The 3 Most Important Things You Need To Know When Buying Your First Property
With house prices having reached their low point, and with mortgage rates settling down it’s a good time for first-home buyers to consider getting into the market. Here are some tips, before you take the plunge!
Buying a property is a bit like shopping. How many times have you gone shopping only to have buyer’s remorse when the excitement has worn off?
The only difference is that properties cost thousands of times more than those signature clothes or shoes, so taking your time to think your property purchase through cannot be stressed enough.
Once you have affixed your signature on that contract, you might find yourself floating in a sea of regrets because you did not think things through. This article aims to help first-time homebuyers make educated decisions by presenting the three most important questions they need to answer before purchasing properties.
1. What is your total budget?
Your budget will define the kind of house you can afford. But there are numerous additional cost inclusions apart from the price of the house itself. A common observation among first-time buyers is that they fail to accurately estimate the total price they must pay when making a house purchase. The truth is, there is more to property ownership costs than meets the eye. Before you go on daydreaming, you should get a good grasp of what additional costs are included when investing in a property.
Building Inspection (C$800)
Evaluating the property’s current condition will help you identify areas that are not in good working condition (for future reference and repair)
Registered Valuation (C$1,000)
Many banks will require a registered valuation ofthe property you intend to purchase before givingyour mortgage approval.
Legal Fees
You will need a lawyer to give advice on theproperty and to organise the conveyancing (transfer of the property into your name. Most solicitors will give you a quote for this.
Note that the costs mentioned only account for the costs of acquiring the property. There can also be unexpected costs like maintenance, bills, council rates, body corporate fees, and others that might come as a surprise if you are unprepared.
The best solution is to have a financial buffer – we would recommend between $5,000 and $10,000.
2. Why is the house being sold?
On top of knowing how much you can offer from your end, it is useful to know more about the property itself and the owner’s circumstances.
Why are they selling?
This question will reveal more about the hidden motivations behind selling the property than just the obvious: relocation for a new job, downsizing home costs, or accommodating a more prominent family. The real estate salesperson is legally bound to disclose any issues that may affect your decision to purchase, especially if it involves the house’s structural integrity.
Value of similar homes
Ask the agent for examples of recent sales of similar properties in the neighbourhood. This will help ensure you do not overpay.
The neighbourhood, schools etc.
Knowing the neighbourhood will help you determine value too. Consider local school zones, crime rates etc.
Check the LIM
Most agents will provide you with a recent Land Information Memorandum. You can check this yourself, but given the amount of money involved in purchasing a property, it is wise to get an expert (your solicitor) to review it for you.
Length of time that the house has been for sale
The longer it’s been on the market, the better the odds that you can negotiate the price.
3. Who facilitates the transaction?
Remember that real estate agents, although they are helping you decide on a purchase have a duty of care to you as a buyer, but their main responsibility is to the seller. (It is the seller who will be paying their commission.)
Buying your first property is never as simple as it seems and it pays to ask questions and make use of experts like building inspectors, mortgage advisors and solicitors: They may seem expensive, but will pay for themselves in the long run.
Lisa and Steve Stone
Elite Agents for Ray White
Thestones.co.nz