Understanding the buying process
First time buyers will face a multitude of emotions: excitement, anxiety and confusion to name a few – all of which may cloud judgment when it comes to making big decisions.
Solid preparation and a knowledge of the process will put you on the right track to buying the house of your dreams. The first step in home ownership is knowing exactly what you can afford to buy. Your lender will offer a pre-purchase approval so that you know where you stand financially from the beginning - this will help when it comes to formally approving your loan.
During your search, you may come across a number of different buying methods. Here are the three most common:
This is a blind offer for a property that does not come with a price tag. Interested parties make an offer in writing to be opened by the vendor on an agreed date. You will not know the competing offers or the house value – unless independently surveyed. Your offer may come with a list of conditions but you could potentially be bidding against someone with a similar offer without conditions. For that reason, the sale may go in their favour.
2. Private treaty / offer and negotiation
Similar to tender, but the house will have a publicly known value. The buyer can negotiate back and forth with the seller over the price and conditions. This allows for the buyer to have more control and put more conditions on the offer before committing.
Unlike the tender, you are openly bidding against people. If you win, the offer is considered unconditional which means you can’t back out of it. View the property before attending any auction and if you are serious about bidding, it is a good idea to do your due diligence first by investing in a building inspection and meth testing beforehand. It is important to leave the emotions at the door and have a maximum price in mind and not to go above.
Building and Meth inspections
Congratulations on finding your dream home. It is a huge achievement and undoubtedly a big investment. This could potentially be your abode for the next ten years so it is wise to have the property fully inspected before it’s too late.
Additional costs for first time buyers to plan for
First time buyers should be aware that there are often additional costs associated with purchasing a property.
Building and Meth inspections are not obligatory, but they are highly recommended to identify existing problems before purchase rather than foot a hefty bill to rectify the problem – when it’s your problem.
There are generally certain legal and loan establishment costs that your lending body will pass onto you, so it is advisable to ask about such fees in advance. Lawyer fees will also need to be factored into your costs.
Before you purchase a property, it is important to purchase a Land Information Memorandum Report (LIM) and go through it with your lawyer. The report varies in costs but is usually around $250 - $400. A LIM Report is a summary of information that the council holds on a property. Another useful source of information is a Property File, which includes information on building and drainage and building consents.
Your solicitor or conveyancer may advise you to obtain a new survey of the property which will add further costs.
Harveys agents’ commission is incurred by the vendor, so this is one aspect of the sale you will not need to worry about.