Tips For Buying

If buying a property is part of your reason for refinancing, there are a number of things to consider. Here are some more tips to help you on your journey.

Research the property and the area

Research the capital growth history of the area and the potential rental income of the property. The local real estate agents are a good place to start.
If you're buying a unit, the managing agent will have a complete history of the unit and the apartment block. A small fee will apply for strata searches, but it's worth it.
Buy in an area that suits your needs and lifestyle, e.g. close to schools, shops, transport, or close to parks and beaches.

Finding the property you want

The Property Buyers Guide is full of great information to help you buy the property to match your needs. It's a checklist where you can keep a record of all the properties you've seen. You can jot down everything from the address of the property and real estate agent's details, to the number of bedrooms plus services and facilities in the local area.

Who are Buyer's Advocates when they're at home?

Buyer's Advocates work for real estate agents and give professional advice on what property to buy or lease. They weigh up the investment risk and negotiate the best price

A fee applies for this expert service. In Sydney and Melbourne it's generally around $6000 or 2% of the purchase price.

Do your inspections

Get your building and pest inspections done. It will cost a little, but if you find problems it will save you a lot of money, and headaches, in the long run.

Take a closer look

When you've found a property you're really interested in, here are just some of the things to look out for:

Make sure you inspect the property more than just once.
Visit it at different times of the day/night and week so you can gauge traffic and noise levels.
A rainy day is perfect to see if there are any leaks.
Are there any cracks in the walls (interior and exterior)?
If it is an old house and the carpet is lifting up in places, have a look at the state of the floorboards.
You may see signs of mould, white ants, borers or other problems.
Is there a musty smell? It may indicate rising damp or water damage.
Check the walls on the other side of the bathroom for signs of water damage/rotting wood.

Understand the contract

Your solicitor or conveyancer should read the Contract of Sale. Are you happy with what's included in the sale? Are all the fittings included? The outdoor BBQ? Tools in the shed? Any furniture? Ask as many questions as you need to feel comfortable. And make sure it's all written in the agreement.

What does "tendering" mean?

Sometimes, when there is exceptional interest in a property, a seller may decide that they'll only accept written offers or sealed bids. In this case you're best to speak with your solicitor first.

You can "tender" for properties at private sales and auctions.

Negotiating a price

You can only negotiate for private treaty sales. Naturally sellers want the highest price for their property and buyers want to pay the least amount. The seller expects you to make a lower offer, but not so low that it's out of the question. Generally, people are prepared to meet somewhere in the middle.

Tips for auctions

If you've never been to an auction before, the more prepared you are, the easier it is. To help prepare for the big day, read on.

Be prepared

Go to as many auctions as you can. They can be pretty nerve wracking first time round. Once you get a feel for them, how they run and what happens, you'll feel more confident when you're ready to make your bid.

Do your inspections beforehand

Get your building and pest inspections done before the auction. Once they accept your bid, it's all yours, including any potential problems.

Have your financials in order

You'll need a written loan approval before the day of the auction. Talk to us about getting a loan approval for the day. You'll also need the deposit, which is usually 10% of the purchase price.

How to bid at auction

Once the auction starts you can make a bid at any time. You can do this verbally or non-verbally by raising your hand or nodding your head.

Bidding usually starts off in $10,000 or sometimes $20,000 increments. If you feel like slowing the increments down, you can offer an increase of $5,000 or less.

If bidding stalls, the agent may accept $1,000 and even $500 increments.

You need to register to bid

By law, you must register to bid at an auction. Take along your driver's licence as formal identification.

What if it gets "passed in"?

If the bidding doesn't reach the owner's reserve price the property is not sold. It is then considered "passed in". Usually, the highest bidder has the first opportunity to negotiate with the seller and the agent.

Sold! What happens now?

Your bid is accepted. You sign the contract and pay a deposit while you're at the auction. The deposit will be held in trust until settlement. For more information on the auction process and relevant regulations, contact the Department of Fair Trading in your state. By the way, congratulations!

What's the difference between auctions and private treaty sales?

At an auction, you're bidding on a property with other prospective buyers - the highest bidder being successful.

When buying a property through a private treaty you make an offer to the real estate agent who then talks with the property owners.

Once you and the seller negotiate and agree on a price, a contract of sale is signed by both parties. This is called exchanging contracts and it's when you put down a deposit.

Tell me more about private treaty sales

After the contracts have been exchanged, there's normally a cooling-off period, i.e. you can change your mind about buying the property.

You need to let the seller know in writing and the deposit will be returned. However, the seller may be entitled to keep 0.25% of the purchaser's deposit. This percentage varies state to state.

Tell me more about auction

With an auction there is no cooling off period.

Once you sign the contract you're committed. If you don't go through with the purchase, you lose your deposit. You may also be liable to for:

liable for any deficit realised on the sale of the property within 12 months of the auction; and
reasonable costs associated with that sale; or
sued by the vendor for breach of contract.

Helpful Tools

The Real Estate Institute of Australia website has a wealth of information, such as finding your local real estate agent, market reports, property listing sites and more.
The Department of Fair Trading's website advises on fair and ethical practices for buying, selling and renovating your home.
Use our Property Buyers Guide to make sure the property has everything you're looking for.

Renovating versus buying versus renting

Renovating, buying and renting may all be appropriate throughout your life. It depends on your circumstances and what's important at that time. Here's a look at the pros and cons of each, so you can weigh them up for yourself.

Buying versus renovating
The cons cost of moving additional stamp duty loan set conveyancing fees real estate commissions	The pros you may add to the capital appreciation (you don't want to over capitalise as you might not get money back) new lifestyle more space, bigger garden new area to explore
Renovating versus buying
The cons months of disruption and hard work might have to move and rent elsewhere a rule of thumb is don't spend more then 25% of the value of your house on renovations cost goes up during the renovations	The pros doesn't cost as much as buying you can design what you want if you like the area you can stay and add value to property at the same time

Helpful checklists and other information

Like us to help shed some more light on buying your first home? Here are some useful checklists and reference materials you can print out and refer to whenever you wish.