Property and attitudes towards it have changed significantly over recent years. But, two truths remain universally present – that being, people require shelter, and buying property is the biggest investment most people make in their lives.
The average residential property in Australia currently costs buyers $918,000 (including interest) over 25 years – that is, for a $580,000 property in today’s terms. That’s almost a million-dollar investment over several decades.
But, what’s perhaps most surprising is the fact the majority of buyers spend this sum of money with a limited understanding of market fundamentals – in particular the concept of capital growth and the factors that drive it for each individual property.
This DIY approach Australians have to buying property for occupation and investment is both dangerous and lacking in rigour – the biggest concern being ignorance to the risks associated with property selection.
While most buyers acknowledge they require a conveyancer for the legal aspects of the purchase, and may even get a building inspection to ensure structural integrity, few buyers consult a professional about the property itself, the risks associated with it and how it stacks up as an investment – an important factor in wealth creation and protection for both homebuyers and investors.
While property experts like valuers report on the value of a property, a property advisor or buyer’s advocate focuses on performance over time, and how the property assists buyers to meet their lifestyle needs with their financial position in mind.
Like the conveyancer and building inspector, a property advisor protects the buyer’s interests – in this case protecting buyers from making a poor million-dollar investment decision and steering them, based on demonstrable evidence, towards an investment that not only avoids pitfalls but with the potential to perform better than most.
However, the problem is neither an awareness of the profession nor a failure in understanding the potential of what a buyer’s advocate actually does. Rather, in most cases it’s one of two things that prevents would-be buyers from engaging a professional from the outset.
Firstly, an unwillingness to pay for advice. Despite the fact a property advisor can save buyers both time and money, some view the additional outlay of a few thousand dollars a deal breaker – even to avoid a million-dollar mistake from which it can take a lifetime to recover.
Secondly, is the DIY approach of many Australians to buying property, where they assume the role of the property expert. But, like IT technicians, sales consultants, mechanics, doctors, hairdressers, chefs, lawyers, nurses and any other profession requiring study, undertaking a trade or on-the-job learning, property advisors have developed and refined their trade over the years, making them the expert in their chosen field.
The fact most people balk at the idea of cutting their own hair – instead paying hundreds, even thousands of dollars a year for a professional to provide the service – yet spend a million dollars on property without the same hesitancy is particularly baffling.
As human beings we’ve thrived due to our sociability and ability to rely on each other to achieve shared goals. This doesn’t mean being an expert in everything, but more importantly acknowledging the limitation of our knowledge and expertise, and when to ask for help.
So, when buying your next property, ask yourself, “do I know property like I know my profession?” If the answer isn’t a resounding ‘yes’ it may be time to seek professional advice.
Like investors, homebuyers should invest in professional, independent and customised advice, if required, to assist with their home purchase.