Types of property buyers in the market place

Types of property buyers in the market place

Perth Buyer's Agent Simon Deering

Author

Buyer's agent and co-founder

G’day everyone it’s Heath and Simon from You&Me Personalised Property Services, the buyer’s agency made for you the property buyer. Today, we just wanted to have a chat about the three different buyers in the marketplace and Simon’s here to explain all that.

What are the different types of property buyers?

Thanks Heath. Yes, there’s three types of buyers when you’re looking at acquiring property:

There’s the cash buyer, which everyone knows (especially the sellers). They can make an offer in cash you don’t have to worry about: will they get their finance? Won’t they get their finance? And then the other two types of buyers or bank-imposed buyer and a self-imposed buyer.

Three types of buyers

  • Cash buyer
  • Bank-imposed buyer
  • Self-imposed buyer

So let’s break those last two types of buyers down first.

Bank-imposed property buyer

The bank advises the borrowing capacity

A bank-imposed buyer is someone that goes to the banks, and they say, Mr. and Mrs. Bank, this is how much money we make as a couple. Here’s our last six payslips. How much money can we borrow?

The bank looks at their serviceability, they look at their borrowing capacity, and they come up with a figure, let’s say $500,000.

They say Mr. and Mrs. Buyer, you can borrow up to $500,000. So Mr. and Mrs. Buyer go out and they buy a property for $500,000.

That is what we refer to as a bank-imposed buyer. They will spend right up to their limit. Yes, maximum.

Bank-imposed buyers will spend the maximum of their borrowing capacity advised by the bank
Bank-imposed buyers will spend the maximum of their borrowing capacity advised by the bank

Self-imposed property buyer

A more conservative approach

A self-imposed buyer is a little bit more reserved. A little bit more conservative with their approach.

They go to the bank. The bank still gives them their borrowing capacity of $500,000, but they self-imposed what they’re going to spend. And let’s just say they go, okay, we can borrow $500,000, but we’re going to buy a property at $440,000.

Now, the reason why they’re doing that is because they’re thinking the one thing in life that remains constant is: change.

These are some changes that could affect the buyer when borrowing money:

  • I could lose my job
  • I could get made redundant
  • We might have to move interstate and it could take us three months before we get a new job.

There are all these other factors that they take into consideration so that if anything in their life is negatively impacted, they haven’t borrowed up to their eyeballs. They’ve got a contingency plan and they’ve got savings in the bank to be able to carry them on.

The cash property buyer

The best type of buyer

The best type of buyer in any type of deal is obviously a cash buyer. But if you are using leverage and you are using the banks money and finances: at You&Me Personalised Property Services, even if it’s not our job to give you the advice, but we will always suggest becoming a self-imposed buyer opposed to a bank-imposed buyer.

And really, they are the three types of buyers.

Perfect. Thanks, Simon. Perfect explanation.

YouandMe Personalised Property Services works will all types of buyers
YouandMe Personalised Property Services works will all types of buyers

What type of buyer are you?

And for the viewers at home, if you want to know anything at all related to property, come and see us. Come have a chat.

We help all types of property buyers buy or invest in property in Perth and Brisbane.

And until next time, happy investing.

Perth Buyer's Agent Simon Deering

Buyer's Agent, Co-Founder at You&Me Personalised Property Services

Helping property buyers get into Perth and Brisbane property faster and for less.

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