The more I think about the search for a property, the more it reminds me of dating.
Yes, that’s right, dating.
And I guess it’s more like the search for a partner online or via a dating app.
But all the same emotions apply. There’s hope and anticipation to begin with, then the search becomes quite tedious and exhausting, until you finally stumble across something that engages you.
Of course then attending an open house (the actual date) and the follow-up can be quite stressful, especially if – when you get up close and personal — you end up with a sense of disappointment.
The trick is to keep looking, stay focused, and not give up on finding ‘the one’.
I can’t tell you how to find your perfect match, but I can share three invaluable lessons I’ve learned in recent months about securing a property.
1. It’s a marathon not a sprint
Like any life adventure, before you undertake it, you need to be prepared.
In this case, be prepared for the long haul.
Securing a property takes an enormous amount of time and energy. In my view, you’ve already lost the race if you go into it hoping you’ll be done in a few weeks. That has been known to happen but it’s not common by any means.
Your property search could take anything from a few months to a few years.
The reason for this is that it’s a lengthy process. You need to work out what you can afford, the most appropriate location to live, and get the due diligence done.
After all that you need to actually buy the place and settle. It all takes time!
2. Do your due diligence
So what is due diligence anyway? They’re two words that, together, don’t make much sense at first glance.
Due diligence is basically paperwork and phone calls to get your ‘ducks in a row.’
Buying a property is one of, if not the biggest, financial decision you’ll ever make. It’s vital you do the necessary work to make sure everything runs smoothly and you can move into your new place hassle free.
At a very basic level it means looking over the real estate agent’s glossy brochure, inspecting the property itself (are the taps running? is the electricity working? Air conditioning? Is there access to gas?).
Following these activities, it’s time to book a building and pest inspection by a trusted builder, and then have a lawyer look over the contract.
If at this point if everything seems above board, you can ready yourself for auction day.
3. Make sure you can afford the property
Applying for a loan can be incredibly daunting.
Here’s a tip that may seem bleedingly obvious but so many folks don’t understand this: the bank needs to know you can pay off the loan.
So, if you’re currently renting, and in debt, the bank will be reluctant to give you money because you haven’t proven you can easily meet your expenses.
Banks don’t like risky loans, so your income will need to be robust and steady.
For many younger Australians the biggest financial challenge is working up enough money for a deposit.
Some agents and vendors will only require a 5 per cent deposit, and in the recent Federal Budget some single parents have been given the option of a 2 per cent deposit, but most will have to stump up a 10 per cent deposit.
You can apply for what’s called a Deposit Bond through an insurance company, for example, but speak to a lawyer or financial planner about whether this non-cash option may be right for you.
If you’re buying a property without selling your existing property just yet, you may need bridging finance.
The bottom line with all of this stuff is that the bank will look at your income, your expenses, your equity (current home), your debt (credit cards), and the amount of capital (or cash) you can stump up, in order to gauge the bank’s level of risk in handing over a very large volume of money.
The bottom line - no one is out to get you
There’s really no grand conclusion to be drawn here other than take care.
No one’s out to get you – not the agent, not the vendor, not the bank manager or lawyer.
At the end of the day, they’re all guarding themselves, or protecting themselves, from the risk involved in dealing with a big asset and a large amount of money.
With that in mind, your task is to ease all of their concerns and progress confidently, within your budget.