As we earn more, we tend to spend more. Turning that wealth into disposable income, it’s natural to believe that all your hard work should be rewarded with a better lifestyle.
Your Expectations are the problem
Even if we haven’t earned it. We always expect more than we can get. This is why we negotiate, we play games, and we trick ourselves to think that we can get something for nothing. Unfortunately, in this market where there are a lot of buyers and nowhere to put their money. It means setting realistic expectations around not what you can afford but what you could secure is key. Just being able to afford the property at that time will not help you in a month’s time. Being able to secure the property is setting a buffer where if need be you could pay more than the selling price in order to secure it today.
In every property search, there is always the possibility that there will be another buyer who is happy to pay a little extra just to secure the property. Every time you miss out on a property. It costs you. Strata and building report reviews, contract reviews but most importantly time. There is a very real opportunity cost as the market continues to grow, knowing that every week that passes there will be a compromise down the line where what you could afford 3 months ago is no longer a possibility. This has been the reality for many buyers from January until June 2021.
The response for a lot buyers has been to go back their lenders for more money. Since buyers have borrowed more money for their property, immediately their expectations have shifted once again with the increase borrowing capacity. Now they want an extra bedroom or a nicer suburb. It’s natural to think this but they will falling down the same slippery slope and will be missing out on property again with these unrealistic expectations.
How to break this expectations cycle
Its important to understand the types of property that you are interested in and what they eventually sell for. If these properties sell significantly higher than you expectation and this repeats over and over again. You have unrealistic expectations. Its that simple. What’s most important at this stage are your actions. The sooner you can identify this, the sooner you can make adjustments ahead of your competition to place you in a position of not just being able to afford property having the capacity to secure it as well.