Keep a cool head, even in a soft market

Banks are always keen to lend money, homes are selling more slowly and owners are keen to negotiate, so now is definitely a good time to buy, but don’t throw caution to the wind.

There are some golden rules for home buyers and investors to follow to avoid getting stuck with a bad investment.

Buyers should try to negotiate price on a promising property, but should in most cases avoid remarkably low-priced homes.

It may appear to be the opportunity of a lifetime, but closer inspection may reveal it needs major repairs or is heavily encumbered in some other way;

Focus on location. There’s a much bigger variety of favourable locations nowadays, including properties close to decentralised commercial hubs, in self-contained estates, or in triedand-tested central suburbs.

But focus still on those where there’s good demand and prices are rising, rather than being tempted to buy a property in a less desirable area just because it’s a “bargain”; and

Do your homework on pricing before making an offer. Get help from a local estate agent who can give you a comparative market analysis showing the number of recent sales in the area, their actual selling prices, how long they were on the market and their original asking prices.

Don’t be embarrassed to walk away from a property if your research results are not favourable.

Professional advice is important to maximise potential returns, but it’s also vital to keep a cool head and make your own decisions.

While cash might give you an advantage in negotiations with keen sellers, it is probably not the best idea currently to spend all your savings on a property purchase, because the rate of property price growth is generally lower than the rate of interest you would get in the bank.

Consult a bond originator and get prequalified for a homeloan before you start looking for properties to buy. This will also give you an advantage in negotiations because it tells sellers you are a serious buyer.

Botha is CEO of BetterBond.