What property do I buy?

How to Buy the Right Property

Our Fundamentals

Buying the right property is a science. And an art.

There are a lot of factors which affect whether or not you get a good deal when buying property. For those who love the Art vs Science arguments, let's say there is an art to finding, matching and negotiating a property.

That is there is an art to pulling the "3P" levers at your disposal. Price, Property and Position. Its an art to adjust them in the right directions to get the best home for you.

Brighton East, 28 Pine St: Brighton legend Bert Stewart focusing on the job at hand while auctioneer Leigh Hallamore of Buxton revs things up. Bought under the hammer for $1.921 million, with five bidders.
Brighton East, 28 Pine St: Brighton legend Bert Stewart focusing on the job at hand while auctioneer Leigh Hallamore of Buxton revs things up. Bought under the hammer for $1.921 million, with five bidders.

Also our view is that when assessing and buying the right property, it's a science. But it's a science with rules.

It's about financial, spiritual and physical outcomes. Financial outcomes are tied up in the science of demand and supply driven by population, land and position characteristics. We are happy to send our detailed thoughts on this.

If you follow the right rules with focus, logic, good information, experience, discipline and some emotion, you will be successful.

Case Study

Dear Mal,

Please accept our apologies for the delay in sending this to you. As you might imagine, the last few weeks have been fairly hectic for the Levines, gearing up for the move back to Melbourne, supporting Julie's mother both in and out of hospital, coping with Michaels' needs during his HSC exams … not to mention a few rather pressing business commitments!!

With all of the above, the pressure was much relieved by the knowledge that our search for a home in Melbourne was "done and dusted", with thanks principally due to you and your very considerable efforts over the course of these past 6-9 months. We could not have done it without you, particularly from such a distance, and feel it is appropriate to place on record our appreciation for your encouragement, guidance and good humour throughout what was a pretty trying time. Working with the vagaries of a difficult property market, your dedication to our cause, your sound and honest advice, delivered on a timely and regular basis, and your perspective judgement of what would and would not suit, were altogether very reassuring, to say the least. The advantage of having your 'eyes open and ears to the ground' on our behalf, was a real bonus in a process made a great deal less complex than it might otherwise have been if we had not had access to your local knowledge, contacts and research resources. We believe we achieved a very good outcome (via your patient negotiations, of course) and one that met the majority of the needs you so diligently reminded us about whenever we got sidetracked!

In short, Mal, we would have no hesitation in recommending the services of James Buyer Advocates to anyone in a similar situation and expect to be back in touch with you the next tome we venture into the property market. Please pass on our thanks to Ian for his participation and courtesy as well - it must be said that you are certainly a very good 'double act'! We look forward to catching up with you both for a celebratory drink as soon as we are settled.

Kindest Regards,
Julie & Richard Levine

12 Quick Commandments to Buying The Right Property

  • Many people think buying a home is about the money - it's not. It is about clearly understanding your needs.
  • Many people think cashflow is the major issue in buying a good investment property - it is an issue but the cornerstone is capital growth.
  • Many people think buying a home well is a bit hit and miss. It's not - those that buy well:
    • Step 1: Understand your needs
    • Step 2: Research all options.
    • Step 3: Assess value and quality correctly
    • Step 4: Negotiate to buy well
  • Many first time investors think buying an investment property means buying something unusual. This is rubbish - it's all about demand and supply for future growth. If you wouldn't want to live in the house, your spouse wouldn't want to live there, and your mother doesn't like it - DON'T BUY IT. Chances are unless you are aliens; nobody else will like it in the future either.
  • Do all properties increase in value? - NO. Do all inner city properties go up? - NO. Why is that? In the case of the Docklands, it's not demand - it is supply. Growth is a demand and supply issue - not just demand. That's why we love inner city family homes. They aren't making more land and our population is increasing at the world average. It's an ongoing story of increasing demand and restricted supply.
  • Can you avoid buying Duds? Yes - by focusing on ALL the key characteristics. Area, position, land and building. Not just two of the four characteristics.
  • Is it good to buy in hotspots? Maybe, but maybe not. For all the reasons above.
  • Is property buying high or low risk? For mum and dad in the right area and the right home over 20 years it's low risk. For short term developers and investors it's high risk - very high risk in some cases.
  • Are agents ratbags? A few, but so are some buyers and advocates. Most high end agents are very, very good at their job. Trouble is they are not working for you - the buyer. They are working for the seller. If you think a few TV tricks or some agent abuse will get the property in a tough negotiation, you are naïve.
  • Many people can putt like Tiger Woods occasionally, but can they do it when they absolutely have to win and there are no second chances? Auctions and Agents can be about Anxiety, Stress, Fear of Loss and the Unknown. How many buyers snatch defeat from the jaws of victory simply because they do not recognize the need for expert unemotional advice at critical times? There is a big difference between doing what you know and knowing what to do. Yes this is another cliché, but can you perform under pressure when you and your family are pulling at the heartstrings? Can you make the right decisions?
  • Most good negotiators know this - sometimes you can offer too much and miss the deal - i.e. if you had offered less you would have bought it.
  • A good home, well bought that meets your needs and is held for 10 years plus will almost always perform better than two or three buy and sells during the same time, no matter how good a negotiator you are. In and out of the market plus transaction costs are very significant negative issues. Know what you want for now and for the next 10 years BEFORE you buy.

Our four-step process gives you clarity when it comes to your needs and figuring out exactly what it is that you are looking for. We help you find appropriate properties that fit your criteria. We assess the pros and cons of each property as they relate to your needs. And we negotiate hard.

Our tools and systems are there to help you assess, and make the right decision at the right time.

Property vs Shares?

Both are brilliant investments - if bought, managed and sold correctly.

Shares and property have similarities but are also very different. Share markets have a great deal of research behind them and from that research comes tools like earnings per share, dividend yields, balance sheets and more. This information leads to better decision-making.

Like property, no shares are guaranteed of an outcome and as any seasoned investor knows, shares also have many "emotional" issues like management, boards of directors, world prices and so on.

Similarly, owning or controlling property is a lot more than a financial decision.

While the share market is very large with guidelines and research tools, until recently, property - which goes back further than any share market - has not had any comparable level of analysis or decision-making tools.

Our view is that just like building sound share portfolios, good property decision-making follows a logical process, based on long-term analysis of the knowledge gained from past results.

Predicting Future Trends

We don't have a crystal ball when it comes to the property market.

But based on an analysis of past results, we look at a range of factors - supply, demand, population, location, likely trends - that will help you make the right decision.

For example, while our body of property knowledge cannot predict with 100% certainty each individual's behaviour - it is possible to predict with a high level of certainty how large groups of human beings will react to a property or groups of properties.

We also know that people who control or "own" properties have better physical, spiritual and financial outcomes than those who do not. This is true of whole populations as well as individuals.

Major Volcanic Eruption!

23rd August 2014
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