Set a ceiling and dont smash it
As one of life's biggest and most rewarding experiences, buying
a house is something you want to get right. Here's the top 10 house buying tips
to help you find success in your property investment.
1. Don't rush in
There's no hurry. Get prepared first.
One thing you can do is a comparative analysis. This means
setting a certain time period, say a few months, and gathering up as much
data as you can on properties for sale in the area you are looking at.
This should include the area or suburb you are specifically
looking into, as well as a few suburbs surrounding.
One approach is to draw up a spreadsheet of features (bedrooms,
amenities, size etc) and put in both the ask price and the sale price (where
available).
This will not only give you a good understanding of the market,
it will give you some figures to let estate agents know you've done your
background research.
2. Get finance first
It's generally a big mistake to head into the marketplace before
you know your price limit or even whether you have finance.
Agreeing to take a property even informally, pre-contract, can
cause problems if you realise you don't have the money to cover it.
For instance, waiting for finance on your dream property can
give others who do have finance, a chance to duck in and sign for it while
you're in limbo.
3. Read the fine print
Whether you are buying for investment or your first home, the
deals details should be held up to a strong light.
Contracts have a way of becoming incomprehensible, so make sure
you give yourself time to get the fine tooth comb out to investigate every
word, assumption, expectation and number.
And find out your rights. Many contracts have an opt out or
cooling off period. If they don't then you should ask why and consider
seriously whether you still want to sign.
4. Set a ceiling and don't smash it
Just as any home needs a roof, so do those who are buying it, a
financial roof that is. It can be easy when the blood is flowing and the
auction hammer is dropping to let emotion over-ride the numbers. Don't. Numbers
rule.
5. Know the system
This advice builds on the one above.
For instance, know that buyer agents and selling agents are
quite different and will have quite different approaches to your business. You
need to know which is which.
You should also get familiar with real estate lingo. This can
mean actual architectural terms including the fuzzy ones like a "renovator's
delight". It's also worth noting: terms change in different countries, a
colonial kitchen in the US is very different to one in Australia.
A good understanding of the real estate market will help you ask
good questions and that's vital.
6. Do inspections
Part of your budget should be to pay for home inspections. If
you're thinking of bidding for a place or making an offer, it's essential you
know about what problems a place may have.
Big problems will, of course, add costs to your household budget
and may affect your ability to repay your mortgage. Even small ones may put
that new furniture, or pool you were hoping for out of range.
Get a property inspection report first and then see if the
vendor is willing to negotiate downwards to factor its findings in.
7. Check on other costs
Buying property includes some costs which should be added onto
the actual price. As noted above, inspections should certainly be part of that.
Shifts in interest rates should also be factored into your planning and managed
as best as is possible. Fractions of a point up or down can make things a whole
lot cheaper or steeper than you'd otherwise expect.
Other possible extra costs like commuting to/from work from your
new place, school or shops, rates and body corporate fees, utility costs should
also make their way onto your budget spreadsheet.
8. Develop your style
What kind of persona do you want to put out there? What is your
negotiating approach? How can you do business and feel comfortable with
yourself?
To some extent this is about setting some personal values. But
it's also about how you feel you can best succeed using your strengths and not
having your weaknesses exposed.
9. Give yourself some wriggle room
It is prudent to set a ceiling on your buying price. It's also a
good idea to set a floor.
But, sometimes it is worth going outside of the range if a) you
can afford to and b) a cheaper home is perfect. You don't want to miss those
chances.
So, be a bit flexible and don't be afraid to allow your price
parameters some wriggle room.
Discipline still plays its role here though and you should know
what price you simply cannot go over, or under.
10. Keep up
There are developments in real estate all the time. So, it pays
to subscribe to a news feed on real estate news so that industry and market
news is at your fingertips.
Doing so will allow you to act quickly when circumstances
require it and to drop in real estate terminology so that agents know you are
serious and not to be messed with.
If you're looking to buy or sell give yourself the confidence to
talk the talk.