Homebuyers are being urged to protect their financial information to avoid overpaying for properties.

Tiimely Home’s head broker Barbara Giamalis warned Aussie buyers about not giving real estate agents their full pre-approved loan amounts.

Ms Giamalis said that sharing this information could lead to making an emotional decision and overpaying, and advised to only disclose an amount that matched the property’s listed price.

“Homebuyers should tell the agent they’re pre-approved for an amount aligned with the property price but not disclose the entire pre-approval,” Ms Giamalis said.

“This helps maintain negotiation power and stick to financial goals.

“For example, if a property is on the market for $600,000, but the agent knows you’re pre-approved for $650,000, they may use that as leverage to push you towards a higher offer, reducing your ability to negotiate effectively.”

Property Investment Professionals of Australia board member and buyer’s agent Cate Bakos feared it may be happening in hot markets like Perth and Brisbane, noting that buyers might overpay due to fear of missing out.

“If we’re talking about a $1m home in these hot cities every fortnight the property price on average goes up $10,000 – that’s a really difficult market to be in,” Ms Bakos said

The buyer’s agent said the cost implications of being unprepared when buying a home could be catastrophic for buyers.

“Property is an expensive asset … if you’ve been ill-prepared, it’s a very expensive experience with stamp duty and marketing costs,” she said.

“Buyers need to be level-headed; they should not be impulsive.”

She stressed the importance of market research and remaining level headed to avoid financial strain from unexpected costs and market changes.

Brisbane-based agent from McGrath Wynnum Manly Gaby McEwan noted that she’d observed entry-level properties often see multiple offers, and baby boomers be fine with paying more for property due to being in a better financial position.

“I often warn buyers to not over-leverage themselves and emphasise the importance of financial preparedness,” Ms McEwan said.

Ms McEwan advised prospective buyers, particularly young couples, to save more and aim for properties within their means to avoid financial strain.

“If a friend wants to buy something needing lots of work, I recommend saving up and moving to the next bracket rather than taking on a fixer-upper,” she said.

“Properties in high demand, particularly new or renovated ones, are selling quickly, and nationally we’re seeing challenges posed by recent tenancy laws.

“The impact of potential interest rate cuts and current tenancy laws on the broader real estate market will be interesting to see.”

But the agent warned Australians that they should view property investments more moderately and treat them like share markets, focusing on long-term gains rather than short-term market hotspots.

Originally Published: David Bonaddio | realestate.com.au | 24 September 2024

https://www.realestate.com.au/news/experts-warn-aussie-househunters-about-simple-mistake-that-could-be-costing-them-thousands-of-dollars

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