The rookie mistakes first homebuyers make and how get in fast.
Getting in to the property market is one of the most daunting things for first homebuyers but it's that nagging feeling of FOMO that propels us in to action. And rightfully so, as the property market rises, each day that passes is a day that we could have been on that wheel taking advantage of the capital growth increases in value.
Growth in value creates equity, an increased amount of the portion of the property that you own. The bank that loans you the money does not get a share in the increased value as the market goes up, so proportionally your equity in owning that property is greater meaning theoretically you have made money. But of course you need to sell the property to realise the actual cash.
If the property market increases (it doesn't always, it has historically been cyclical) first homebuyers stand to increase their net worth considerably. This is a source of wealth that they have not been exposed to before however the fear of the market going the other way can cause inaction. This inaction delays the creation of wealth and is a typical rookie mistake that is easily made. Of course the market may go the other way but first homebuyers are usually at the beginning of their working lives and as long as they can afford the repayments factoring in some interest rate rises, they have plenty of time to work through down markets. Depending on when you get on, you may also achieve some equity that would allow you to purchase an investment property in a down market, or upgrade your own home renting out the property that you initially buy.
So get prepared, get informed and get to it! You can do this!! Here below are jobs you need to tick off to get yourself ready to buy;
Get your finance approved.
You might think you aren't quite ready and are still saving up but get on to a broker now. These brokers are free to sit down with and will often meet you at your work or home to give you the lowdown on how much you can afford to borrow. This may involve putting you on a savings plan if you have not got a deposit yet so you can be ready to pounce as soon as possible if your dream property comes up for sale. They also compare all the major banks against other lenders to determine the best deal and interest rate for your particular circumstances and future plans for the property. These brokers are generally paid a commission from the lender they put your through and you can ask to view a statement showing their rate of commission from any particular lender to show that they are reasonably impartial and not motivated by high commissions. Most lenders pay around a similar rate but there are sharks that a good broker can point out. If you need a broker and are in Melbourne metropolitan area, please ask me and I can recommend someone.
Don't wait around for too long learning the values. It doesn't take too long to get familiar with local prices these days with the internet. The major portals will show sales prices in many instances across the country or if you are looking in my area, you can view just the LAST THREE MONTHS of data here. We update it on our website monthly to keep it relevant and find it confusing looking at the major portals which go back years in some instances. The median prices are also interesting to read about which examine the past few years and it's fun to try to predict the future prices!
Get the rest of the professional people on board
You might still feel unprepared at this point. You are going to need a few more people to be your expert advisors on this journey. You can't tackle this road alone I'm afraid so don't make the rookie mistake of doing nothing because you didn't feel you had the backup or professional support.
You have your finance broker already so now you will need a conveyancer. They will handle the legal side of the transaction for you. They can interpret the contract documentation that goes along with every property sale and a copy of which will be provided to you by the estate agent. They will also arrange any government grants you may be entitled to as a first homebuyer.
Next, you might want a building and/or pest inspector to carry out checks to the building to examine the structure and identify any potential issues and estimation of their repair costs. Usually buildings can be easily repaired by the relevant tradespeople and the most common issues dealt with by first homebuyers are usually cosmetic. If you need someone in Kingston/Bayside area, please ask me.
Of course you will need an estate agent as most properties are sold by one across the globe but you will not really have the choice of who this is because it is the seller of the property that chooses the estate agent. You can however maximise your experience with the estate agent by chatting openly with him or her about your budget range and what you are looking for. They may have something they are listing that afternoon that is not yet advertised. Be honest with the agents about your budget range and don't be afraid to tell them it's your first home, agents are not there to take advantage of your inexperience, they just want to sell you their properties. Once you have prepped as per this article, you will be well equipped to deal with any estate agent! You will need to be prepared to be pro-active with your search. Don't expect the agents to call you as they could not possibly call the thousands of buyers they meet. Sign up for alerts here to be notified of new listings in your preferred area through Hockingstuart but the major portals now offer similar services.
The only other person you need to say yes to you once you have ticked off the above list is YOU! Use this link to email yourself to say I WILL BUY A PROPERTY and make it happen. You got this.
For all real estate related information or advice, contact the author Simon Wendt, Licensed Estate Agent at Hockingstuart Mentone on 0407 040 706.