Purchasing your first home is an incredibly rewarding experience. It is also a long, tedious and sometimes frustrating process. There’s a lot at stake if things don’t work out how you imagine them to be. Knowing what to look for, how to prepare, and who to turn to when you need help will be invaluable to you. Here are a few things to consider that will take unnecessary stress away.
Congratulations! Your hard work and savings are finally paying off. Now you’re ready to search for your first property. However, as you hope for a seamless process, the hard work isn’t over yet. As a lifetime investment, a small overlook could cost you tens of thousands of dollars throughout your mortgage. Here are a few tricks to optimise your chances of securing the right home for you at the right price.
Make a Financial Plan
The first question you should ask yourself as a buyer is “what can I afford?”.
Your budget is your starting point in the buying process. Even if you have your deposit ready to go, your outgoing expenses should still be monitored closely – it’s a good start to impress the mortgage lender. Remember, you still have to consider additional costs such as property valuations, building insurance and stamp duty. Therefore, it’s a good idea to track your spending habits and begin reducing any unnecessary purchases. There are plenty of budgeting apps that you can use to help you with this process. It’s a great habit to get into early on in the process that might help you down the track if you consider renovating.
Understanding what you can afford in your day-to-day spending will help you know your financial limits when looking for a home. It can be difficult when you have set your eye on a specific style of home or property in your initial search, however buying a home should always be a rational choice, not an emotional one; think with your head, not your heart. If you’re unsure about what you can afford, review your monthly spending and make a budget on your income and expenses.
When you are ready to begin your search, start looking for properties with a slightly lower price range. You can then create a baseline for your search that you can use to establish your needs and requirements. This will also give you an insight into the current market conditions, what other homes in the area are selling for and what price range you can afford.
When you begin your search, start with a lower price range, you’ll be better able to establish your needs and requirements. It will also give you an invaluable insight into the current market conditions and what is available for your price range.
Do Your Research
One of the biggest mistakes that a first-time buyer can make is not doing thorough research. Researching the current real estate climate, location, future city planning, and local schools can all contribute to the cost of a home.
Work towards understanding the surrounding areas; assume the real estate market changes regularly, look into recent local sales within the past six months to get a good idea of what prices are like. Additionally, comparing similar houses on the market in your chosen area will help you establish the average cost of a home that fit your parameters. Take into account the number of bedrooms, bathrooms, and overall land size – this will help you understand the value of the area and comparable homes. Also, be sure to keep an eye out for areas going through gentrification or have any planned developments to get an idea of up-and-coming suburbs.
Understanding your chosen area’s market value can also give you a realistic expectation of what you can afford. Surrounding schools, upcoming/pending developments, building construction, or accessibility to public transport can drastically increase (or decrease) your property value. If possible, determine the property’s history and how much the property value has increased over the years.
Remember, the research you complete will benefit you if/when you decide to sell in the future. If the home is close to public transport, local schools, cafés and restaurants, city developments, these will all contribute to the home’s value.
Be Realistic About Issues
You inspect a property – you love it, fantastic. HOWEVER, you have to be realistic about what problems may arise. Ask questions to the real estate agent: why are they selling? How long has the property been on the market?
Checking the light switches and flushing toilets may seem like a silly idea, but they are necessary to identify any home problems. If you’re looking to move straight in without renovating, then you want a home in perfect working order. While small issues can be easy to overlook – especially if you’re emotionally invested in the property – a small issue could lead to long-term problems. Being realistic about any kind of issues the property may have is paramount when considering purchasing a property.
With that being said, keep your financial plan in mind. Does the house need fixing up to make it more livable? Are you planning on building an extension? Does the kitchen need work or the carpet replacing? These are questions that need to be answered in align with your budget. If you cannot afford to make amendments with the property, then don’t waste time looking for places that need additional work.
Be Confident in Negotiating
You’ve found a property that suits your needs, is within your budget and you’re ready to negotiate. Negotiating a price is a crucial stage in the process, it can take time, and it can be frustrating. Keep in mind, negotiating a small figure at the time can make a huge difference long-term. Don’t be afraid to stick to your guns. This is where an independent property valuation can assist in establishing a correct price when entering into negotiations.
Making an offer lower than the asking price is a great way to test the seller’s flexibility. Be careful not to offer a price that’s too low from the asking price – about 10% should be OK. Bear in mind; the real estate agent is acting on behalf of the seller, so they are committed to making sure that the seller is getting the best deal possible, they won’t do you any favours.
If your offer/s to negotiate are rejected, don’t be too disappointed and don’t over-compromise. Going over your budget – no matter how small – can affect your long-term payments, so be weary how much you’re willing to compromise.
Inspect and have the property valued
Making sure that the property is livable when you’re ready to move in is vital. It is essential to organise an inspection to ensure that the property is in suitable condition and correctly reflects the current market value. Working with experts to make sure that you’re getting what you’ve paid for is a necessary (and in some cases, it may be compulsory) service.
Inspecting the property will save you any drama you may incur after the deal is closed. There’s nothing worse than walking into your new home and find a problem that wasn’t disclosed throughout the process. It’s easy to blame the seller for not disclosing, but as the buyer, there is an equal responsibility to investigate yourself.
Buying a home is an overwhelming experience; however, knowing that there are services available to you that help ease the process makes a world of difference. Seeking out an independent, local property valuer to complete a pre-purchase property valuation report will ensure you understand the property’s true worth within the current market value.