The Four Key Property Variables. 02/10/12

Why is it that all anyone ever focuses on is price? Sure it tends to be one component that drives the ultimate decisions we make when buying property, however it’s not really a relevant factor unless it’s brought in to perspective. Let me demonstrate. If I offered you a property for sale and told you the property purchase price was $1 million dollars, for most of us it would probably be a stretch. It would have to be a super property to get us to leverage that much money. It would want to have a few bedrooms, an opulent bathroom or two, some sprawling grounds perhaps and maybe a pool. Let’s face it, that’s a lot of cash to spend. Now, if I offered you Tasmania and told you the purchase price was $1 million dollars how quickly do you think you could raise the cash? Personally, I think it would be a matter of hours. So what’s the difference between property A and property B that makes the same dollar amount less of an issue?

Experience tells me there are four main variables when we are looking to buy a property. Each of these single variables must be addressed in relation to the other three or we simply cannot make a clear, accurate decision about the purchase we intend to make. So what are the four variables?

Price:

Let’s start with the most obvious shall we? A smart buyer will ever spend ONLY what they have to spend, however if you tempt this smart buyer with a small Australian state at a bargain price (as above), what was once unaffordable soon becomes a reality. This happens every week in the real estate market. Go to Auction and watch the inexperienced ask Mum, Dad and friends for those few extra thousands of dollars so they can secure the property of their dreams. Or at least that’s what the selling agent is alluding to. What was a fixed spend is now a variable. What drove the change?

Location:

I “HAVE to” live in Toorak, or in Manly, or at Glenelg or Perth Central CBD. It’s a must! If I had a dollar for every time I heard the “have to” line I would have been able to buy Tassie already. The issue here is that so many people simply can’t afford to stretch financially (unless they vary their budget), to be able to live in the “have to” area. Strange as it may seem though, when a prospective buyer is shown a property in an adjacent suburb that pretty much IS the dream home for the fixed budget, all of a sudden the “have to” isn’t necessarily a must. Maybe the new area is a possibility. Maybe, if they really think about it, it’s not that far from where they originally thought they had to be. Maybe, to get the place they want, at the price they are happy with they can vary where they “have to” live by a little bit?

Size:

I want 4 bedrooms, 2 bathrooms, a deck, a pool, an alfresco area and I want it in my area for $300,000. At the risk of stating the obvious, what you want and what you get can be two different things. In your area $300,000 buys you a 2 bedroom one bathroom townhouse on a block of three. The stand alone mega mansion of which you speak sits at about $650,000. If you are simply not capable of spending that amount of money, and you have to live in the area you have chosen, no ifs, ands or buts, then it looks like you will be looking for something a little smaller than anticipated at first. Not really a bad thing guys, just reality. Once you know where you want to live and how much you have to spend then you can get a pretty quick idea of how much home you get for your money. More money though would mean more home. I’m just saying that if you were to vary any of the other key variables, you could get what you want if size really matters.

Condition:

Would you pay the same money for the same sized house in the same area if one place was a wreck and the other was brand new? Of course not. Only a fool would. So following this train of thought, logic dictates that if you are willing to get a place in need of restoration, it is possible to buy the right sized place in the location you want, for the money you want to spend, provided you can see past its present condition. It’s pretty simple, if you are willing to do the work on this variable then the others can stay in place.

Funny how all everyone ever talks about when they are buying is price, yet change any one of the other above variables and you can achieve the price you want. You just might not get what you want in relation to location, size and condition. Then again, what is most important to you? I figure that’s the variable that get’s the least variation. As in all aspects of life guys, everything else is negotiable. As always, negotiate hard, but fair. Have fun and buy well.


Garry McPherson

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