Have you been spending your Saturday morning traipsing from one open home to the next?
Perhaps you are trying the ‘modern’ way of searching, up till midnight most nights trawling through properties on websites like Domain or Real Estate.com to find the one that jumps out and says buy me?
Or maybe you have even considered using a property buyer but you’re just not comfortable paying someone to do what you feel you can and what if they can’t find a property you like?
Well, then this list is for you.
After doing a brief survey around the office here at Awesome Lending Solutions, we have compiled a list of the top ten secrets to buying a home.
Some are obvious, and some are not so obvious.
Buying Secret # 10: Keep Your Money Where It Is
It’s not wise to make any huge purchases or move your money around three to six months before buying a new home. Dipping into your savings can appear like you are not used to having significant savings and can raise questions about where the savings came from resulting in a request for more than the usual information.
Lenders like to see the money for the deposit and cost in the same account for 3~6 months as it shows you are reliable. This is often referred to as ‘Genuine Savings.’
Be careful if you open new credit cards, purchase a new car or buy a lot of big-ticket items, even on those interest-free loans that some major retailers offer. It could result in more difficulty in getting a loan. After all, you don’t want to take any chances with your credit history.
Buying Secret # 9: Get Pre – Approved For Your Home Loan
There’s a big difference between a buyer being pre-qualified and a buyer who has a pre-approved mortgage.
Anybody can get pre-qualified for a loan. It is as simple as walking into a Bank and saying “I earn this much how much could I borrow.” I have seen many clients get into big trouble when relying on this simple result to put an offer on a property. For instance, I have heard of a 17-year-old being given a letter stating he was pre-qualified for a loan, which is great except that people under 18 can not borrow money.
Being pre-approved, on the other hand, means the lender has looked at all of your financial information, and they’ve let you know how much you can afford and how much they will lend you. Being pre-approved will save you a lot of time and energy so you are not running around looking at houses you can’t afford.
If you need help obtaining a preapproval or would like to know which lender will pre-approve you
At Awesome we can also put together a Property Acquisition Plan so you can see the best possible lenders, fees & charges, etc.
All from the comfort of your living room without having to go door to door to each financial institution to find the one that is the best for you.
Buying Secret # 8: Avoid a Border Dispute
It’s essential to get a survey done on your property, so you know exactly what you’re buying.
Knowing precisely where your property lines are may save you from a potential dispute with your neighbours. This is especially true when it comes to older properties where the fence line differences may arise because fences have moved over time as they were torn down and replaced.
If the property is an investment property, it is also worth noting that the land value will be based on the amount of land you have. So when it comes to the land tax bill, it is best to have an accurate map drawn up in the event you may wish to dispute it.
Buying Secret # 7: Don’t Try to Time The Market
Try not to obsess with trying to ‘time the market’ picking the absolute top and bottom. While using the property clock to guide you in your purchase can be useful, it is very difficult to figure out when is the absolute best time to buy or sell.
Attempting to anticipate the exact movements in the housing market is near impossible, for example, some markets will drop and then bounce along for 6~12 months before dropping again. In Sydney, for example, the market started to move but it was more than three months before property valuation firms and newspapers started to realize that prices were rising fast.
Instead, take the attitude that The best time to buy is when you find your perfect house, and you can afford it.
Keep in mind that real estate is cyclical, property prices go up, and contrary to popular belief it does go down at times. The key is that over the long term a properly selected property in a long term growth area does go back up again.
So, if you try to wait for the ‘perfect time’, or play the latest property hotspot game, you’re probably going to miss more often than you succeed.
Buying Secret # 6: Bigger Isn’t Always Better
Everyone’s drawn to the biggest, most beautiful house on the block, but bigger is usually not better when it comes to property.
There’s an adage in real estate that says don’t buy the biggest, best house on the block. The largest house only appeals to a very small audience, and you never want to limit potential buyers when you go to re-sell.
Keep in mind that your property is only going to increase in value as much as the other houses around you. As a result, if you pay $500,000, and your neighbours pay $250,000, and their property goes up by $50,000 to $300,000, they have had a capital gain of 20%. On the other hand, if your property goes up by the same $50,000 your capital gain on $500,000 is just 10%. Wouldn’t you rather own two properties worth $250,000?
Sometimes it is best to buy the worst house on the block because the worst house per square foot always trades for more than the biggest house.
Buying Secret # 5: Avoid The Surprise of Those Extra Costs
The difference between renting and home ownership is the additional costs that go with home ownership.
Most people just focus on their mortgage payments, but you also need to be aware of the other possible expenses such as land tax if you are an investor over the land tax threshold, strata fees, and special levies if the property is a unit and maintenance costs if the property is a typical house.
Just like cars properties need regular repairs and maintenance we would recommend around 1% of the properties value is put aside each year to cover the expenses. It is much better to be able to draw on reserve funds in your budget for these costs so you’ll be covered rather than risk losing your house.
Buying Secret # 4: You’re Buying a House – Not Dating It
Buying a house based on emotions is just going to break your heart. If you fall in love with something, you might end up making some pretty bad financial decisions.
There’s a big difference between your emotions and your instincts. Going with your instincts means that you recognize that you’re getting a great house for a good value.
Going with your emotions is being obsessed with the paint colour or the backyard. It’s an investment, so stay calm and be wise.
Buying Secret # 3: Give Your House a Physical
Would you buy a car without checking under the hood? Of course, you wouldn’t.
Make sure you have a pest and building inspection done. It’ll cost about $200 – $500 but could end up saving you thousands.
The Building or Pest Company’s representative’s sole responsibility is to provide you with information so that you can make a decision as to whether or not to buy.
It’s the only way to get an unbiased third-party opinion.
If any issues are found in the property, you can use it as a bargaining tool for lowering the price of the home.It’s better to spend the money up front than to find out later and you have to spend a fortune.
Buying Secret # 2: The Secret Science of Bidding at Auction
If you find yourself going down the path of an auction environment your opening bid should be based on two things:
- What you can afford (because you don’t want to outbid yourself)
- And what you believe the property is worth.
Not sure what it is worth, contact Awesome Lending Solutions and we will be able to complete a property report free of charge to ensure you are armed with the right tools to make an educated offer.
After you have decided to make your opening bid, be sure it is something that’s fair and reasonable and isn’t going to offend the seller.
A lot of people think they should lower the first time they make a bid. It all depends on of course what the market is doing at the time. You need to look at what other homes have gone for in that neighbourhood, and you want to get an average price per square foot. Sizing up a house on a price-per-square-foot basis is a great equalizer.
Also, see if the neighbours have plans to put up a new addition or a basketball court or tennis court, something that might detract from the property’s value down the road.
Sellers respect a bid that is an oddball number and is more likely to take it more seriously. A nice round number sounds like every other bid out there. When you get more specific, the sellers will think you’ve given the offer a careful thought.
Buying Secret # 1: Stalk The Neighbourhood
Before you buy, get the lay of the land – drop by morning noon and night.
Many homebuyers have become completely distraught because they thought they found the perfect home, only to find out the neighbourhood wasn’t for them.
Drive by the house at all hours of the day to see what’s happening in the community.
Do your regular commute from the house to make sure it is something you can deal with on a daily basis.
Find out how far it is to the nearest shopping centre, local shops, and other services.
Even if you don’t have kids, research the schools because it affects the value of your home in a tremendous way.
If you buy a house in a good school area versus bad school area even in the same suburb, the value can be affected as much as 20 percent.