So, the amount of property coming onto the market balanced against buyers in the market will determine clearance rates. 

Remember these key points when considering your purchase:

  • Rarity and scarcity—is there oversupply of the type of property you are looking at—is it likely to become a saturated market?
  • Quality—is it a home that has strong appeal to a broad market? 
  • Location—is transport, schools cafe culture and other infrastructure nearby?
  • Established—is it a medium/high density with plenty of similar homes? Is it in a growth corridor, a new estate or off-the-plan sale? (these are higher risk) 
  • Land—What is the land component?
  • Affordable—can you comfortably hold the property long term? Even if interest rates rise?

Remember, it is not a race. It is about buying the right property, not just buying any property.

buying a home after lockdown

Think about the home you will sell later 

Not everyone buys and sells homes at a profit. If you bought a home based on price alone, you may struggle to find buyers as the market shifts. If you are the only one negotiating when you buy the home, you may struggle to find buyers when you decide to sell. Often the way you buy will be the way you sell it.

Even if you are selling years or decades later, you still want buyers competing for your home. We don’t know how the market will change in the future. But, if you made a compromise when you buy, other buyers may be unwilling to make the same compromise. 

Perhaps you plan to live in this home for decades so you are not worried about selling it later. Who knows how circumstances will change? No one has a crystal ball (2020 has taught us how life throws unexpected curveballs.) But perhaps you’ll need to sell sooner than you expect.

So regardless of when you plan to sell, buy a home with great appeal, charm and character. You’re looking for quality that will attract buyers regardless of market fluctuations.

Don’t overextend financially 

It’s important to set your price window and don’t veer beyond it. Some like to take the maximum a bank will lend them and rely on their future earning potential. This approach makes me nervous. Gambling with financial commitments is a high-pressure way to live. I recommend you buy what you can afford now. In five or ten years, when you’ve earned more money and can afford a better home, you can purchase then. (I’ll be delighted to help you.)

Don’t rush 

Some buyers are tempted to act fast. They may have been in the market for a while, waiting for stage four restrictions to end. Now, they feel the urge to jump on the first property in case we get locked down again.  

But rushing forces you to skip your due diligence. Buying property is a financial decision that should be considered carefully. Agents love a quick sale and may pressure you to buy fast to knock out competition. 

When you rush, your emotions are leading the transaction decisions. We need to let logic rule. So take the time to think about the home, ponder the opportunity and take action only when you are ready. 

Ask questions of the agent 

The agents are employed by the vendor to get the best price for the property. They may be very nice and friendly and seem to have your best interests at heart. But you should never tell them your budget or that you have just fallen in love with the house they are selling. So pepper your agent with questions and tap into their market knowledge. 

Questions you should ask agents when you are buying a home after lockdown (or any time):

  • Why is the vendor selling?
  • Has the home been on the market long (if you don’t already know the answer to this)?
  • Are the vendors price expectations in line with the quoted price? (if you do your research, you may be able to challenge unreasonable price estimates)
  • Why has the price been set?
  • What price would get the vendor to sell prior to auction? 
  • How has the interest been so far? How many second inspections have you had?
  • Has anyone done a building inspection?
  • Have you had any offers? If so at what level and was it not acceptable? 
  • When were renovations complete, has rewiring or restumping been done? (if renovated) 

Some clients are uncomfortable grilling agents. Especially when agents are so experienced at dodging intrusive questions. If you secure me as your buyers’ advocate, I will take care of those questions for you. 

buying a home after lockdown

Understand the process, especially online auctions 

During stage four restrictions, agents were forced to bypass onsite auctions in favour of online alternatives. Many agents will keep using new online auction technology, even when restrictions ease. If that’s the case for agents in your area, it pays to understand the nature of the online auction.  

Online auctions are convenient for agents and auctioneers who don’t have to travel across Melbourne on auction day. But for buyers they can be challenging and unfamiliar. 

On the street, you can easily see other bidders. You can read body language to determine how close they are to their limit or how keen they are to purchase. Online, you have fewer opportunities to scope other bidders. There’s fewer chances to psych out the competition online too.

Be prepared by attending a few online auctions so you can learn how it works. This way, when your desired home is listed as an online auction, you’ll be more familiar with the bidding process. 

Be prepared to walk away

My final tip about buying a house after lockdown is this: sometimes it’s best not to buy at all. If the price goes beyond your limit, or even if you just feel a tingle of uncertainty, walk away. 

Another house will come along. 

So, to summarise, my tips on buying a house after lockdown

  1. have a strategy
  2. understand market volatility
  3. don’t buy because it’s a bargain
  4. take time and don’t rush a purchase
  5. ask agents hard questions
  6. understand the process, especially online auctions
  7. be prepared to walk away

My final tip on buying a house after lockdown? Consider a buyers’ advocate to help you

With all this uncertainty, buyers’ advocates can help take some of the stress away. You’ll feel confident in the purchase price, get support dealing with agents and access to off-market properties thanks to my extensive network. I will help you devise your buying strategy and negotiate or bid at auction on your behalf. So if you’d like a free consultation, so we can evaluate your particular circumstances and recommend a plan specific to your situation, contact me on 0418 575 906.