Before you start looking for a home it is important to work out your budget. You’ll need a deposit and you need to allow for other costs such as stamp duty, legal costs and loan application fees. You may qualify for government assistance and you’ll need to know how much you can and want to borrow.
It’s a good idea to talk to some lenders. You can go direct to the banks or you can speak to a finance broker. The broker has the advantage of being able to compare many different loans for you and can help with your application. Keep in mind that the more you borrow the more the lender will benefit. Bank employees will often have lending targets and brokers may get a larger commission by recommending a particular lender. So, be careful.
Make sure that you’ll be comfortable with the repayments and allow for rising interest rates. Remember to put into your budget the other costs of home ownership. They’ll be rates to pay, possibly body corporate fees, gas, electricity and general maintenance costs.
Looking for a home can be a roller coaster of emotions. First there’s the excitement of planning a first home. Then there’s the frustration of the Open Home merry go round, the misleading advertisements and the misleading agents. Then when you finally find the right home they’ll be excitement again; quickly followed by the nervous butterflies.
Without wanting to sound too mushy, the truth is that the right home will have the right feeling. It may not necessarily have everything on your checklist but it “feels” like home.
Two words of advice . . . “Stay clear”. Buying a first home is nerve racking enough without having to buy from someone shouting at you with a hammer in their hand! Auctions are a horrible way to buy. First there’s no disclosed price. Second, if you are given a probable price it’s probably an underestimate. A low price might persuade you to attend the auction and the agent needs a crowd. So there you are with your hopes high only to be shattered in the first few bids. Auctions are often a masquerade of deceit with mountains of stress and pressure designed to make people jump to decisions they would never make if they had time to think.
If you are negotiating on a property and miss out to someone else, that’s negotiation. However, if you have been told by the seller or the agent that your offer is accepted and then the property is sold to someone else for a higher price, you have been gazumped.
Most decent people see this an unethical practice but several agents encourage it. Be warned.
Buyers Price Declaration
Most buyers and sellers tell us that they dislike the games and deception that typically make up a real estate negotiation. So, The Real Estate Shop has adopted a negotiation principal developed by the late William Vickery who was awarded the Nobel Prize for Economics. It is considered the most ethical way to negotiate a selling price.
Firstly, we have an asking price. This is a price we consider achievable and fair. You are then invited to complete a Buyers Price Declaration that states the highest price you are prepared to pay. Your highest price may be the asking price. If there is other interest you may be prepared to pay above the asking price or you may decide that your maximum is below the asking price. Your offer is confidential and will not be disclosed to other buyers.
Sale Started, Exchange and Settlement
Once your offer is accepted this is a “Sale Started”. From now until exchange both you and the seller are in a position of trust. You trust that the seller is “off the market” and will stick with you. The seller also trusts that you are “off the market” and have stopped looking at other property.
Your pre-approved finance will now need to be upgraded to formal approval for this specific property. Your solicitor will require this to be in writing before an unconditional exchange of contracts can take place. Most sellers will allow 10 working days to exchange before they consider placing their property back on the market. Whilst this should be readily achieved it is wise to check this with your lender.