First Home Buyer – key considerations
CATEGORIES:
Buying your first home is one of the biggest financial decisions people make in their lifetime – here are some practical ‘first home buyer tips’ if you have taken the plunge and are buying your first home.
Take a look at your salary, debt levels, cost of living and the repayments you’d face on your ideal property. Be honest with yourself about lifestyle costs so you don’t over-stretch yourself.
Do this before you start looking. This allows you to understand what you are able to afford and decreases the risk of missing out on a great property because you haven’t got your finance organised.
Take a look at the neighbouring suburb. It might be a five-minute walk away but often so much cheaper. If you can’t afford your favourite area, consider what you like about it and seek the same in another region.
Major items to look for include a quiet suburban location away from major roads and traffic noise, lots of natural light, close proximity to shops and transport, a good floor plan, good internal size (apartments)/land size (houses) and ideally, off-street parking. Your first property purchase will not be your last, so be willing to compromise on the smaller things but not the headline items above.
Company title apartments often have by-laws restricting owners’ rights to rent their apartments. This might not matter right now, but if you ever want to rent it out or sell it later, company title could be problematic. Stick with strata apartments – there’s plenty around. Also avoid new apartments in inferior locations. They’re often keenly priced because the developer bought the site cheaply.
It’s really off-putting to walk into a dirty, untidy property. But stop yourself and try to see past the mess. How would it look with new paint and carpet and a professional clean? A poorly presented property in a good location is a gift for budget-conscious buyers as you’ll face less competition.
You can make an offer prior but you risk paying more than you need to. Pre-sales usually occur when there is lacking interest or when one buyer is offering a lot more. Plan your walk-away price and attend some auctions to experience the atmoshere and observe a few bidding strategies. Organise contract amendments beforehand in writing. If you really don’t want to bid yourself, you can authorise someone else to act on your behalf.
If you’re going to start the bidding, start low. Project confidence and make the other bidders think you have no limit. Make your bids fast and assertive. Agonising over your next bid is a sign of weakness. Call out your offer in full (that is, say “$ 350,000” instead of the increments, such as “$ 5000”). If it’s going to pass in, make sure you’re the highest bidder as you’ll usually be given first right to negotiate afterwards. Stick to your walk-away price. Short-term disappointment beats long-term remorse!
Don’t offer the most you can first-up, as vendors will always assume you can do better. Put the offer in writing and mention your pre-approved finance. To make it more seductive, sign a contract and attach a deposit cheque. If it’s rejected, look for ways to help the vendor. Offer a shorter settlement or early release of the deposit if they accept the price. After one or two rejected offers, try offering an odd number such as $ 337,500 instead of $ 340,000, as it implies you’re stretched to your financial limit.
I strongly recommend this but there are also ways to identify major defects yourself. These include checking the power board in the electricity box to see how old it is; checking for sagging floors; and looking for water stains on the ceilings or dark stains around the skirting boards, which could indicate leaks or rising damp. Also, turn on a tap to check the water pressure.
One of the biggest challenges for a first home buyer is saving for a deposit. Many States offer a First Home Buyer Grant and Stamp Duty Concessions. Visit your states Office of State Revenue for more information
If you need support and advice, Equilibria Finance can support you through this process.
Anthony Landahl | Equilibria Finance
Note: This is for general information purposes only and does not constitute advice. With all of these options there are a number of considerations outside the scope of what is covered in this article. Please ensure your personal circumstances are taken into consideration.
