Some important things to consider When Buying Property!

Buying a good home or investment property can be a fantastic financial asset for you and your family. Avoid making costly mistakes by being better informed with the following tips.

1. Lack of research

   You should do some detailed research to work out the market value of the property. The process is called comparative market analysis. It's extremely powerful when you're trying to negotiate the best possible price. Also see Tip #6 below.

   Select a maximum of three suburbs and see as many properties as you can in preferably a 6-12 week time frame. Preferably you should inspect at least one hundred properties and document their main features.

   Invest the time and effort to get a good deal, otherwise the selling agent will have the upper hand when negotiating with you!

2. Thinking Selling Agents are there to help you, the 'buyer'

To put it bluntly, the Selling Agents are NOT there to help you get a good deal. They are working for the seller, NOT the buyer. To really know important details about the property, you need to ask the right questions and do your own research.

Some good questions to ask when doing your research are:

• How did you come to the asking price?
• Are there any recent sales in the street or surrounding streets that are comparable to this home? If yes, make sure the selling agent can show you the evidence of this.
• What are the offers so far on the property?
• How long has it been on the market?

Use the answers to these questions (plus you own research) to your negotiating advantage with the selling agent.

3. Searching without finance approval

Obtain a 'pre-approval' from your Lender. Identify the maximum price in your comfort zone. Importantly paying bills and credit cards on time sets a ‘clean’ money management view to your Lender, assisting your loan approval process.

4. Overstretching your finances

   Don’t commit to a mortgage beyond your means. Four important rules to avoid trouble:

   1. Make sure your repayments are no more than 25% of your total household net income.
   2. Don't borrow more than 80% of the property's value.
   3. If you don't have a 20% deposit, then you can't afford to buy that property. Look at a smaller house at a lower price if necessary.
   4. Interest Rates can vary over a relatively short period. (remember 2006-2010) Budget to deal with higher interest rates (if and when they increase).
5. Ignoring inspections

   Termite infestations, dodgy wiring, sub-standard renovations ... there are many potential problems with any home that you're not likely to pick up yourself.

   For your peace of mind & to avoid potentially large unforseen expenses, get a Building Inspection Report done.

6. Not factoring in running costs

   Before you rush off and make an offer on a property you should determine whether you can afford the running costs on top of the mortgage such as council rates, water rates, land tax etc.

   If you're buying an apartment, find out how much the Corporation fees are, and how much money is in the sinking fund. Corporation fees typically range from $300 to $2,500 a quarter.

7. Being influenced by rental guarantees

   Avoid properties with a rental guarantee. A good property doesn't need one. An inflated rental figure pushes the return on investment up against the yield (the ROI / Yield) and allows the seller to put a higher price on the property. As the saying goes - anything that's too good to be true probably is!

8. Buying property sight unseen

   Buying property sight unseen is a recipe for disaster. You can't possibly consider all factors important to you. With hundreds of thousands of dollars – take the time to inspect it yourself.

9. Limiting your selection choice

   Avoiding the auction experience reduces your property selection. Do your research by going to a number of auctions, and identify the value of the property. Part of your auction plan should include a maximum bid price and stick to it.

10. Listening to too many people

    Everyone's an expert when it comes to real estate. Avoid well meaning 'kitchen table advice'. Put in the necessary hours of research, ask Unley Conveyancing questions BEFORE you sign, then you can move ahead with greater confidence!

11. What is market value?

    Offer what you think is market value, from your 'comparative market analysis' (see Tip #1 above). If your offer is below the owner's expectations:

    1. Provide information about why your office is genuine, and
    2. Make the deal attractive to the owner by offering different Settlement terms or even a 'rent-back period'.

    However, be prepared to walk away! You are better off letting someone else pay above the market value. Offer your details to the selling agent anticipating the owner may be willing to come closer to the market value. There are other suitable properties out there.

12. Do It Yourself

    Renovating a property can add value to a property. However, unless you have the know how or experience do not embark on it yourself.

    Add 10-15% to any renovation budget to allow for unexpected expenses.

13. Don't be shortsighted

    Buying a property is an investment – spend some money along the way for added value when you eventually sell.

14. Build a good team

    Choose a Conveyancer who has been in the industry for a number of years, like Unley Conveyancing. Take time to have sound contact with good advisers and tradespeople – setting up your own team will reward you!