John McGrath – How to deal with FOMO as a buyer
Over the past three months, home values have risen in all 15 of the capital city and regional markets of Australia bar Darwin and regional Victoria, according to the latest CoreLogic data.
The key reason for this is a supply/demand imbalance. There simply aren’t enough homes for sale to meet the level of buyer demand in the marketplace.
The gap between supply and demand has been quite large all year.
For example, over the four weeks ending July 16, there were 73,200 homes for sale in the capital cities. That is 19% below this time last year and more than 25% below the five-year average.
This lack of supply is not only pushing up prices, but also creating a fear of missing out, or FOMO, for buyers in the marketplace.
In many markets, buyers are feeling pressure to stretch their budgets when a suitable home becomes available for sale, because if they miss out, they may be waiting many more weeks or months for another suitable home to come up for sale.
But there is some good news for buyers on this front.
According to CoreLogic, an “uptick” in new listings was evident in the June data. This is significant because listings tend to fall in Winter.
So, relief is on the way for buyers. Hopefully, this trend continues and you’ll have more choices soon.
But for now, I have some advice for buyers to help them deal with FOMO.
- Make yourself known to local agencies. Don’t just register your details on the major property portals to receive new listing alerts. Get yourself registered on individual agency databases. Many agencies email new listings to their database clients before advertising them on the big portals. Getting first look at a new listing when stock is low is a major advantage.
- Tell the agent you’re interested. If you don’t make your interest known right away, you might not get the chance to make an offer. Other buyers will be motivated to move quickly, too.
- Make good offers. Start with an offer that is close to your walk-away figure. As always, the agent and vendor will assume your first offer isn’t your best so leave some wiggle room. Waive the cooling-off period, put the offer in writing and mention your pre-approved finance. Also, look for ways to help the vendor. Ask the agent why they’re selling, and consider any attractive terms you could offer to suit their motivations. For example, a vendor who’s in a hurry to sell might find terms like a shorter settlement or early release of the deposit appealing.
- Winning at auction. If you’re going to start the bidding, start low. Project confidence and make your bids fast and assertive. Call out your offer in full (i.e., say “$850,000” instead of “$5,000”).
- Accept the hand of fate. I think fate can play a hand in finding the right property. When I was an agent, I saw many underbidders walk away miserable only to find a more suitable property just a few weeks later. If you miss a property – or several properties, accept that it wasn’t meant to be.
The Spring season is now only five weeks away.
Traditionally, Spring is the biggest selling season of the year. We usually see a decent seasonal uplift in the number of homes for sale.
So, try not to be too disappointed if you miss out on a property this Winter, and trust that another great home will come up for sale soon.