Mermaid Beach At John Henderson Professionals Mermaid Beach we never forget how exciting it is to buy a home. You’re making plans for the future, choosing a home in an area that appeals to you, and investing in one of the safest methods for acquiring wealth. At the same time, the event can be a daunting experience if you don’t have sound knowledge and understanding of everything that’s involved.
How to Organise your Finance
Few people can afford to buy a home without borrowing money. What’s more, there’s no point looking seriously for a home until you know just how much you can afford to borrow. Once you know how much money you have to spend, stick to your limit and be realistic. There’s no point having a beautiful home to live in if you don’t have any money left over to eat.
Remember, the price you pay for your home is not the only cost involved. Some of the additional little extras you need to take into consideration are legal fees, building reports, stamp duty if applicable, mortgage insurance, moving costs, property valuation and insurance.
You could go directly to a financial institution such as a bank or a building society and make a home loan application. The reality is that they will usually provide you with one of their home loan options and this may not necessarily be the right one for you. Given the number of home loan products on the market, you may prefer to talk with a mortgage broker who is registered with the Mortgage and Finance Association of
Australia or the New Zealand Mortgage Brokers Association.
Mortgage brokers are independent and specialise in finding the most appropriate home loan for you, ask us to put you in touch with a recommended Home Loan specialist.
Buy First, or Sell First?
The prospect of selling your house before you have established where you are going to move to, may seem daunting at first. But the truth is a huge number of home hunters find the property they want within a relatively short time. So don’t be afraid to sell first, then buy. This means you will have your financial arrangements already taken care of and you have the freedom to bid at auction, or to make an offer knowing you are in a strong position to negotiate on price and time.
There are two major financial considerations to buying before selling:
1. If you make an offer on a property before your house is even on the market, the seller of the property you want is less likely to be willing to negotiate on the price or the terms.
2. Selling your house as a condition of contract to buy another, usually means you have very limited time in which to complete a sale for your existing property. This means you can be under pressure to accept a low market offer.
Understanding the Market
Over a period of time the property market fluctuates, so it’s helpful to know what sort of market is prevailing when you are looking to buy. Knowing the current market gives you an indication of what sort of properties are being sold, how quickly and for how much. Each type of market has its own set of characteristics.
Buyer’s market
• The number of properties on the market are greater than the number of buyers
• Properties usually take longer to sell
• Prices are stable or sometimes they fall
• Buyers often dictate the selling price
Seller’s market
• The number of buyers exceeds the number of properties available for sale
• Properties sell faster
• Prices generally rise
• Sellers may receive offers from more than one buyer
• Sellers gain prices closer to the listed price, or over it
Balanced market
• The number of properties for sale is about equal to the number of buyers
• Sellers will consider reasonable offers
• Prices are generally stable
• Properties sell within a reasonable time
• A good number of prospective buyers see the property
Seasonal factors
There are generally fewer properties for sale during the winter months, Spring traditionally being the time of year when more people list their property for sale. However, personal circumstances is one of the most important factors and homes are bought and sold throughout the year. So don’t let the season stop you from looking and if you find the right property for you, from buying.
Starting your Property Search
The first step is to make a list of what you are looking for in a property. Think about your plans for the future. Are you planning a family? Do you intend to have pets? Do you like to entertain? Do you want a swimming pool? Just remember that the more particular you are, the more difficult it will be to find the right home.
Some considerations are:
• Price Range
• Locations
• Type of property (eg townhouse, apartment, unit, house, acreage)
• Proximity to amenities like schools, shops, public transport, work
• Property size (land and home)
• Number of bedrooms
• Garage and storage
• Views
Prioritise the list into “needs” and “wants”. Make sure you do your homework. There are thousands of properties for sale every week so you don’t need to rush in and make an offer on the first one you see. If there’s an area you’d like to live in, take the time to inspect a reasonable number of homes to give yourself a true understanding of the market value of the properties and area you’re looking at.
It’s always a good idea to keep a list of the properties viewed and their features, even take a photo so you can remember them in more detail. In searching, the first homes you see can quite often, in retrospect, have more appeal as your market knowledge increases. At other times your first impressions will help you define your priorities and preferences.
