Buying A Property
Choosing the right property takes time, commitment and homework. Before you start looking, work out how much you can afford to spend, where you want to buy and then keep a close eye on sales in the area.
The Right Location
Finding the right location is so important when it comes to buying your property. A good location is not just a good investment, it is also where you or your tenants will live, so its vital to find the right fit. Think about important amenities like transport, schools, shopping centres and local services.
Look for areas on the rise that offer the opportunity for growth. If you like an area, but its out of your price range, consider neighbouring areas. The ripple effect from interest in popular areas can see nearby suburbs gaining value too.
It's also a good idea to consider future developments that might be salted for the area you are looking in.
Calling It Home
Whether you are looking for a house, terrace or apartment, there's bound to be a property that works for your lifestyle. Freestanding houses, often complete with gardens and garages, are generally the most expensive option. They are certainly not the only option if you're looking to keep your feet on the ground. Terraces, townhouses and semi-detached houses are great alternatives, however that may mean you're a little closer to your neighbours. Apartments can be a more affordable option and often easier to maintain. Create a list of what matters to you and see where it takes you.
Think Before Buying
Buying a property to live in, or as investment, can be a stress-free experience. The secret power is proper planning and careful research. Minimise the headaches by taking time to think through a few points:
- What's driving your purchase? Does this property suit your needs?
- What king of property are you after? A house? An apartment? Maybe it's a block of land and a new home.
- How many bedrooms and bathrooms?
- If the property has been renovated recently, is it compliant? Check approvals and permits.
- Are there stairs? Is that a problem for the people who will live there?
- Does the property have a common wall? If it does, check what the noise is like.
- Car spaces can add value even if you don't need one yourself. Does it have one?
- If it's an investment property, consider the needs of future tenants. Talk to us about who's renting and what's important to them - that way you can maximise returns.
Choosing A Home Loan
There are plenty of different home loan options available, each offering different rates and features. Raine & Horne Marrickville offers a dedicated brokerage service Our Broker, who can provide you with information on the types of loans they offer. When it comes to choosing your loan, look for a competitive interest rate, sufficient repayment time, favourable conditions and options that will suit you.
Variable Home Loans
If you want to take advantage of the current market rate and enjoy some flexibility, a variable loan may be for you. It often starts with an introductory rate and then after a set time will change depending on the current rate. You can usually make additional payments. Basic variable loans will have fewer features but may offer a lower rate.
Fixed Interest Loans
If you like certainty, a fixed loan can be a good choice. With set payments, you’ll know exactly how much you need to pay. That means that you won’t experience rate rises, but you also won’t benefit from any unexpected drops in rates either.
Variable? Fixed? Not sure what’s right for you? A split loan may be the answer. Simply select the amount you want to fix and leave the rest as variable.
Line of Credit
Often offered as part of a home loan, a line of credit allows you to borrow against the value of your home. It means funds are easily accessible when you need them.
If funds are required to cover the gap between the purchase and sale of a property a bridging loan may be the answer.
If you’ve made extra repayments on your loan, a redraw facility will allow you to access them when you need them. Be sure to check the details with your financial provider.
Pay your home loan off faster by making extra repayments, in addition to the monthly repayments.
First Home Buyers Grant
If you’re looking at buying your first home, you could be eligible for the First Home Owners Grant. The grant is different in each state and territory, and in most places, it applies to new homes only.
This is a tax paid by the purchaser on all real estate. You’ll need to factor in the cost of stamp duty on top of your purchase price.
If you’re borrowing more than 80% of the purchase price, you’ll generally need to take out mortgage insurance. It’s typically between 2% – 4% of the purchase price and protects the lender.
Most employ a conveyancer or solicitor to manage the legal side of buying or selling property. They prepare the contract and settlement documentation as well as provide legal advice and explain the implications of any finer details. This involves the following steps:
- Examining the contract of sale.
- Review of the strata inspection or company title report.
- Arranging payment of stamp duties.
- Checking for outstanding arrears or land tax obligations.
- Finding out if any government authority has an interest in the land or if there is any planned development.
- Discovering any information that may not have been disclosed such as illegal building work.
- Calculating adjustments for council, strata and water rates for the property settlement.
- Completing final checks prior to settlement.
- Attending settlement.
- Overseeing the change of title.
