How to get a bargain in the property gloom

Falling property prices don't always mean cheap pickings so how do buyers spot a real bargain?

The Sunday Star-Times asked a range of experts for advice on the best strategies.

Financial planner Lisa Dudson said, as with any investment, buyers must do their homework and understand property was a long-term investment.

Although vendors could be open to dropping their prices, Dudson cautioned against waiting for the "perfect" time to buy. Timing the market was hard and best left to sophisticated investors, she said.

With prices down 4% since November and the number of days a house is taking to sell up to 50 from 39, buyers have more time to research the properties available and to find out why the vendors want to sell.

Does the vendor have a ticket booked to start a new life in London in a fortnight or do higher interest rates have him spooked? If so, the buyer will know he can bargain hard.

New Zealand Property Investors Federation vice-president Andrew King said buyers should try to discover how motivated the vendor was to sell.

"Find someone with a problem that you can solve."

The ability to pay cash makes buyers more attractive to vendors hoping to sell quickly.

For their part, vendors must ensure their property is well presented and priced realistically.

King, who recently co-authored a book on surviving a falling property market, said bargain-hunters should get to know the area where they plan to buy by visiting open homes and researching sale prices.

Better local knowledge meant they were more likely to spot a real bargain.

King keeps a note of every house he visits and calls the real estate agent a month later to see if it has sold.

This gives him an idea of what properties in the area are worth and whether the seller might be prepared to accept a lower offer.

Not all property advisers believe now is the best time to buy.

Author and financial adviser Martin Hawes says if you are buying your own home and the right property turns up at an affordable price, it's probably a good idea to grab it.

But he thinks it's too early in the slump to say definitively that now is a good time to buy. "The old investment saying is `buy in gloom, sell in boom'. I don't think that it's gloomy enough yet. I think it will get gloomier."

- © Fairfax NZ News