The process of buying a home can be somewhat overwhelming, particularly if you’re a first-time home buyer. There’s so much to consider both financially and technically, and if you’ve never bought a property before, all that technical jargon and all those scary additional costs are likely to leave you cross-eyed. So, to simplify the home buying process, we’ve broken it down into easy steps, that will (hopefully) make it all a little less daunting.
Know your financial position
Educate yourself as a buyer and know your borrowing capacity. Ensure your finances are in order and you have pre-approval before you start looking at properties. Find out what the upfront costs and fees are (stamp duty, bank fees, conveyancing costs and inspections) as well as ongoing fees (strata or land tax and mortgage insurance).
Shop around various lenders to make sure you are getting the best deal. Offerings will vary, so be mindful that the highest loan could also stretch you thin financially. Always seek professional legal advice.
Pre-approvals consider your financial situation at the time of enquiry – they indicate that you are eligible to apply for a home loan up to a certain amount. It is not an offer of credit and there is no obligation for the bank to honour it.
Research the market and the areas you’re interested in
One of the fundamentals of the decision-making process for first-time home buyers and avid investors alike is market research. Being familiar with a neighbourhood and the lifestyle that it offers is just as important as being abreast of current property data.
Some things to consider while researching:
Check to see if there any new developments or zoning changes
Attend as many auctions in the area as you can and familiarise yourself with the process and the auctioneers
Focus on areas with good infrastructure- public transport, schools and shops.
Find out what properties are worth, and if you’re buying an investment property, look at the rental yield. This will help you understand what return you can expect on your investment
Try not to be too focused on a suburb – look at surrounding suburbs as well.
Make the most of open home inspections
Arrive when the doors open. This allows you ample time to inspect the property, and to gauge the reaction and feedback from other buyers. Go back and have a private inspection. You want to get a good sense of the home on your own.
Check for evidence of mould in bathrooms, window sills, cupboards and damp areas with poor ventilation. Ensure ceilings are perfectly straight and look for any cracks within internal and external walls. Test the hot water – often water that takes a while to heat up can indicate a leak somewhere in the home or a problem with the hot water service.
Building and pest inspections
Inspections provide you with reports on the condition of the property and provide you with detailed information regarding potential issues before you invest valuable time and money in a property. Before the inspection, discuss any concerns that you have. Attend the inspection as this a great opportunity to educate yourself on the state of the property.
Building and pest inspectors look for a wide variety of issues, such as cracks in the wall, dampness, mould or leak stains and rust. The inspector will check whether the windows and doors are functional, look for potential plumbing and electrical issues, rotting timber, pests, roof and fire hazards. External walls, large trees and garden hazards, and external structures will also be appraised, including whether extensions are legal and have council approval.
Purchasing your new home
Once you have found a property you want to purchase, do your due diligence. Arrange conveyancing, inspections and a valuation before you exchange contracts.
Sales method: Private treaty and Auction
Private treaty allows for greater flexibility at the negotiating table and can work to the advantage of buyers and sellers. In terms of process you will negotiate on price, exchange contracts and pay a deposit.
Auctions are considered the fairest way to purchase a property. The process is transparent, you can see who the other bidders are, where they begin and where they stop bidding. Be prepared on the day with your deposit because if you have the winning bid at the fall of the hammer, you will need to present it right then and there – there is no cooling off period. Be clear about what you are prepared to offer and factor in what price you are prepared to competitively bid to on the day.
Quick guide to buying a home
With open home inspections, ensure you arrive when the doors open. This allows you ample time to inspect the property and to gauge the reaction and feedback from other buyers.
Go back and have a private inspection. You want to get a good sense of the home on your own.
Choose properties in areas that have public transport, good schools and shops.
Ensure your finances are in order and you have pre-approval. Get a second opinion on your finances and don’t be afraid to use a broker.
One of the fairest ways to purchase a property is via the auction process. The main advantages over private treaty are that it’s transparent – you know exactly how many competitors there are, where they begin and where they stop bidding.
By Sitchu Team