Home Buyer Traps
Whether you’re a newbie to the property market or already a seasoned buyer, there are more than a few watch outs with purchasing your most valuable asset. At every stage of your buying journey, there are little tricks and traps that can cause upset if you’re not on your game…
Let’s start at the very beginning. Before you even start seriously looking at properties online or inspecting the homes for real, you should get your finances in check.
Be realistic about what you can afford. Open that spreadsheet doc and document all of your outgoings (Every. Single. Dollar.) and work out what you have left to still live comfortably. Then try out one of the many mortgage calculators online to check your price bracket. It’s really important to not over extend yourself or you could end up in all kinds of hot water…or without any hot water as you try to make ends meet.
The next thing to do before you start seriously inspecting properties is to talk to your bank or mortgage broker and get your finance pre-approved. The last thing you want to do is find your dream home, then miss out because getting your finance approved has taken longer than expected.
So now that you’ve got your financial ducks in a row, let’s be clear about exactly what you want to buy – is it your home? Or is it an investment? If you try and look at both, you’ll end up buying something that doesn’t really fit either purpose.
Next, let’s talk about the search. Like most people, you’ll start online, make a shortlist and then go view. Let’s make sure that shortlist is worthy of your time. Agents aren’t silly, so they use swish photography taken on a wide-angle lens to show the place in its best, even if unrealistic, light. Make sure you look at the dimensions on the floorplan, so you get an accurate insight into the properties size.
You should check the inclusions too. For apartments, they may show lovely gardens, but if that garden isn’t shown on the floorplan, it’s not part of the title.
Also, be aware that online real estate portals often only use pricing estimates, which can be outdated by at least 3-6 months. So you should be aware the price estimate provided may not reflect the current trends in the market.
Bank/ledger valuations are usually very conservative too, so they don’t really give a true representation of the property’s value.
You can run into the same trouble with auction price guides – these figures are only the baseline starting point of the sales agent’s marketing campaign. The property may go well above this price (and usually does in a competitive housing market like Sydney for example).
So how do you know what price is right?
It’s best to do your research to see the final selling price for properties of a similar style in the same area within the last 2-3 months. You can also pay to get the property appraised by a professional so you have a realistic idea of the property’s value (e.g. as a buyers agent yours truly offers this service and it is honestly well worth it!)
Some prices might be inflated by hopeful owners, but that doesn’t mean you need to give them a wide birth, you can always offer what you think is fair. A good bargain just may find its way to you if you take this approach.
But before we get to the offering stage, let’s talk about your buying options. You can strictly attend auctions to see if you can pick up a bargain (though it’s not guaranteed) or you can widen your search to any property for sale.
Don’t forget to consider you can also buy via pre-auction offer or post-auction negotiation. While these two aren’t always your number one choice they definitely have their place in the buying property journey.
Either way, make sure you take your time with your purchase, stay calm, unemotional and be sure not to rush into anything. Carefully inspect the properties and the local area.
At auctions, you need to be aware that auctioneers are paid to sell a property. If you are the highest bidder and an auctioneer places a vendor’s bid, you don’t need to bid against yourself to offer a higher price. If you are the highest bidder you have control. Just watch and wait for someone else to put their hand up before you say anything.
Despite popular belief, you can still secure a property even if the reserve price has not been met at auction – it’s up to the seller. Just aim to be the highest bidder at the fall of the hammer, then you can move into post-auction negotiations and may be able to acquire the property below listed reserve price.
Whether you decide to go with an auction or regular ‘for sale’ listing, make sure you undertake thorough due diligence before signing on the dotted line. We’re talking building/pest inspections and strata inspection reports (for units/apartments/villas). An apartment may seem like an affordable buy, but some high body corporate costs can end up costing you more in the long term.
Finally, never ever rely on what the sales agent is telling you – they’re working on behalf of their client, the seller. So be aware… Research! Research! Research! Or go and engage the services of a top notch buyers agent so you have someone working solely for YOU.