Buying guide

8 tips from agents to help first home buyers compete

A less competitive market still has its challenges for first home buyers and good homes, so listen up.

What you'll learn:

  • First home buyers are in a strong position in the current buyers’ market.
  • Auctions are no longer a no-go zone for first home buyers.
  • Strategies for making your offers.
  • How to show agents and vendors you’re serious.

There’s no denying that you’re in a buyers’ market at the moment, and first home buyers, unfettered by having a property to sell before making an offer, are in an excellent position to secure a home.

Whereas, in 2021, you’d probably have been competing with investors and developers for your first property, the field going into 2023 is a lot clearer as these buyers are holding off their usual activity.

So how can you put your best foot forward in this market full of opportunity? We have 8 plus tips for you.

1. Auctions are not a no-go zone

In the hot market of 2021, the auction process was pretty off-putting for first home buyers, many of whom couldn’t put forward unconditional bids due to their financing. But succeeding at post-auction is very doable for first home buyers in the current market, says Ray White agent, Tanya Kwasza. She cites a recent auction event where there was strong interest but no one bid. But immediately after the property was passed in, four people came forward with conditional offers and a winning party quickly emerged. Her advice is to attend the auction and stay engaged afterwards, let the agent know you have a conditional offer ready prior to the event, and be ready to start negotiating if the home is passed in.

People assume that if an auction is passed in, the property will languish for a while, but Tanya says that’s often not the case, they tend to sell very quickly afterwards.

2. Find out the seller’s motivation

Making an offer in the current conditions, where even seasoned agents are scratching their heads about pricing, takes good due diligence and clear communication from the selling agent. In the current market, you have to find a vendor who’s realistic and who will listen to the real estate agent, says Barfoot & Thompson agent, Alex Wu.

New homes can work well for first home buyers with the assurance of Master Build guarantees and there are usually clear indications on price from developers.

Alex is marketing some affordable new homes in Avondale Heights which are appealing to first home buyers, single parents with children and downsizers. These homes, close to the train station, shops and motorway will maintain value and be good for resale.

The Barfoot’s agent says he’s not seeing as many investors as before because rents aren’t covering the mortgage payments. First home buyers have a completely different motivation, on the other hand, he says. They want to buy so their children can have a stable life, attend schools nearby and they can buy at good prices at the moment, he says.

4 Fowler Avenue, Mount Albert, Auckland

3. Price your offer carefully

UP Real Estate agent Paul Raynes is selling a number of homes suitable for first home buyers in his market of Mt Roskill and its surrounds.

When competing on buying a home in a multi-offer situation, which can happen in any market, Paul’s suggestion to buyers is not to put in an offer with a round figure, for instance, $1 million. It’s a better idea to go for say, $1,007,000.

This will tell vendors that you’ve put some thought into it, there could be some movement in the offer, but it’s unlikely to be another $50,000 or $20,000, says the UP agent. You should also convey that you’re genuine and you’ve been pre-approved for finance.

4. Be on the same page with your partner about what you’re buying

Paul cautions that if you’re buying with a partner, to make sure you have agreed on a number of features you want on your first home.

Some first home buyers are waiting for the perfect house at the perfect time in the market, and his advice is not to wait for these “perfect situations,” as they may never happen. Not even the pros in the market get to time the market perfectly.

A number of first home buyers are hesitating about taking the next step because they’re afraid the house’s value will continue to fall. The UP agent says he bought a rental in 1997 and the home dropped in value but now it’s doubled. “Time fixes these things so quickly,” he says. “If everything comes right in the next 18 months, the gains buyers make could be quite incredible,” says the experienced agent.

22/8 Basque Road, Eden Terrace, Auckland

5. Where a first home buyer trumps the rest

First home buyers have a clear advantage in the current property market and it’s that you don’t need to sell before buying. And because you’re often renting or living at home, you can be flexible on the settlement date. This might give the vendor time to purchase, for instance, which is valuable to them.

Meanwhile, Paul sees a lot of first home buyers treating their first home a bit like an investment, getting in tenants or flatmates to help “take the edge off” the mortgage in the first few years.

13A Rotomahana Terrace, Remuera, Auckland

6. Have a great team supporting you

As a first time buyer, you’ll need a really good team behind you, says Anne Duncan agent, Emma Duncan. This means finding a good agent to work with who’ll help you with pricing and keep you informed on recent sales. They’ll also give you tips on how to compete and win in a multiple offer situation.

Working with a recommended mortgage adviser who can help you with your home loan, is vital too, she adds.

With this support behind you, go out and try to be as active in the market as you can. This means going to open homes and to auctions even if you’re not participating, says Emma. The more you do this, the easier it’ll be when it’s your turn.

“I welcome people asking me questions all the time if they see something they like. Get out there and start meeting people,” adds the Anne Duncan agent.

26 Springwood Place, Mount Eden, Auckland

7. Strategies from mortgage advisers

To first home buyers ready to act, make sure you have mortgage pre-approval before starting your search, says senior mortgage adviser, Geoff Bawden. The lender will still want to assess the individual property, but it just gets you through part of the process, he explains.

“It does demonstrate to the vendor that you’re serious,” says Geoff.

“One of the benefits of going to a mortgage adviser rather than to one bank is each bank has a different policy on what they’ll lend, and the adviser should have that overview.”

And there are things you can do to strengthen your buying position, says Loan Market’s Cam Muggeridge, buying with friends or a sibling, for instance.

Then, when it comes to making an offer in a multi-offer situation, it’s about removing as many conditions as possible, he advises.

The Loan Market mortgage adviser realises every buyer wants a deal. But when negotiating, make it a fair offer today, tomorrow is a whole different day, he says. “If you’re chasing a deal or a price, the changes depend on the market. That deal might not always come around.”

8. Start a fighting fund

And if you really want that home, be prepared to fight for it, whatever the market is. When she’s house hunting, Harcourts Epsom agent Abbey Davis says she always has what she calls a fighting fund, a little bit of extra money tucked away somewhere that might win her the home she has set her heart on.

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