How to Pay the Best Price for a Home
One of the biggest financial decisions of your life, is buying a home or an investment property. The average property price in a major Australian city is 6.7 times your salary, making it one of the most expensive housing markets in the world. Buying a property in a market like this is a risky business and one that makes it harder to stick to your budget. The only way to do this successfully, is to truly understand how much a property is worth. There several factors that you need to know before taking this big step. In this blog we’ll talk about the possible pitfalls and resources that could be of benefit to you.
Compare the Pair
If you are looking at a particular area or suburb, you need to research how much properties in the vicinity are selling for. There are a few ways to do this;
Talk to competing local Real Estate Agents,
Your Mortgage Broker will have a list of recent sales in the area,
Research online; for example realestate.com.au have a tool for recently sold properties.
I’d also recommend attending auctions, to not only understand the real value of a property but to gain experience of the auction process. Don’t sit on this research for a few months, as the market fluctuates regularly.
Location, Location, Location
To really understand a properties location, thereby it’s worth, you need to know exactly what surrounds it. You’ll no doubt have a list of ‘must have’s’ nearby, such as a good school, transport links or local shops, however, what about the must not’s? Utilising a source like Google Earth can reveal things that cannot be seen from the ground, like the noisy car mechanic or train line running at the back of your property – do your due diligence. One of the best location tips I’ve ever received is to try and visit the house at different times of day or night to understand any possible noise impact from neighbours or the environment.
Stick to your budget
Buy with your head and not just your heart. A great way to stick to your budget could be to buy in the suburb next door to the one you want. It could offer more value and space for the same price or less. Bear in mind your financial capacity to service a loan and disregard how much you could get approved for. Include maintenance and a contingency margin in your budget, so you’ll be comfortable knowing that you can afford your new home.
Real Estate Agents work for the vendor, not you. A Buyers Agent works for you, although they could cost up to 1% of the property price, they could potentially save you thousands in time and money. Using an expert in these emotional decisions, even if only at the auction, is a wise choice, as they set your list of needs and budget, as their priority. We have a great buyers agent that we work with, just give us a call and we can setup a free meeting to understand more about what they do.
The Money Pit
It is essential to get a building and pest inspection before putting an offer on a property. These reports can help you understand any building repair costs and possible structural issues. They’re also used as leverage for negotiations in a private treaty, for example; if it will cost $20,000 or more to repair a roof, perhaps the vendor would agree to reduce the cost of the house to reflect this.
Back to the Future
You may be buying a property in your 20’s or 30’s, however our needs will change over time. Whatever your situation, try to think a decade ahead when making such a long-term purchase. Will you need space for your future children? Does the property have the potential to renovate or extend? Is this property located somewhere with a great investment future, in an area with a strong rental market? Unless you have a DeLorean time machine, it’s important to ask yourself; ‘what will future-me want?’
When inspecting a property, talking to a real estate agent or an owner, do not give away too much emotion or information about your financial situation. Do not let your feeling sway you at an auction and be fully prepared to walk away, if the bidding goes over the real worth or your budget. Always remember that if you hold your cards close to your chest, you are creating the opportunity to find a real gem for the right price.
Talk to us today about setting your budget and your home loan needs.
*This information is not to be relied upon without speaking to your finance broker, tax agent or financial adviser.