The trend of buying first, selling later and seeking long settlement
A shortage of properties to choose from on Sydney’s northern beaches is prompting people to ignore one of the most famous real estate rules.
The adage of always sell before you buy is being turned on its head as a shortage of stock is leading people to buy first, seek a long settlement and then have faith they will, in turn, be able to sell their property for a good price.
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Agents are seeing a trend emerging with up to half their buyers asking for up to six month settlements, giving them time to sell after they have bought.
The data specialists CoreLogic reported this week that the number of properties listed nationwide is the lowest for this time of year since 2010.
On the northern beaches, according to realestate.com.au, there are 691 homes for sale this week. That compares to 895 this week last year and 795 homes this week in 2017.
Mary Rowley, of LJ Hooker Mona Vale, said three of the four bidders on a Mona Vale house last week wanted a long settlement.
“We are seeing a lot of people buy first,” she said.
“They want to feel comfortable with the property they buy, they know there is a shortage of stock and they are confidant they will be able to sell their home well,” she added.
The five-bedroom house at 44a Bassett St East, Mona Vale sold for $3.01 million, $110,000 over its reserve.
The new owners are from Roseville and they requested a six-month settlement to give them time to sell their home.
Stock is in such short supply on the lower northern beaches Andrew Reynhout, of LJ Hooker Manly, said half of the buyers he is dealing with are asking for settlement times of ten to 12 weeks.
“A lot of people who sold last year and who are renting are trying to get back in and they are not wanting a double move, 50 per cent of our buyers are asking for longer settlements,” he said.
Mr Reynhout auctioned recently a Fairlight townhouse at 1/5B Hilltop Cres, seven groups registered to buy the property and several were wanting a long settlement.
The three-bedroom townhouse with ocean and harbour views had a guide of $2.1 million and it sold under the hammer for $2.435 million.
Twenty-two groups, mostly young families, signed up to buy an older style three-bedroom house in Frenchs Forest last weekend.
Number 3 Merrilee Cres sold for $1,415,000 to a young family from Cremorne.
Tania Paris, of Belle Property Frenchs Forest/Seaforth said bidding opened at $1.1 million, went straight to $1.15 million and the auction was all over within ten minutes.
“There is so little on the market, buyers are scrambling to get to open houses and see property before it comes to market,” she said.
At a three-bedroom Forestville house, which had a guide of $1.2 million, 101 groups inspected the home in the first week.
“That’s a new record,” Ms Paris said.
Two investors were among the six bidders competing for a Balgowlah duplex last weekend.
A range of buyers were interested in 16 Maretimo St, which was made up of a three-bedroom apartment, bedroom apartment on the ground floor and a four-bedroom unit upstairs. The solid double-brick property was on 695sqm of land and couples were looking to buy together, families were looking to keep one unit and rent out the other and investors were looking for the block.
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The last two bidders on the property were both investors and the hammer fell at $2,566,000.
Tim Wirth, of LJ Hooker Seaforth, said many buyers are frustrated at the lack of choice around.
“People are now selling first and taking a leap of faith that they will be able to sell later,” he said.
Mr Wirth added that he expects more to come to market in the run up to Spring, including homeowners who held off because of the Federal election.