First home buyer tips?

Discussion in 'The Buying & Selling Process' started by jinx77, 17th May, 2019 at 10:56 PM.

Join Australia's most dynamic and respected property investment community
  1. jinx77

    jinx77 Member

    8th May, 2019
    I’m a prospective first home buyer looking to buy a small property to reside in n Melbourne’s suburbs.

    I don’t know much about this process at all. I’ve already gotten preapproval from the bank so I know what my financial parameters are and what I’d like to buy. But I’m not confident or knowledgeable at all when it comes to the buying process. I look at listings every week but don’t know how to go about putting my dream into action.

    Does anyone have tips about what I should and shouldn’t do? Tips about the following would be great:

    - when/how to hire conveyancer
    - how to negotiate
    - terms and key words to look for in listings
    - what questions to ask real estate agent
    - red flags to be aware of
    - things to avoid
  2. hammer

    hammer Well-Known Member

    28th Aug, 2015
    Heya, the first thing to do is work out your goals. Obviously you would like to buy a place...but then what?

    Do you invest in shares want to buy another property, start a business....etc.

    I only mention this is because how you structure your loans and what type of property you buy now can affect these sorts of things in the future.

    I'd also sit down over the weekend and read this forum. Its free and the knowledge within these threads will save you thousands.
  3. Cate Bell

    Cate Bell Well-Known Member

    7th May, 2019
    This is my process, I have never bought property in Melbourne. 1) I engage a solicitor for conveyancing after signing the contract- I always have the solicitor read the contract before signing (this is at no cost). 2) Negotiation takes time. I let the agent do most of the talking. I have found over 30 plus years that most agents can't negotiate, I have found that the recipe for success is an agent that wants a sale, a seller who has to sell and the property has an upside - this is the sweet deal. Agents don't usually earn any $ until the completion of a contract, one that has had spent months on a property can be more eager to get it sold. I go in with very low offers, I am not emotionally attached to a property- even for my PPOR. I will make many offers until I find the sweet deal. You might offend the seller with your offer, but if they have to sell, they will usually counter offer. I don't chase agents after the offer. I sometimes give them a strict timeframe, "this offer is only valid until 5pm as I have another property that I am interested in". 3) ask the agent about how long it has been on the market (you should be able to find this online with a simple search, but you want the agent to tell you this information- you will get a feel for how they view the property and how desperate they are to sell it. I do a simple search on RP Data and Onthehouse which gives me information on the recent sales and historical information- it is a guide only. I also go onto the council website and look up the property and see if there are any easements and look up the zoning etc. In Brisbane I ignore the list price. Try to get the agent to talk to you about the sellers (not money) circumstances- do they want to settle quickly? Would they rather a longer settlement? Agents usually give you a lot of information in these discussions about the seller, things they shouldn't be disclosing. I also ask the agent about how his/her business is going- I had one recently who told me that properties were falling down on finance so he was looking for a second job (so you know he is desperate for a sale). 4) Red flags, I don't know the Melbourne market, but for a first property any structural damage I would avoid. A red flag for some people is a property that has been on the market for a long time, but I don't see that as a red flag- it is usually a sign that a property has been poorly marketed or the sellers expectations were too high in the beginning. 5) I avoid townhouses, units, apartments, main roads etc, I only buy house and land. I always try and buy the worst house in the best street and reno it (if the sums add up). But this might not suit your budget, strategy or area. I would have a really clear strategy, how long are you looking at holding the property for? Is capital gain important to you? Is lifestyle more important? Would you do a simple reno? I hold for the very long term (20-30 years) and have seen a few cycles in different locations. This is just what I do and my experience, it woks for me. You have to find what works for you. I look at several areas. You could get a few simple books, when I bought my first property at age 20 I read a Noel Whittaker book, it was a good introduction. Good luck.
    mehrar_84 likes this.
  4. The Y-man

    The Y-man Moderator Staff Member

    18th Jun, 2015
    1. A pre-approval does not mean much, so get your situation checked by a good mortgage broker
    2. Select your conveyancer out before hand and go for a quick "get to know you" meeting - we have always used a conveyancing lawyer in case something goes bad or complicated
    3. How to negotiate - there are entire books and numerous posts on this in the forum.
    4. Listings - this is a tough one - figure the area you want to live in first. Then look for ads within. Key words are up to you - eg "acre", "pool", etc.
    5. Questions to ask agent - always begins with "Why are the vendors selling" and "How much are they expecting" (even if you see the advertise price) as an ice breaker. The rest is part of negotiating, but ends with "send me the section 32"
    6. Red flag: Special conditions, covenants, zoning - all part of the section 32.
    7. Things to avoid: High voltage transmission lines within 500m, train track next to property, etc
    General order of events:

    1. sort out finance beyond pre-approval
    2. go and interview a few conveyancing lawyers and pick one
    3. figure out suburb
    4. go to opens, attend auctions "to get a feel"
    5. Always ask for a section 32 at the open even if it vaguely interests you (the agent will treat you more seriously).
    6. If something genuinely interests you, and you have no idea regarding building issues etc, get a pre-purchase building inspection done (we use Archicentre)
    7. If you have no idea what is in the section 32, give it to your conveyancing lawyer for a look through (expect to pay a small some for their time)
    8. Talk to you legal and finance team on special conditions you will need to put in (not possible for auctions)
    9. Get a valuation report run for the property for a idea of fair market value (my mortgage broker runs this for me)
    10. Negotiate based on the findings of the section 32 and building inspection (eg "Nice house, but the building inspection indicates $Xk worth of work needs to be done...."). Use the settlement date as a negotiating tool.
    11. Make an offer - keep in mind the valuation report!
    12. Wait.
    13. Agent will come back with counter offer. Your call - if the property is too good to let go, adjust your offer. If it's so-so and you can find another, say no and start over.
    14. If your offer is accepted, write a cheque to the real estate agency's trust account (NEVER make the cheque out to the real estate agent!!)
    Steps 10, 11,12, 13 does not apply to auctions.
    Instead, you make bids based on the outcomes of the inspections and valuation report.

    The Y-man
    Propertunity likes this.