Buying a property is one of the most important decisions that you will ever make. If you make the wrong decision, it could end up costing you thousands or even hundreds of thousands of dollars.
In this piece for Inner West Mums licensed buyers agent and expert in Sydney real estate Nick Viner of Buyers Domain offers these seven key considerations to avoid disaster when buying a property. Be sure to read these tips – they could end up saving you a fortune!
1. Don’t Forget Your Needs. Keep on asking yourself, ‘What am I buying this property for?’ Your needs should govern the type of property that you buy. What may appeal to you when looking for a home may not be appropriate for an investment property.
If you are buying a home, consider not just whether the property is suitable today but also in the future. If you are planning to have or grow your family, for example, will the property be big enough?
Do not just buy a property because you or those around you think that it is a good idea. Buying a property is a very costly exercise. To avoid buying the wrong property, you should write a checklist of the things that you are looking for and make sure the property you buy ticks most of those boxes.
Example: We were recently instructed by a retired couple who were looking to downsize. Whilst they were fit and healthy and able to manage stairs, the property was to last them at least another 20 years. Therefore they did not want to buy a property with any stairs.
2. Don’t Buy Without Finance in Place: Consider your budget. If you need to obtain a mortgage, find out from a mortgage broker or your bank how much you can borrow. Remember that there may be a difference between the amount that you are able to borrow and the amount that you are prepared to afford. Do not borrow the maximum amount if it means that you would need to live off bread and water for 30 years.
If you need to take out a mortgage, obtain a pre-approval from your bank or mortgage broker before you start spending time looking at properties.
3. Don’t Use Second-Rate Third Party Service Providers: When you buy a property, you are likely to rely upon a combination of the following service providers:
- Solicitor or conveyancer to review the Contract and carry out the conveyancing. If you are going to use a solicitor, make sure that they are a property solicitor
- Mortgage broker or banker to help you obtain finance
- Building and pest inspector to carry out a building and pest inspection report
- Strata records inspector to carry out the Strata Inspection (if you are buying a strata property)
- Financial planner and or accountant in circumstances where financial planning or investment advice is needed
Have these contacts in place before you start looking for a property. If you find a property that you like before taking time to assemble your team of third party service providers, you risk either losing out on the property to another buyer or appointing a team who are second rate.
Always use service providers who have been recommended to you first.
Example: We were once instructed to purchase an investment property for a client who was keen to use his friend and family lawyer to do the conveyancing. It became clear that the solicitor in question had very limited property experience and provided such bad advice to his client that the client nearly missed out on buying a great investment property.
4. Don’t believe everything the selling agent is telling you: Remember that the selling agent has been engaged by the vendor to achieve the maximum selling price for the property.
If an agent has told you a fact that is important in helping you make your decision about the property, do your own research to make sure that the fact is accurate. The agent is always likely to present the property in the best possible light.
Example: If you are buying an investment property, do not rely upon the rental guide provided by the selling agent. Invite at least one independent property manager to attend the property with you so that you can obtain a second opinion.
5. Don’t buy without doing your research: There are a number of matters that you can research when buying a property. A non-exhaustive list is set out below:
- What is the property like at different times of the day and night? The agent may often choose an inspection time that literally presents the property in the best light. However, go back to the property at other times and check that it still appeals to you. If the property is near a school, go to the property at school times and before and after school to check the noise and traffic levels.
- Are there any problems or defects with the property? Engage a building and pest inspector to carry out a report on the property.
- Is the property adversely affected by proximity to busy roads, commercial or industrial zones, the flight path, power lines, telecommunications towers, electricity substations, housing commission, flood plains and other water courses, pubs, clubs and hotels, for example?
- Are there any proposed infrastructure changes which may impact upon the property in the future? Your solicitor or conveyancer should be able to confirm whether the property is affected by a notice of proposed road widening or rail development but check neighbouring properties as well.
- Is the property adversely affected by a notice of proposed development in the immediate vicinity? Check with the local council whether there are any active Development Application consents relating to any neighbouring property.
- What are the positive and negative features of the property?
- What are the most recent comparable sales and how do they compare to the property?
6. Don’t get the agent/vendor offside: Whilst observing point 4 above, don’t lose your cool or get angry with the agent (or vendor if no agent is involved). You may question whether they are telling you the truth and you may not like the way that they seem to be treating you but never let this show. If you annoy the agent or fall out with them, they are unlikely to want to deal with you. Remember that buying a property is just like any other business transaction. If you maintain a good professional relationship with the agent, you may be more likely to secure the property.
Example: We have known of many occasions where another party may have been willing to offer more money for the property. However, because the agent preferred dealing with us, we secured the purchase for our client at the lower price.
7. Don’t get gazumped! Once you have found a property that you like, you are likely to have completed the hardest part of the whole process.
However, to ensure that you end up with your chosen property, think carefully about whether and how you may make your offer. If the property is due to be auctioned, sometimes it may be worth waiting until the auction. Other times it may be worth making an offer before the auction. If you are going to make an offer, make sure that you don’t miss out on the property to another buyer.
This may be the hardest point to observe because you have little control over whether a vendor will ultimately accept a higher offer than yours. However, there are strategies that you can employ to ensure that the risk of being gazumped is reduced. For example, minimise the time between declaring your highest offer and providing the signed copy of the Contract. The shorter the time, the smaller the risk of another buyer making a higher offer.
If you have not already done so, consider speaking to a buyer’s agent. It may prove to be the best use of your time. A good buyer’s agent will help you with each of the matters listed above and more.
Give Buyers Domain a call on 02 9568 6330 to find out how we can help you with your next property purchase.
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