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While still possible, landing a bargain is exponentially more difficult in a soaring market, a buyer’s agent explains.
“It’s like finding a needle in a haystack,” Lachlan Vidler, director of Atlas Property Group, said in a recent episode of The Smart Property Investment Show.
But finding a bargain in a soaring market could in fact mean securing a fair value.
“If you can get fair value for it, that could be a bargain,” said Mr Vidler.
“We’re seeing it every single Monday and Tuesday when we have the wash-up at the auctions, properties are going for 10, 15, 20 per cent above price guides at auctions. People are paying through the nose just so they can secure that little bit of land to have their home on,” he noted.
This, he explained, is a massive challenge for investors.
“That unfortunately is hard for investors to compete with, because for investors you’re looking for that return, and as soon as you move outside of what that return needs to look like for you, you’re out. Whereas if you’re an owner-occupier, you can stretch that budget a little bit more,” Mr Vidler explained.
As a buyer’s agent, this means determining a strategy in a rapidly northbound market is a whole new ballgame, one in which flexibility is key.
“For us, when we talk about goals and objectives, the way that we sort of think about it is, objective or objectives, is the end state. That’s where you want to be in 20, 30 years. Whatever that might look like for you, whether that’s a number of properties, whether it’s an amount of passive income, whether it’s a total value portfolio, whatever it is, that’s your objective or objectives.
“The goals are the points along the road that help you get there. And I think you’re very right in saying that in markets like this, you’ve got to shift. The goals that you want, you might have to amend them a little bit,” Mr Vidler clarified.
Risk tolerance, too, needs to match a buyer’s objectives.
“People individually can struggle with that, and I think that’s where the benefit of professionals really comes in, whether it’s a buyer’s agent like we are, or whether it’s a financial planner, whatever it might be.
“But professionals who do it are really good at not just helping people work out what their goals are, but taking them through the journey, because it’s not... Imagine somebody walks in and says, ‘I want a $30-million portfolio’, and then I’ve got to come back and go, ‘To be honest, I think realistically let’s set it at five’.”
“That’s a big jump, but professionals who do it day in, day out, it’s a bit easier to take people on the journey and go, ‘All right, maybe not 30’, and you coach them through, so when they get back to maybe that five and they come to it themselves, it feels a lot better than being told, ‘No, you can’t do that’,” Mr Vidler explained.
For more advice from our property expert, tune in to our podcast here.