Process for buying first home

Discussion in 'The Buying & Selling Process' started by AbleTasMan, 22nd Feb, 2020.

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  1. AbleTasMan

    AbleTasMan Well-Known Member

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    Hi! I’m hoping some of you on here could give me some help and guidance as to the process I should follow in buying my first home.

    I have only started looking this year and that’s only been online, but it’s all pretty daunting and I’m a bit unsure how to go about actually buying. I don’t want to come across as a complete newbie when making a deal or talking to the real estate agents (as I’m sure they’ll take advantage of that), so am wondering what’s the actual process I should be following to buy my first place?

    A bit of background, I’m in my 40’s, single (never married - no kids) and currently have full time work. I don’t really have anyone close to talk to about real estate and have never thought about property until now, but it seems like it may be a good time to buy before prices start going back up. I have done some reading up on it over the last 6 months but am still confused about the steps, and stuck on a few things I can’t work out. I have a lot of questions that may seam dumb, but please bare with me:

    • Do I need a home loan pre-approval? Do I need this before going to open homes and making offers? (I have saved a lot over the years and have enough for 20-30% deposit. I’ve never been in debt and have always had a good credit rating.)
    • Is there any point using a mortgage broker? or should I just use an online comparison site to find a loan? (I already have bank accounts with Rams, Ubank and ANZ).
    • Is it worth getting a loan that has an offset account? Is this generally what people do?
    • Do I need a lawyer? where do I find one?
    • Do I need to get an inspection done? And what kind of Inspection is it? is this different per state? I’m in Tasmania.
    • or is this something that they do? i.e should I ask for inspection papers?
    • Who do you contact for the inspection?
    • Do you make an offer straight away? (at the open home for example?) or do you wait for an inspectors report before making an offer?
    • Is it worth offering less than the asking price?
    • If they reject the offer do they normally come back with a counter offer? or would I stuff up my chances by offering lower?
    • If they don’t counter can I request a counter offer? - or would this be weird?
    • Also when they get more offers, do they just take the highest? or do they go back to everyone else who made an offer to see if they want to up it? reason is I would have a range of say $30K that I could offer, but obviously I’d like to be on the lower end of that… but could go to the top end if I really had to.
    • Does making a larger deposit (like 20-30%) increase your chances of your offer being accepted, even if you offer lower? Would this with a written offer demonstrate I’m serious and really ready to buy, or is it simply they go with the highest amount offered?
    • If the seller gets a higher offer do they normally tell you what that amount is? Is it normal to ask what the higher or highest offer they’ve received is?
    • I keep reading about settlement dates and cooling off periods.. why are they so important?

    To put it in perspective, there’s a small 2 bedroom place I currently like the look of online. It’s listed as offers over $375K. So for me that seams a lot, so I’d like it a little less say around $360K, but if I really had to I could go up to $400K. If I offer less, will I get the opportunity to bargain up if others have put in higher offers? or is this not the done thing and I should just go in at the top of what I can afford at $400K?

    • If the seller comes back with a higher counter offer, can I counter that again lower? or is that just stuffing them around?
    • If I get pre-approval with one lender, do I have to use them? or could I change to someone else if I find a better loan?
    • If my offer is accepted, how do I pay them the deposit? is it just like an online bank transfer? And when is it paid?
    • If something happens through the process and I need to pull out of the sale, do I get the deposit back (remember I’m able to pay a fairly large deposit - I don’t want to loose this money!).

    My main experience with this sort of thing would be buying items on eBay and Gumtree where I generally am able to haggle a bit to get a better price, but not sure if this applies to buying a house. I really appreciate any advice and answers to those questions that I’m stuck on, I’d like to come across with a bit more experience than I have when dealing with agents / sellers.
     
  2. The Y-man

    The Y-man Moderator Staff Member

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    Go have a chat to a good knowledgeable broker, and they will answer many of the questions you posted regarding pre-apps, offset loans - highly recommended for your first purchase to help you navigate.

    Hint: if they can;t tell you the pro/cons of an offset account, find a new broker!

    The Y-man
     
    Lindsay_W likes this.
  3. The Y-man

    The Y-man Moderator Staff Member

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  4. AbleTasMan

    AbleTasMan Well-Known Member

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    Thanks for the link, I'll have a read! With your other reply, by broker do you mean mortgage broker? How do you know who is a good one?
     
  5. Trainee

    Trainee Well-Known Member

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    Remember the offer process and standard contract terms are different by state.
     
