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Homebuyers in Brisbane are missing out on thousands of dollars in savings by failing to get finance approved before making an offer to buy a property, according to one of the city’s mortgage brokers.
Daren Crawford of Trademark Finance said having pre-approval gave buyers huge bargaining power and could lead to a significant reduction in the purchase price. Many buyers, however, are unaware of the importance of pre-approval, he said.
“The vast majority of buyers in Brisbane – I’d say up to 80 per cent – don’t have pre-approval when they make an offer to buy a property,” Mr Crawford said.
“Most operate on a 'buy first and secure finance later' policy, but it’s actually much smarter to do it the other way around,” he said.
“Buyers should always secure finance before they start making offers to purchase, with the benefits being multifold. It means you know what you can afford before you commit to purchasing something and it gives you the confidence of knowing you’ll be able to secure finance for the property before you make an offer.”
Having pre-approval also means homebuyers have greater bargaining power, Mr Crawford said.
“So when you do make an offer to purchase a property, you can make it with a seven-day finance clause rather than 21 days, which will be a very attractive proposition for a seller,” he said.
Mr Crawford said people currently looking to buy property in Brisbane would particularly benefit from having pre-approval as a bargaining tool since the expectations of sellers have recently been boosted.
“There has been a great deal of commentary around the Brisbane property market, with predictions of good growth to come, and despite the fact that prices haven’t moved upwards substantially yet, sellers have raised their expectations around what they can achieve for their property,” he said.
“Since it’s no longer a buyer’s market, buyers don’t have much bargaining power, but pre-approval can give them some power back. It can help them to negotiate a lower price as they’re able to settle on the property faster.”
[Related: Non-bank launches online pre-approval system]
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