To broaden your search, drive through an area and surrounding suburbs, refer to local newspapers, weekend papers and the internet to draw up a shortlist of properties that best meet your expectations on price, location and features. Remember, others will be looking and well priced properties can sell within days, so you need to be looking on a daily basis.
Find an Experienced Real Estate Agent
Find a real estate agent who specialises in the neighbourhoods that you want to live in. Here at John Henderson Professionals Mermaid Beach we specialise in selling property in Mermaid Beach, Mermaid Waters and Miami – we live locally and sell locally. It is good to choose and build a good rapport with an agent, one who will seek the property you want, understand what is important to you and who is willing to listen and go the extra mile to find the right home for you.
Buying an Established Property
Established homes have a certain charm and character about them that many home buyers find attractive. Often they offer excellent value in comparison to building or buying new. You will want to discover, relative to the age of the home and the price, the cost of any maintenance required prior to purchase as you will need to factor in the cost to address these once you take possession of the property. One way to give yourself peace of mind about the property you’re buying is to arrange a building inspection with a reputable building inspector. This will
help to inform you whether the property is structurally sound and what expenditure you can expect in the near future such as repairing the roof, plumbing maintenance, replacement of insulation or an inadequate hot water system. It’s common (and advisable) to have a ‘satisfactory’ building inspection report as part of the ‘Offer and Acceptance’ contract you sign when buying the property.
Buying a Strata Property
A Strata Company or Body Corporate is made up of the owners of a complex or building. Buying a strata property means that the ownership of all the strata property’s common area is shared and you must work with other owners to maintain the value of the property. The Strata Company is responsible for maintaining all of the strata homes in a complex and its surrounds such as swimming pools, gardens, exterior walls, windows, doors, footpaths and car parking. They are also responsible for making key decisions such as how much money is levied each year for maintenance of the common areas.
Members of the strata complex meet as agreed to elect a council of owners who will be responsible for making recommendations on key issues relating to the property. A good action is to obtain the last 12 months Strata Company meeting minutes to see what they’ve done. Ask about their financial reserves and if they’re planning to upgrade or make improvements to the property. If the strata company has large arrears, it could mean they have insufficient funds to correctly maintain the shared areas.
Every strata property will have a strata plan that will help you determine what you actually own. The plan will show you all of the units, common property boundaries of the property and if your unit has been allocated car parking. All these various aspects have an impact on the true value of the strata property.
You will need to factor into your annual budget the payment of ‘strata fees’. These payments will go towards the overall maintenance of the complex and to pay for associated costs such as insurance. Before you buy, make sure you know whether the current owner owes any money to the strata company. Any outstanding money should be deducted from the settlement price of the property.
Every strata company has their own set of rules and regulations. Some strata companies for example, ban pets, or may have certain restrictions for renovations or installation of exterior wall mounted air conditioners. You need to understand exactly what you and your neighbours responsibilities are before agreeing.
Buying a Block of Land
When you buy a home it is usually the land that increases in value, not the building. A decade ago, land represented approximately one third of the value of the average new house and land package. Today, land typically represents more than half the total cost. Whilst all land has value, some blocks are certainly worth substantially more than others. Consider some of the following points before you buy.
Scarcity – the scarcity of land is generally determined by geographic features such as how near a river, lake, ocean, hills or unique developments you are. The fewer properties that are available the greater the demand and the higher the price they can likely command.
Size – every square metre of land has a value. So the bigger the land size in any given area and circumstances like view, the higher the market value. Compare the price paid per square metre for similar blocks in the area where you intend to buy to ensure that the price you pay represents a fair value at the time.
Location – has always been the key to capital growth in real estate. A good location can be qualified in many ways. It can mean a prestigious suburb, close proximity to the CBD, a property nestled idyllically in rolling hills or by crashing waves. What buyers should consider about location in any suburb, or anywhere in the country, is the convenience and lifestyle that most closely meets their needs and more than likely others requirements. A block located in a quiet street, close to parklands, public transport, health services, education, recreation and shopping is going to appeal to many future home buyers, and the benefits that these features offer will represent a value that they are willing to pay for in the long term.
Services – take into account the proximity of connections to the services such as sewerage, electricity, gas and water to the land and to the most suitable building site.
