Don’t make these mistakes when buying your first property
By Bushy Martin
Buying your first property can be daunting because you just don’t know what you don’t know.
The biggest stumbling block is at the starting line, as first-timers rush to real estate websites and spend their weekends hitting the pavement on the hunt for their perfect property. It sounds like the right approach. But this is the first mistake.
Successfully buying your first property is a game of finance in an elite team sport. You need to focus on the right principles, processes and most importantly the right people before anything else – the property is the last thing you look at.
Your first property is not your last
Far too many first home buyers want to buy their Taj Mahal from the get go – Chasing the ‘dream home’ too early leads to massive mortgage pressure and a lifestyle limited to baked beans and Friends re-runs. This property is your first stepping stone – buy what you can afford and sustainably build towards your dream, while enjoying your life along the way.
Don’t go it alone: Property is not a part-time solo sport
Your home will be the most expensive thing you buy, and that means nervous first timers often won’t trust people and look to go it alone. Or worse, they seek guidance from amateur advisors – their family or friends who care but don’t have the required expertise to provide anything close to good advice. It is absolutely crucial to seek out an independent team of professionals before doing anything else, including a property advisor, savvy mortgage broker and a buyer’s agent or project manager so you can gain clarity and comfort on the journey ahead.
Don’t go shopping … yet
It is surprising to most, but finding the right property is down the bottom of your to-do list. Get your finance sorted first by seeing a good mortgage broker so that you are clear on the budget from the outset. This means that you will know your achievable and comfortable purchase price, extra costs and ongoing cost affordability before going house hunting. This also means that you won’t be rushed into taking the first deal offered by your existing bank, or committing to buy a home only to find out later that you can’t afford it. Get your home loan finance pre-approved so that you and the sellers you deal with have full confidence in you as a potential buyer.
Don’t buy on emotion
Don’t fall in love with a property and don’t buy at auction.
When looking for a property it is easy to get carried away. Good selling agents know this, and they’ll have you paying more or too much for that property you’ve fallen for. This is particularly the case at auctions, where good auctioneers will use your emotion and FOMO (Fear Of Missing Out) to get you to pay top dollar.
Don’t make an offer based on ‘the market’
When many first-time buyers find a property they like, they come up with an offer based on the selling prices of similar homes in the area. This is a trap, as it is unlikely you’ll really be comparing apples with apples – circumstances, seasons, style, design and location are usually different, and even when subtle it still makes a difference. A good buyer’s agent or experienced mortgage broker can share actual real time data on what true comparative properties have really sold for, giving you true evidence to base your offer on.
Don’t make an unconditional offer
Selling agents may pressure you to make an unconditional offer – don’t make this mistake. ‘Unconditional’ means that if your offer is accepted and signed you are financially committed to the deal despite any finance or other issues that may arise.
Given the uncertainty and continuous change in the home loan market, always make an offer subject to finance. Also make an offer subject to an independent building inspection, so that any unseen structural issues, termites or other concerns can be identified.
Don’t be intimidated!
With a list of ‘don’ts’ and plenty of unknowns, it is easy to feel overawed by what’s ahead. But if you educate yourself and get expert advice, you can’t go wrong.
Check out websites such as www.firsthomebuyerbuddy.com.au and www.buildinoz.com.au and work closely with your mortgage broker, property advisor and the rest of your team to set yourself up for success.
Bushy Martin is founder of KNOW:HOW Property Finance - an award winning finance brokerage and property advisory. He is recognised as one of Australia’s Top 10 Property Specialists. His new book ‘Get Invested’ and podcast of the same name is the prequel to his first book ‘The Freedom Formula’ so that you can live more and work less through clever property solutions. Check him out here: www.khgroup.com.au & www.bushymartin.com.au