Yahoo Finance Step-by-step: The 7 stages of buying a home
Finding the right property can be tough, but if you’re a first home buyer it can also be a daunting experience if you don’t know all the steps involved.
Director at First Hand Property Mitchell Farah gave Yahoo Finance a comprehensive step-by-step guide for how to buy a home and all the tips and tricks to help you along the way.
Step 1: Find the property
You can’t buy a home until you’ve found one and while Farah said property portals like realestate.com.au and Domain are handy tools to help you find properties you can also give yourself a boost above the competition with off-market opportunities.
Off-market properties are homes that haven't been listed on property portals yet, so are new to the market and will have less competition.
“If you're a buyer in this competitive market, then you should also be on the list for off-market properties with local agents in your area,” he said.
Farah said there are a lot of listings at the moment that are selling before they go to market and with off-market opportunities you can get access to up to double the amount of properties.
“Look at which agents are selling properties similar to what your property wishes are, send them an email and ask to be added to their database for properties that meet your criteria,” Farah said.
“This is a critical first step before just going to inspections because if you get access to those opportunities you might be getting sent six potential properties a week when there are only two listed online.”
Step 2: Inspecting the property
So you’ve seen a property you like online but now you want to see it in person. Farah suggests trying to tee up a private inspection if you can.
Regardless of whether it’s a private or public inspection Farah said there are some key criteria you should look out for when viewing the property.
“You should come prepared to the inspection with your property criteria. Often having a list of what’s important to you is a really good option so you can make sure it’s ticking all your boxes,” Farah said.
Farah said things like the aspect - does the property have a nice outlook and is there good natural light - are the most important things to buyers.
“Buyer beware, if all the lights are on in the property when you come to the inspection turn them off and see how dark it is. There is a good chance that it’s a dark property lacking natural light,” Farah said.
Another thing Farah said to look out for is styling. Many properties on the market will have been professionally styled for the inspection and can be deceiving.
“Take a step back and think ‘has this been styled to maximise space?’, And, if you're bringing your own furniture in how would you set up the property,” he said.
“Some stylists will obviously look to create a vision in the property that may be difficult to replicate practically.”
The third most important thing to look out for is common walls and general features of the property.
“If it's an apartment block, consider if neighbour noise will be an issue. Then look out for things like is the kitchen electric or does it have gas?”
“These smaller things can be changed but you need to consider whether you want to spend extra money on renovations.”
Farah said it’s important to ask the agent questions while you’re there also. Here are the three main ones he said may seem simple but are important.
Is the property currently tenanted or owner occupied?
Why is the owner looking to sell and how long have they lived here for?
Are there any issues with the property that I should be made aware of?
“You may not always get an honest answer, but these are important questions to ask when viewing a property you’re interested in,” Farah said.
Step 3: Research the property
It is a good rule of thumb to add 10 to 20 per cent to the price guide to get a more accurate idea of what price the sellers are looking for, Farah said.
“When they give you the price guide, you should always put the price guide against recent, comparable sales in the area to get a full picture,” he said.
“Do your research to determine whether you feel the price guide is realistic or not before you consider moving forward.”
If you like the price guide and feel good to go forward you should request a contract of sale. Farah said this contract will often have a lot of the really pertinent information about the property.
It is very common for all buyers, experienced or not, to engage a solicitor or conveyancer to overlook the contract.
Farah said you should also look to obtain:
A strata report if the property is in an apartment block or complex
Building inspection to ensure there are no immediate issues with the property
Pest inspection
“A strata report can give you an understanding of what the strata levies are and whether there are any upcoming major costs you should know about,” he said.
“Most agents will already have a strata report or a building and pest report already complete for purchase, but if not you should definitely make sure to obtain one yourself.”
Step 4: Making an offer
Okay, so you’ve done your research and have all the available information and you are ready to make your offer.
Farah said generally if a property is listed for auction, there is an auction date set, but that doesn't mean you can’t still make a private offer.
“It is at the discretion of the owner but if you want to make an offer prior to the auction it’s a good idea to call the agent to ask them if there is a price and if so, whether the owners would be willing to accept it prior to auction,” Farah said.
“Be aware that whenever you do put an offer forward for a property, if other people are interested in the property, it is highly likely that the agent will alert the other buyers of the interest, because at the end of the day, they are working for the owner.”
You should always submit your offer in writing and Farah suggests it should be an “unconditional offer” if you want to be a more attractive buyer.
Another tip is to put a time limit on your offer to entice the sellers to make their decision quickly so you don’t have to sit and wait nervously.
Farah added that you should also leave yourself some wiggle room in case your first offer gets knocked back. That way, you have the capacity to increase it.
Step 5: Offer accepted
The first thing that will happen when your offer is accepted is you’ll be notified by the agent. The next thing you need to do is put down a deposit.
Most deposits are 10 per cent, but some sellers will accept 5 per cent.
“Most people will not accept less than 10 per cent for a settlement period that extends further than six to eight weeks,” Farah said.
“This is because the level of risk for the seller is heightened with the smaller deposit in case you're not in a position to complete the sale.”
You will also exchange contracts at this time and it's imperative that you compare your contract and the agent’s contract to ensure they are identical.
“Once those contracts are signed and exchanged and the deposit is received, technically, the property is exchanged and you or your solicitors should be notified of this.”
You will then have a final inspection the day before you enter the settlement period.
Step 6: The settlement period
It’s during this time that you will organise all your financial and moving arrangements.
“In the settlement period it is not uncommon to request access to the property to do measurements or whatever you need to do before moving day,” Farah said.
Your solicitor will also generally help you organise the payment of the remainder of the funds so you will have fully paid for the property by the end of the settlement period.
“The agent will then hand you the keys and you will be ready to move into your new home,” Farah said.
Step 7: Time to move in
Congratulations, you’ve reached the end of the journey and it’s time to get settled into your new home.
Generally this is just like a regular move but Farah said if you’re moving into an apartment complex be sure to brush up on the strata by-laws.
“Be aware of the strata by-laws and anything that you need to know in terms of getting approval for using lifts for moving in furniture and all those sorts of things to ensure a smooth transition into your new property,” he said.
“If the property is an investment and you need to find new tenants it is advised during the settlement period to do research on the rental market and also prospective agents who can be ready to start the renting process.”
