Buying a first home...hints and tips

[wysiwyg]

Is true mortgage insurance can be expensive but you also have to take into account the length of time it will take you to save up the extra deposit and what might happen to house prices in the meantime and the money you are paying out in rent etc. Often if you do the figures at the rate house prices are rising currently it works out better to say have a 10% deposit and pay mortgage insurance than spend another year renting to save the 20%.

Auctions are not always a bad thing particularly if you can be quite emotionally detached about a place so are not going to be pushed higher than you think is worth. The area I live in if wasn't prepared to go to auction would have reduced properties available by about 70%. Places do sell prior to auction occasionally, and often you can gleen info from an agent about why someone is selling and how likely they are to accept an offer prior to auction.

We were relatively new to Australia when we started looking to buy (a year or so here) so hadn't a clue really about how system worked over here and found this book which we got out the local library useful

The insiders guide to buying real estate [text] : by someone who buys real estate for a living / Patrick A. Bright.

Although this book does recommend seeing 100 properties before you start getting serious so you can get a good idea of the market and are able to value places quickly - so it ruined a fair few Saturdays for me - I think we had seen 92 when bought ours.

[Lulu]

I ALWAYS felt I was paying too much when I've bought...but have always been proved wrong in the long run .

It might also be a good idea to get an idea of how much some things can cost to replace - if you are looking for something that needs a bit of work you need a realistic idea of what that will mean.

[misty]

Research. Research. Research.

Know your area. know your budget. Know what your are and what you aren't willing to sacrifice (ie, needs v wants). Be willing to acept less then perfect (you can always upgrade later, you don't need the best straight away. Don't get to emotionally invested (extremely hard for some people), at the end of the day it is just a house, and there are others. You don't want to pay more then it is worth. Compare the asking price with the price of the other houses in the same area that have sold or are for sale - make sure the houses are comparable (ie, DLUG and 3bd +ensuite, compare against the same or similar).

Get yourself a good homeloan broker. Make sure you are aware of all the hidden extra costs (stamp duty, application fees, conveyencing fees, LMI, house and contents insurance, etc). You will need this on top of the deposit.

Good luck and have fun

[rubibaby]

Okay...here are a few suggestions. Firstly ask yourself where do you want to live and what do you want to live in. Do you want to live inner-city, coastal or rural? Do you want to live in a house, apartment, farm, etc?
Make a list of what is important to you - number of bedrooms, car access, land size, number of bathrooms - but be prepared to compromise on some things.
Are you willing to renovate? Renovating is very common in cities but it is expensive and a difficult task to do with children.
I'd recommend that you look for at least one special feature - view, large backyard, period feature.
A lot of these tips I've got from LJ Hooker Real Estate's guide to buying. It is a good read and full of info...good luck!
It is an exciting time...

[smiles4u]

... a piece of advice that no one thought to tell me years ago was to find out if the house next door or even a few doors up is housing commission owned ... you will be surprised even in the nicest suburb, just one home standing on it's own in street is a commission home and not a bad looking house or unit accommodating tenants with drug, mental illness, etc ... and life can become hell with living next door people like that.

For example - my sister was living in a lovely unit in a gorgeous Sth East suburb in Melb to find the unit next door to her was owned by the housing commission, all the other units were owner occupied ... and the tenant had a shocking mental illness & she would physically harm herself & my sis would often awake to an ambulance turning up ... and then it got worst when the neighbour started stalking my sis & threatening her life ... the police wouldn't do anything as the neighbour had ' not ' physically harmed my sis.

I live in a nice area of Ballarat, well i thought so when we bought then found there to be a housing commission estate quite some distance away from us & far enough too but we didn't realise the primary school closest to us is the only school for the sorry to say unstable ferals with problems living there's children so when it's time for our DD to go to primary school we can't bring ourselves to send her with so many kids with problems there, the school looks beautiful but the school reports on the net were not as good a results as other schools. So our not looking into this before buying (and our DD was NOT conceived then) this has turned into a headache & concern for us as parents.

