For those considering entering the real estate market, there are many factors to consider.
One of the keys to success is research. You need to research the area, research the property and research the financing.
If you are looking to buy a property in which to live or as an investment, where should you begin? Quite simply, you need to do lots of preparation – after all, this is a major financial decision.
Do the research – Valuation Report
You need to look at a variety of properties, find out sale prices, understand where the market is going, how much property is available, and how quickly property is selling.
We offer a FREE VALUATION REPORT for our clients that we highly recommend prior to going to auction or private sale. This report will help assess the value of the property, comparative sales in the area and suburb demographics. Click here for a sample copy of the report.
This information can be gleaned from attending auction sales, looking at the published sales results in newspapers, talking to real estate agents and attending open inspections.
Some agents’ websites also show sales results, plus for a small price you can get pricing data from various online property data websites.
It’s easier to be more analytical and less emotional when buying investment property. Look at recent sales and rents. Do you homework on income potential, understand what your holding costs are and make allowance for some routine maintenance over the years. Local agents can provide estimates of rental value and steer you to similar properties to compare.
Be cautious about buying an investment property that requires a lot of upfront initial expenditure: similarly, be careful about choosing a property that will have future maintenance concerns.
Look at the funding you will require and make allowance for at least a couple of week’s vacancy each year.
Are inspections worthwhile?
Should prospective buyers always obtain a building inspection? That’s a definite yes, although sometimes you have a clean bill of health on a new strata building for instance, and so an inspection may not be essential for that type of property.
It’s especially important to get a building and pest inspection for an old building. This type of inspection can pick up building defects and potential pest infestation such as termites or woodworm, and inspectors can access tricky areas under floors or on roofs.
Archicentre, the building advisory serves of the Royal Australian Institute of Architects, writes about 25,000 building inspection reports a year nationally. They report that common problems are cracking in the house structure, termites, damp, plumbing defects and electrical faults.
If you’re still keen on the property after receiving the report, you can use it as a bargaining tool to negotiate the price down.
Sometimes inspectors advise not to buy a house at all. For units, check common areas too, as you may be levied with additional fees if there are problems there.
When viewing a property, you should have realistic expectations. Make a list of essentials. If a major one is missing, perhaps you can make alterations. You may be able to install a skylight or a bigger window, for instance.
Buyers’ Agents
For people who don’t have market knowledge or enough time, buyers’ agents perform a good service. They can often deliver the required property within a short period of time.
Different scales of fees apply and all will be quoted: a success fee, an up-front fee plus a percentage for success and a fixed fee. Buyers’ agents do not list or manage properties for sale.
Buying at auctionBuyers’ Agents can also bid for you at an auction, but of course many people don’t use a Buyers’ Agent and so must attend the auctions themselves, which can be a daunting prospect.
When buying at an auction you must register and prove your identity. You will be given a number, which you display when bidding. To understand how the process works, attend several auctions you are not interested in so you can watch dispassionately.
The auction price does not always reflect the valuation. If three or four people want a property, the potential sale price can be affected. So when buying at an auction ensure you have a good understanding of the market.
Research the home loansMaking sure that you have the right home loan is also key. The interest rate, the flexibility, features, etc are all important. That’s where our expertise comes in – we can help you to shortcut the research and effort to getting the best loan for you.
You must do the researchIn other words it comes back to research. To purchase well you need to get to know the area well, see which types of homes are popular and sell easily, understand any potential building developments or rezoning, and inspect plenty of properties.
You also need to research the best home loan for your needs.
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