Pre-ap­proval cru­cial

The Courier-Mail - Property - - INSIGHT -

HOME­BUY­ERS in Bris­bane are miss­ing out on thou­sands of dol­lars in sav­ings by fail­ing to get pre-ap­proval for fi­nance be­fore mak­ing an of­fer to buy a prop­erty, ac­cord­ing to one of the city’s mort­gage bro­kers.

Daren Craw­ford (pic­tured right), of Trade­mark Fi­nance, said hav­ing pre-ap­proval gave buy­ers huge bar­gain­ing power and could lead to sig­nif­i­cant re­duc­tions in the pur­chase price, but many buy­ers were un­aware of its im­por­tance.

“The vast majority of buy­ers in Bris­bane – I’d say up to 80 per cent – don’t have pre-ap­proval when they make an of­fer to buy a prop­erty,” he said.

“Most op­er­ate on a buy first and se­cure fi­nance later pol­icy, but it’s much smarter to do it the other way around.

“Buy­ers should al­ways se­cure fi­nance be­fore they start mak­ing of­fers to pur­chase, with the ben­e­fits be­ing multi-fold – it means you know what you can af­ford be­fore you com­mit to pur­chas­ing and it gives you the con­fi­dence of know­ing you’ll be able to se­cure fi­nance.

“But, im­por­tantly, hav­ing pre-ap­proval also means you have greater bar­gain­ing power, so when you do make an of­fer to pur­chase a prop­erty you can make it with a seven-day fi­nance clause, rather than 21, which will be a very at­trac­tive propo­si­tion for a seller.

“If a seller has mul­ti­ple of­fers they are more likely to ac­cept the one that has the short­est clos­ing pe­riod, and they’re more likely to ac­cept a lower of­fer if they know fi­nance is vir­tu­ally guar­an­teed.”

Mr Craw­ford said peo­ple look­ing to buy prop­erty in Bris­bane would ben­e­fit from hav­ing pre-ap­proval since the ex­pec­ta­tions of sell­ers had re­cently boosted.

“There has been a great deal of com­men­tary around the Bris­bane prop­erty mar­ket, with pre­dic­tions of good growth to come and, de­spite the fact prices haven’t moved up­wards yet, sell­ers have raised their ex­pec­ta­tions around what they can achieve for their prop­erty,” he said. “Since it’s no longer a buy­ers’ mar­ket, buy­ers don’t have much bar­gain­ing power, but pre-ap­proval can give them some power back. It can help them to ne­go­ti­ate a lower price as they’re able to set­tle on the prop­erty faster.”

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