- Exchanging the contract and paying the deposit.
- Arranging building and pest inspections.
- Preparing and examining the mortgage agreement.
A property is a large investment, any information you have will help you make a strong decision. Before committing, consider getting a professional assessment like building and pest inspections, and if you are looking at an apartment, secure a recent copy of the body corporate minutes.
Unless you are a trained professional, it can be difficult to see behind the walls of a property. To fully understand the property’s condition, you will need a building and pest inspection to identify any significant building defects or problems.
The consultant will inspect the interior and the exterior of the building. If the inspection does identify issues, you can ask the vendor to resolve these prior to settlement or try to negotiate a lower price.
Strata & Company Title Searches
If you are buying an apartment, townhouse, or villa, you will probably share the cost of repairs to common property. For any property managed by a body corporate it’s important to arrange a strata or company title search. This provides you with the history of the property including a list of past and proposed repairs to other units and common areas and any special levies that may be forthcoming. If you are unsure of any part of the process, the listing agent can provide assistance throughout.
Buying at Auction
Remember auction results are immediate and binding, if you are the highest bidder and your bid is accepted, you are under law, obliged to purchase the property. The successful bidder is obliged to sign the contract of sale and pay their deposit right then and
there. You should have all of the following in place before the auction:
- A clear upper limit that you are prepared to pay.
- All inspections and reports.
- Legal documents checked by a solicitor/conveyancer.
- As there is no cooling-off period, pre-approved finance and a bank cheque for the deposit is a must-have on the day.
- Conditions of sale by auction may differ between state and territories.
Bidding at Auction
Prospective purchasers need to register to bid at auction. Bidders are issued a bidder’s number which is displayed when making a bid. Do not be surprised if the vendor or the auctioneer places a bid, they are allowed one bid, called a vendor’s bid.
When the property falls short of a reserve price, it is passed in. The highest bidder is usually given the first opportunity after the auction to negotiate further. If negotiations fall through and the reserve price is not met, the property will be placed back in the market for sale by private treaty.
Bidding on Behalf of a Purchaser
There may be a need to have someone bid on your behalf. Provide the auctioneer with a written authority before the auction starts, your letter needs to include your name, address and proof of identity such as your driver’s licence or passport.
Phone bidding is a way to allow buyers outside the market to participate at auction. Written authority must be given to the auctioneer prior to the auction, acknowledging that the bidder has been given a copy of the conditions of sale. A copy of the contract must be provided to all successful phone bidders after the auctioneer has signed it on their behalf.
To get a feel for the bidding process, attend other prior auctions prior. Here are some helpful tips to help you make the most of the auction:
- Set a limit of how much you are willing to spend.
- Make yourself known to the auctioneer, if you’re too far out of the way, your bid may be missed.
- Bid with confidence, this shows you’re serious.
- Bid in the increments the auctioneer sets for as long as you can. Don’t unnecessarily raise the price.
- Before the property is sold, the auctioneer will repeat the price several times before the hammer comes down.
This is lowest price the vendor is willing to accept, it is set before the auction by the vendor and not revealed to buyers.
If the reserve price is not met the property is ‘passed in’ or withdrawn. The agent will then negotiate with the highest bidder which may result in a sale.
Contract of Sale
You can examine the contract of sale at any time during the buying process, even before an offer is made. The contract sets out the terms and conditions of the sale.
Making an Offer
Deciding how much to offer can be challenging. There is no right way. You might want to lead with your best offer upfront or start with a lower offer and be prepared to negotiate. Starting low, you run the risk of higher bidders securing the property before you’ve had a chance to increase your bid.
- Make offers at the current market rate. Offers below market value won’t be taken seriously.
- Before making an offer, ensure your finance is approved. The vendor is only interested in serious offers.
- Put your offer in writing and give it to the real estate agent. The agent is obliged to forward all formal offers to the vendor.
As soon as your offer is accepted, the contracts are signed between yourself and the vendor. Most people use a conveyancer or a solicitor to do the legal work.
Once both parties sign the contract it’s time to pay the deposit. The deposit is paid to the vendor’s real estate agent, who places the money into a trust account until settlement.
Settlement can take place 2–6 weeks after the contracts are signed and the title and transfer documents have been exchanged. Once complete, the balance of the purchase price and other adjustments are paid, you become the legal owner of the property.