Things You Need to Know When Buying Your First Home
Are you thinking of buying your first home? It's likely you're going to have a number of questions on your mind. And as a new entrant to the housing market, it's natural that you should!
You may wonder what you should look for in a property, which home loan to select and what kind of assistance is available to you, here is some advice to get you started
Things You Need to Know When Buying Your First Home
Are you thinking of buying your first home? It's likely you're going to have a number of questions on your mind
Do Your Homework
- Obtain pre-approved for a loan so you know exactly how much you can spend before you even begin your search. Having a loan pre-approved means you will be ready to act immediately once you find the right property and there will be less chance of someone else beating you to it. Make sure you have pre-approval in writing from your lender.
- You may have fallen in love with a property but be sure to do your research before getting too attached or making an offer. Important factors to consider when determining what you are prepared to pay include the position of the property, the size (how much property are you getting for your money), the condition and if any upgrades are necessary and future capital growth potential.
- Understanding the real estate market you want to buy in is the key to successful buying. Before making any final decisions, seek professional advice from somebody that has nothing to gain from you buying the property. Websites like www.apm.com.au, www.rpdata.com.au, www.ljhooker.com.au, www.realestate.com.au offer fantastic resources when researching the property market.
- Understanding the practicalities of buying a home and the sales process prior to making an offer or bidding at an auction can also help your chances of finding the right property sooner. It is a good idea to read up on how auctions work and tips on bidding, the same goes for making an offer on a property for sale by private treaty. It is also worthwhile speaking to friends and family members about their home buying experiences.
- Creating a list of all the properties you have seen helps to keep track of what you’ve looked at, the features of each property and the asking price. Noting down everything from the number of bedrooms, parking, condition, agent’s details, asking price plus services and facilities in the area will help to paint a clear picture of each property. This is also a good way to compare the pros and cons of each property and what you may need to compromise on. Click here to download our Open for Inspection checklist.
- Never buy anything without getting an independent building and pest inspection report done, as well as a strata report if you are buying an apartment. These reports will highlight significant defects or issues relating to the property. A report will cost a few hundred dollars, however this is money worth spending. You do not want to discover a major structural problem with the property once you move in, which could potentially cost you thousands.
- For apartment buyers, doing a strata report is a must and will show you the records of the strata scheme, which can include any special levies proposed in the future that you may be required to contribute to, a history of the building’s maintenance work, as well as the amount of money in the sinking and administration funds. These are all factors that could have a big impact if you become an owner in the building. There are companies that specialise in compiling strata reports and you will need to pay them a fee or you can opt to search the records yourself. This usually entails making an appointment with the strata manager to view the books.
- Never sign anything you do not understand. It is best to have your solicitor or conveyancer review the contract before you sign an offer to purchase or exchange. Check the inclusions and exclusions and the length of settlement. If you are unhappy with any of the terms, you may be in a position to negotiate with the seller.
- Remember to look at all aspects of the property. It is about balancing the pros and cons as no property will ever be perfect. Try to make educated decisions based predominantly on common sense.
- Consider who your neighbours are going to be, parking availability if a carspace does not come with the property, any repairs or renovations needed, future development planned for the surrounding area, proximity to amenities like shops and transport, noise pollution from traffic and aircraft and the overall street appeal. While you may be willing to live with or without some of these things, they could have a big impact on the resale value of the property and will need to be factored into the price you are prepared to pay.
- Choosing the right area to buy in is important and not just from a capital growth point of view. Where you live becomes a big part of your life and essentially forms the lifestyle you live. Consider the distance you are prepared to travel to work every day, is there a direct public transport route? Are there adequate amenities for your needs and your family? Find out where the nearest hospitals, schools, shopping centres and recreational spaces are all located. These things all have an impact on your everyday life and happiness.
- Be prepared to act quickly, especially once you have found the property you want. Whether it is the first property you spot or you’ve been looking every weekend for a year, if it feels right, is in your price range and you’ve done the necessary checks then go for it before someone else beats you to it. On the other hand, if you’re not sure then don’t be pressured to act quickly or let yourself get talked into buying a property you don’t like.
- If you are interested in a property, keep up communication with the agent. Make sure they know you are interested so you don’t miss out to another buyer who was more proactive. Give yourself every chance of buying it.
- Try not to let your emotions get in the way, which is sometimes easier said than done. Buying a property can be a rollercoaster ride, particularly if you are buying at auction. The worst thing you can do is to get carried away and go beyond your budget. If you feel you have become too emotionally attached to a property, ask a friend or family member to bid on your behalf. Going beyond your means could have a huge impact on your future financial plans and goals. It is better to play it safe and always consider future events that could impact on your ability to repay your loan, like job security, interest rates rises, health and starting a family.
- Know when to compromise, when to stand your ground and when to walk away. While compromises will always need to be made when buying property, just make sure they are reasonable and well thought out. Waiting for the perfect property to come along could take forever, settling for less than perfect now could mean moving up the property ladder a whole lot quicker.