Buying a property can seem like a daunting task. But it doesn’t have to be! Being informed, doing research, knowing what you want and setting a budget are essentials.
Choosing your home
Whether buying a home to live in or as an investment, you need to approach the process in a methodical manner. Make a list of your requirements – the things that the home must have to suit your needs. It is tempting to become attached to a house that looks good, but doesn’t have what you want. Here is a checklist of things you may want to consider:
Location
Perhaps the most important of all aspects and the one attribute that has the greatest influence on the potential capital growth of your investment. Do you want to be close to schools, family, parks, shops, public transport? Do you want to be on a main road or side street? All these have an impact on the value of a property, and so sometimes it is necessary to compromise, but be sure to prioritise your needs, and stick to your guns. Even a beautiful house with all the latest mod cons will not make up for the fact that is 5 kilometres from a train station, if that is a priority. The suburb or area you choose to look in will also be dictated by your budget, but once you have made your decision, try to draw a boundary around the area you prefer and only look at properties in that area. This will save you time and effort when house hunting.
Types of property
Everyone’s needs are different. Families need space and are usually looking for homes with land in suburban areas. Couples, singles and empty-nesters may be interested in inner city townhouse or apartment living that reduces maintenance and offers closer proximity to work or city venues. Again, it is important to decide on which property type suits your needs and budget for as long as possible. Investors may look to see which types of properties have resulted in the best long-term gains. Things like number of bedrooms, bathrooms and state of renovation are also important factors, as is land size. If you intend to work from home, a studio or extra bedroom will be necessary.
Orientation
This is not always the most important factor, but it does have an influence on how light your house is and how much sun your outdoor living area will receive. Everyone has different tastes, but the most sought-after orientation is usually a north-west facing rear garden or living area - This orientation maximises sun in the afternoon and if the bedroom/s are at the front of the house, will help keep these areas cooler during the summer months.
Building inspections
Archicentre (www.archicentre.com.au) provide independent advice and conduct 300-point building inspections for prospective buyers. Reports are prepared by a specially trained architect and include a detailed condition of the property, cost guide, list of trades and informal advice on renovation ideas. They will aid the buyer by:
- Alerting you to any faults the property may contain, such as cracking, dampness and leaks.
- Advising the budget for any necessary repairs or wanted alterations.
Builder/architecture friends and tradespeople can also be of assistance in providing a pre-purchase assessment. The staff at Jellis Craig are happy to provide independent contacts for assistance in this area.
Auction or Private Sale
Often the buyer has no choice as to whether their desired home is purchased at Auction or via Private Sale. The seller dictates these terms. However, as with everything relating to purchasing a property, it pays to be informed.
Bidding at Auction for the first time can be intimidating. Similarly, the excitement of an Auction can cause emotions to cloud sound judgement. So if you don’t feel confident participating in the Auction process, you can ask a friend, or qualified buyer’s advocate to bid on your behalf.
Some of the benefits of buying at Auction include:
- A transparent bidding process where you are aware of competitive offers and can gauge the market 'feel'
- The sale and signing of documents all takes place on the day.
Buying by Private Sale involves a process of negotiation between you (the buyer) and the property owner (the Vendor). The property will have an advertised price - the starting point for negotiations which usually take place through the Vendor’s agent. Negotiations continue until both parties agree on price.
Unlike an Auction, the negotiation process is not as transparent, however the pace is not as frenzied.
The staff at Jellis Craig are always available to thoroughly explain both processes to interested buyers and assist in making your buying experience as smooth and transparent as possible.
Costs
This checklist highlights the costs most Victorian homebuyers will have to consider:
- Purchase price of home (including 10% deposit on signing of contract with balance payable at settlement)
- Stamp Duty on the transfer of property
| STAMP DUTY |
| VALUE OF PROPERTY STAMP DUTY PAYABLE* |
| $0 - $20,000 | 1.4% of the value |
| $20,001 - $115,000 | $280 plus 2.4% of the value over $20,000 |
| $115,001 - $870,000 | $2560 plus 6% of the value over $115,000 |
| Over $870,000 | 5.5% of the value |
| *Provided by The Real Estate Institute of Victoria Ltd |
| Try our stamp duty calculator |
- Mortgage Application fees (if applicable)
- Insurance
- Adjustments such as council rates, water fees
- Conveyancing/legal fees
Conveyancing
There is a lot of paperwork associated with buying a property, which a conveyancing agent, or a solicitor, is able to assist you with.
You can do it yourself, but it is an area best left to professionals, especially if you are a first home buyer.
Conveyancing costs for a straightforward purchase vary, but $500-$900 is not unusual.
Finance
It goes without saying that careful consideration should always be given to assessing exactly what loan amount a buyer can comfortably live with. This amount will dictate your 'best' purchase price, and it is always imperative that buyers stick to their budget.
Start with Jellis Craig Financial Services – we will be able to give you free advice on choosing the right housing loan. We have established relationships with a wide variety of lenders, which means that you are able to take advantage of our large range of exclusive financial packages. Always seek independent advice when it comes to the tax implications and relevant financial details of purchasing a property.
Most people have heard the expression 'Caveat Emptor', which translates to “Let the buyer beware'. Seeking independent legal, financial and architectural advice helps reduce risks in these areas.
Ultimately, it is your money you are spending, and it is your needs that matter when buying a home. Once you have done your homework and decided on your requirements, the process of looking for a home can be exciting and fun.
To summarise:
- Be informed
- Shop around
- Don’t hurry
- Read everything before you sign
For more information on buying a home, visit the Real Estate Institute of Victoria’s website www.reiv.com.au.
