B Invested

DISPLAY HOMES: WHAT YOU NEED TO KNOW

 

Thinking about going to see some display homes this weekend? Maybe you should think again.

Why? Well let’s just say it’s a sure fire way to get ripped off.

Most house and land packages or off-the-plan purchases are greatly overpriced.

We’ll tell you exactly why if you read on.

 

NUMBERS DON’T LIE, EMOTIONS KILL LOGIC

When it comes to buying a property, emotions can be a real killer.

Sales agents know that emotion can be a powerful sales tool, it can cause buyers to abandon reason in favour of fantasy.

Nathan Birch, co-founder of Binvested says, it is important not to get side tracked.

“When buying a home, you need to make logical decisions, based on numbers,” he says.

“Numbers don’t lie.”

Think about what you need as opposed to what you desire.

 

WHY ARE DISPLAY HOMES SO DAMN ENTICING?

Display homes don’t sell houses, they sell fantasies.

When walking into a display home, you immediately start picturing yourself living a picture perfect life.

Tasteful furniture, breezy minimalist styling – you can picture a happier, better you.

The experience is so sublime. It promises a chance to finally have the life you want. It’s seems so easy, all you need to do is say yes. Who could say no?

The fact is, the whole experience is carefully designed to have just that effect – to grab you by the emotions, where you can’t wriggle free.

The display centre makes it feel real, like it’s already yours.

Later, the 3D interactive tour and glossy brochure let you relive the fantasy over, and over again.

You show others, who second your adoration – soon you a pining in agony for this new home.

Finally, the salesman calls.

He says there’s a special. If you act now, you will receive $20,000 worth of free extras and upgrades.

Happy day! You feel like all your prayers have been answered. Suddenly you have no more excuses left and you fold in your deposit.

While you are picking out colour schemes and eagerly waiting for move-in day, you’re probably unaware of the fact that you have just been betrayed by your emotions.

 

QUESTIONS TO ASK YOURSELF

 

1) WHERE ARE THE DISCOUNTS AND FREEBIES COMING FROM?

While you could get lucky with a discount, there’s no such thing as a free lunch.

If an off-the-plan or display centre salesman is handing out freebies, chances are it is just marketing tactic.

The so called discounts would do little to cut down the big price mark up on these properties.

 

2) WHO PAYS FOR THE DISPLAY HOMES?

Who is paying? The buyer is, of course!

The more TV ads, display homes, brochures, billboards and marketing gimmicks you see….the higher the price of the property.

Nathan says, generally, off-the-plan salespeople earn between $30,000 and $50,000 on each property they sell.

The purchase price of the property has been marked up to cover these overheads – and make a profit too.

While you don’t pay directly, the buck eventually lands in your lap.

 

3) HOW DOES THE PRICE COMPARE?

It’s easy to be fooled into thinking new homes are better – and therefore deserve a higher price.

But the fact is, in a few years all homes will be ‘old homes’ eventually.

So, instead of being dazzled by the shiny new house, Nathan Birch asks “is the five-year-old home down the road selling for the same price, or more, or less than this new one?”

In a few years’ time, will this new home have grown in value? Will it even be worth what you paid for it?

Ideally, you shouldn’t be copping a ‘new’ home premium.

Nathan Birch is constantly snapping up properties for less than the previous owner paid for them. You don’t want to be one of those people who sells their property for a loss.

 

 

3) IS THIS MY DREAM HOME?

Admittedly, there are some things that we should get emotional about – such as a dream home.

If you are in a comfortable place in life and ready for your dream home, then it’s ok to follow your hearts desires.

However, if you are simply looking for a place to live in for now, then you should avoid going all in.

 

4) WILL BUYING THIS BRING ME CLOSE TO MY GOAL?

Investment properties should be seen as stepping stones towards your end-goal.

There is no point getting yourself into extra debt and overcapitalising if it is going to set you back financially – making it harder to reach your end goal.

After all, nice finishes and pride don’t pay the bills.

 

5) CAN I AFFORD TO PAY A PREMIUM?

 

Hypothetically speaking, you have an $800,000 budget and are given a choice of two homes within 1 hour of work;

A tidy 15 year old 3 bedroom home for $550,000

or

A nicer, brand new 3 bedroom home for $750,000

Although it’s within your budget, would you choose the nicer home?

Do you feel a $200,000 premium is really worth it? That’s essentially the choice you are making by buying through a display centre.

 

6) TIPS TO HELP MAKE BETTER DECISIONS

Here’s a shortlist of things to leave at the door when making property buying decisions.

– Your personal style preferences – if you are investing, it doesn’t matter whether you would rather carpet instead of hard floors.

Think about who will be renting the place. Tailor the property to them.

– Your preconceived ideas about buying in more expensive areas – buying in a nicer area doesn’t guarantee you will have better tenants.

– Your ego about the type of properties you buy – Just because you would rather tell people you are buying in up-market areas, it doesn’t mean you will make more money this way.

Put the numbers first, and forget about what other people think.

–  The idea that property always goes up – it doesn’t. An off-the-plan contract price rarely represents market value. Will the market rise high enough for you to break even? Who knows!

 

SOME FINAL THOUGHTS

If you must buy a new home, then consider going through us. We are specialists at sourcing properties at wholesale prices.

Unlike off-the-plan and display centre salesmen, we don’t get paid hefty commissions from sellers.

We only work with home buyers and investors who put numbers first – meaning we don’t use fancy display centres and can strip marketing costs right back.

What this boils down to is big savings for you, because we work for you – not the seller.

That’s what makes us different. We are property liquidators – not retailers.

 

Learn More About Buying Wholesale Properties Here