[Floweryfields]

A couple of my tips would be - once you find a house you like - go there at various times of the day. Go at night, sit outside and see what the noise levels are like, traffic etc. You might also want to consider the position of the sun, where is the west, will the hottest part of the house be living/bedrooms, etc.
Also think about asking a few neighbours in the area how they like living where they are.
Are there alot of rentals, if so, that may mean unruely neighbours depending on the tipe of housing - ie older cheaper homes may attract younger people who may tend to have more parties.
Also think about driving any of your regular commutes from the home to each place to see how long the journeys are, what the traffic is like etc.

[Floweryfields]

Can i ask a question too? If you are buying a rental property - and using the equity on your existing home - do you have to have a deposit?

[Astrid]

smiles4u - good stuff on finding out who your neighbours will be. We also had a similar experience when we were renting, it got quite scary and finally ended when they burnt the unit. We did have a good experience though when we bought, both sides of the house were commission, but long termers. the only issue we had was getting the fences repaired, the Dept will not replace unless completely falling over. So if the fences are bad, be prepared for a long wait and many letters.

[Phteven]

We bought at auction and we paid a great price. We were familiar with the market and we knew exactly how much we were prepared to pay.
We didn't bother going ourselves, we were going on holidays so we sent FIL with inscructions about how much he could bid up to and he got it for a little less than our limit. There can be a lot of emotion in auctions and they're no place for someone who can't control thier competitive instincts but if you can walk away from it (or send someone else) then you might pick up a place for a great price.

Start sussing out the market now - set up an alert with the realestate site and look the weekend papers, drop in on the open homes (DH and I still slow down when we see one), go to a few auctions, get to know the agents and so on.

If you start a shortlist early you might be able to identify a house that has been on the market for a while and hasn't sold. If the vendor is getting desperate they might drop the price big time. If a property falls through at auction hit them up with an offer the next week.

[Rowellen]

Some of our do's & don'ts (this is just my experience having been through the process a few times):
Do NOT go unconditional on a contract unless all conditions especially finance are approved. Finance should be approved in writing. I recommend asking for at least a three week finance clause. Agents will try to talk you out of this. We went unconditional on a contract on verbal confirmation and the following monday, they said - no sorry, the person who said that wasn't authorised . We did get a loan through a different bank but it was a very stressful experience. If the owners won't extend the deadline, let it pass. There will be other properties.
Get a building & pest inspection. And read it. If you can be there with them, even better.
Don't get emotionally attached - it is just a house.
There is a website that shows you how much the house was last sold for. This can be great for setting a price that results in a win/win - they make money & you don't pay too much. The longer it's been since the last sale, the more likely it is that this will happen.
Do know the area, and research sale prices. Most agents will tell you the sale price once a contract is unconditional. After all it is publicly available information once RPdata get around to publishing it.

If you are considering a house that is up for auction, my tips would be:
Get an independent valuation. Yes it costs a few hundred $$ but could save you thousands.
Get finance approved before you even think about bidding.
Set your limit and stick to it. Don't set the limit by what the bank will lend you but by what the house is worth.
Ask someone else to bid for you if you think you might be nervous. Make sure they know your limit. I overheard a couple bidding at an auction once for their daughter. They went over her limit but luckily for her they said they would pay the extra (about $8K). I wonder if they considered the extra stamp duty.
You can make an offer for a house that gets passed in at auction. Offer them less than the highest bid - make them realise how greedy they were


Ausgirl - you generally won't need a deposit if you have at least 20% equity. Note that the equity needs to be 20% of both properties. Of course it will vary from bank to bank. Some banks will allow you to have less if you pay mortgage insurance. You will probably have to cover your own costs and stamp duty is significantly higher on investment properties. A good broker will be able to help you.

HTH

[smiles4u]

smiles4u - good stuff on finding out who your neighbours will be. We also had a similar experience when we were renting, it got quite scary and finally ended when they burnt the unit. We did have a good experience though when we bought, both sides of the house were commission, but long termers. the only issue we had was getting the fences repaired, the Dept will not replace unless completely falling over. So if the fences are bad, be prepared for a long wait and many letters.

So glad you worked that out ... and so glad you worked it out i didn't mean all tenants in commission housing as i have had friends live in housing and they treated it as if it were their own home & kept them beautiful ... yeh, it's the tenants with drug &/or alcohol abuse or seriously mental probs i couldn't live within the same street of ... too hard to know if tenants have probs so better just to keep clear all together & not take the chance as could be harder to resell the house.