We all know that purchasing a property can be a rollercoaster ride of mixed emotions such as excitement, uncertainty, pleasure, stress, nervousness and joy. In fact, these are the feelings which buying a home can bring whether it is your first home, your next home or an investment property. However, choosing the right property for you comes down to knowing what you want and need, what you can afford and understanding exactly what’s available at the time you are ready to buy. Ultimately, if you have done your homework and are aware of these factors, it will be more likely that the home you finally do buy will be the home you had in mind when you started out on your search…which means the best result for you!
What you need to know first up…
So before starting out as a real estate Buyer there are two important points to understand:
- The Sellers of a home you may wish to buy are under no obligation to reveal its faults. In fact, it’s up to you and your legal advisers to examine the property, stipulate your conditions in the contract of sale and make the decision whether to buy or not.
- Real Estate Agents are engaged by the Sellers and therefore work for their clients to get the best price possible for their homes. Their aim is also to sell the property as quickly as possible. However, whilst the Sellers are their clients, Buyers are their customers and it is the agent’s job to match these two parties up. This means finding you, the Buyer, the ideal property in the price range you can afford.
Knowing what you want and need…
This may sound obvious, however this first step it is often overlooked. Remember, the type of home you buy needs to reflect the lifestyle you are planning for your future. This means getting clear on what you want and need in your home, so consider the following:
- Key features you want in the home, in order of importance, plus deal breakers.
- Household numbers and whether these will change.
- Needs of each person in the household now, and in into the future.
- Local amenities required and their proximity.
- Work and leisure activities you love.
- Length of time you expect to live in the home.
- Are you expecting to renovate or develop the property
Think about these questions and discuss them with everyone involved in the purchase. Use your answers as a check list for your specific needs and a guide to the sort of home you want to buy and where to buy it. Prioritising wants and needs are important because you may need to compromise on some points.
Knowing what you can afford…
Assuming that you are going to require a loan, its size will normally depend upon your answers to these questions:
- What’s your income or combined incomes?
- Do you have other commitments such as credit cards, car finance or personal loans?
- How much savings you have available for a deposit?
- How long it will take you to repay the loan- the term of the loan?
- What interest rate is being charged over the term of the loan?
- What are the size and frequency of your repayments?
- Do you have the capacity to pay your normal daily living expenses in addition to loan repayments?
Usually, the larger the deposit you can put towards your home, the easier it will be to buy it. In any case, your deposit will generally have to be between 5% and 20% of the purchase price depending on your borrowing capacity and the policy of the lending organisation. If it’s below 20%, you may have to apply for Mortgage Lenders Insurance which can be costly. It’s also important to budget for the other costs of buying a home such as:
- Legal expenses
- Lender’s fees
- Government charges – eg stamp duty
- Inspection costs (for instance, building and pests)
- Moving costs
- Utilities – ie the connection of gas, phone, water, etc.
When all the calculations are done, you will know what you can comfortably afford- remember it’s critically important not to overcommit yourself financially. (Recognising this, lending organisations generally cap their loans so that the repayments are around 30% of your gross monthly income.) From here, you can safely approach a qualified Mortgage Broker to help you find the right loan for your circumstances. Once you have found this, get it and yourself either pre-approved or pre -qualified. In either case, you will benefit from having your finance in place when placing your offer on a potential property as this will give you the edge over other less prepared Buyers.
Knowing what's available…
At any one time, there can be thousands of homes being offered for sale so if you’ve worked out what you want and can afford, you’re way ahead of the game. Now it’s time to do your research and online real estate sites are a great place to begin. Here you can browse your way through literally hundreds of homes that suit your individual criteria, some even have virtual tours.
Once you are up to speed with prices and properties available in your chosen area, get out and visit these suburbs, check out real estate agents’ windows or ask for their “for sale lists.” Then, start going to some open homes and auctions. Soon you will get a feel for what is available, the number of buyers in the market (demand) and what different properties are worth. Before long you will feel ready to buy secure in the knowledge of your local market. Now that makes good buying sense!
Wishing you happy buying…