Facilities – if you’re buying a block of land in a new estate, you’ll need to know the future plans for the location of schools, shops, access to public transport and building of roads or highways.
Covenants/Encumbrances – these “rules” often exist on a new estate and are a specific set of minimum standards for building construction and land use that are in addition to building codes and area applicable for every property owner in the estate. For example, the design of the home may need to include a double garage or have a minimum living area of 250m2. Ensure you secure a copy of the covenants and understand the commitments and provisions prior to purchase. There’s something special about building a new home.
Offer and Acceptance Process
There are several crucial dates in the offer and acceptance process –
• Agreement or Contract date on the Contract which specifies when negotiations concluded and the agreement is signed by both parties.
• The dates when all conditions of the offer are met. This is when the contract becomes ‘unconditional’.
• The settlement and possession date, which sets down the date by which you must pay the balance of the purchase price to the seller and you receive the keys to your new property.
Making and Negotiating an Offer
A normal part of the process of buying a home is negotiation between the buyer and the seller. The more attractive you can make your offer in terms of price, and the fewer conditions you’ve included as part of the offer, the more likely you are to have your offer accepted. When you are ready to put in an offer, you may do so with the sales consultant. Depending on your regions legislation the offer may be verbal, on an offer to purchase form or on a legally binding contract. Your sales consultant can advise you of the correct procedure.
The initial offer to purchase should have details of any conditions to be put upon the sale, which may include a specific time within which to organise finance, a settlement date, a satisfactory building inspection report and anything else that may be necessary to complete the sale. Advice on offers to purchase in your region can be obtained from you personal real estate agent or your legal practitioner. A deposit is usually paid upon signing of a legal contract, however this may vary depending on the conditions of the offer. The amount of deposit and when it is paid may be part of the buyers offer to purchase. If a contract is unconditional and you do not proceed to settlement you will most likely be made to forfeit your deposit under the terms of the contract.
A conditional offer means:
• You have placed one or more special conditions on the purchase, such as subject to finance, subject to a house selling, subject to completion of certain work on the home, subject to title search.
• The sale is not complete until the special conditions have been satisfied within the stated time.
• In some cases, the offer will be rejected because the owner does not wish to wait the extra time for the condition/s to be satisfied.
• Some regions legislate a cooling off period or similar, so make sure you are aware of all government legislation and your and the sellers rights.
An unconditional offer means:
• You, as buyer, are not placing any special conditions on the purchase.
• The seller has only to accept the offer for the property to be sold.
• Once accepted, the contract becomes binding.
• An auction bid is an unconditional offer, unless conditions have been agreed prior to the auction.
Acceptance of Offer
After the offer has been accepted, your legal representative will need to check all the details of the title and prepare any necessary documentation. Sign any mortgage documents (usually when unconditional and nearing settlement) and arrange your finances for payment of the balance of the purchase price. It is a normal condition of sale that you have one pre-settlement inspection to ensure the property is in the same condition as when you agreed to purchase it. Check that all the chattels are still in place and any repairs agreed upon have been made. Chattels are the items that are specified on the agreement that the owner will leave with the property ie: curtains, lighting, dishwasher, garage door opener etc.
Settlement
Once your offer has been accepted and all conditions have been met, the sales agent will forward the contract to your legal agent. They will administer the settlement which includes exchange of titles and transferring of funds. Your legal and financial representatives will keep you informed and look after the settlement day details for you.
Buying at an Auction
Auctions are exciting; however, they can also be daunting for first time auction buyers. They may be held in an auction room or at the property. In some regions you need to register with the auctioneer if you are going to bid. Bidding needs to reach the reserve price in order for the property to be sold to the highest bidder. If it does not reach the reserve price, it is still to your advantage to be the highest bidder so you have the first right to negotiate with the seller.
Tips when bidding
• Attend a few auctions to see how it works prior to you making a bid yourself.
• Always know and stick to your price range.
• Have someone with you who can stop you bidding when you reach your limit.
• Always do your research and arrange pest and building inspection reports for a property prior to bidding.
• You may bid in small or large increments.
• If you are successful you must be prepared to pay the deposit immediately.
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