  6. The Y-man

    The Y-man Moderator Staff Member

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    Maybe start by reading some of the posts by the mortgage brokers here and see whose style you like.....

    The Y-man
     
  7. significance

    significance Well-Known Member

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    Online mortgage comparison sites are a place to start, but that’s to get a negotiating position. Find the best online rate, then go into a few banks that you like better (better service, ethical charter, better options on the mortgage) and ask if they can match the lowest rate you found online. They probably can’t quite, but if you have a good credit rating and are a good prospect, they can do much better then their advertised rates if you ask. If you are willing to do that, a broker is unlikely to do any better for you as they will be asking for the same thing but taking a commission. It doesn’t hurt to ask a broker for their best deal as well, but don’t make them your only port of call. When I tried it, I found better deals by going direct to the lenders.

    You do need a lawyer — specifically, what you are looking for is a conveyancer. Ask around to find one that a friend recommends.

    Pre-approval is a good idea. You don’t absolutely need it unless you will be buying at auction because you can make your offers subject to finance, but your offer will be more attractive to sellers if you have pre-approval and can offer a shorter settlement period. Getting mortgage approval takes a mountain of paperwork and can take weeks.

    If you change your mind after making an offer, whether you get your deposit back or not depends on what it says in your contract. Your conveyancer can tell you how to word a contract so that you can get your deposit back if you need to. Whether buyers will let you do that depends on how hot the market is where you are buying and the norms in your state. There is also a cooling off period for offer contracts, but if you use the cooling off period to withdraw from a contracted offer, what happens depends on what state you are buying in. You may not get the whole deposit back.
     
  8. AbleTasMan

    AbleTasMan Well-Known Member

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    Thanks for the tips!!

    Ok that makes sense, I haven't actually stepped foot in a bank for about 15 years, is it really necessary? Or can you just do it online? Like I mentioned I'm mainly with Ubank and Rams, and they have some good rates I'd consider going with (2.84% at Ubank) unless there's something better than that. They don't even have physical branch where I live, and I always just do everything online as it's more convenient. As mentioned in my questions, would one with an offset account be better? I can't actually find many that offer that.

    As mentioned in my questions I don’t really have anyone close with any experience in this sort of thing, everyone rents. I've never had a lawyer either, so do I just google one?

    I guess the only thing that would make me pull out is if there was something seriously wrong with the unit, or I guess maybe if something else came on the market that was a lot cheaper (but I doubt that would happen as most are now $350K+ in the areas I'm looking). I did put that I'm in Tasmania in the post, so how do I find out the specifics for Tas?


    It sounds like you've been through this process before, I'd be grateful if you were able to share anymore knowledge on any of the other questions I asked, I'm still stumped.
     
  9. AbleTasMan

    AbleTasMan Well-Known Member

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    I've read the post and it has some good advice. I'm pretty similar to the guy in it, I'm not an investor and just want a place to live in, not out to make money and could be happy living in it till retirement (20-30years). Also like them I don't really have anyone to turn to for advice, which is why I've ended up here. But I guess that post was similar to a lot I've read and doesn't go into much specific detail about certain questions I have which is why I made this one.

    The one I'm really stumped on is can I just make an offer at the open home and then sort everything else out afterwards? and is making a low offer like $360K on a property listed at $375+ a bad idea? I'm really thinking of calling the agent to make a time to see it, but still feel underprepared to be trying to negotiate and then organize everything else.

    If you're able to help me with any of the other things I'm unsure about that would be really great, I'd really appreciate it.
     
  10. SeafordSunshine

    SeafordSunshine Well-Known Member

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    Dear Abel,
    do you have any friends or family members who have recently bought a house or flat?
    It may be that they will have experience, and will happily speak with you over lunch, tea coffee or whatever. ?
    Start going to inspections and listen to conversations, or be involved with them!
    Enjoy the process.
    Ask the agent if they know a solicitor who you can speak to, for say 15 mins, 'with no charge' . Take a few notes.
    I remember making an appointment with a loans person and being ' point blank rejected'
    I came away knowing exactly what I needed to be accepted ( Equity)!
    I hope this helps!
     
  11. AbleTasMan

    AbleTasMan Well-Known Member

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    Unfortunately no, the few people I know all rent. I don't come from a background where anyone know's anything about this sort of thing. Hence asking for advice.

    I am planning on attending inspections, more specifically the one I mentioned in the post which I was hoping this would help with. I still don't feel I know enough to go there and negotiate, but the unit is the only one I've seen in about 4 months that fits my needs. There's not much on the market at the moment in the less than $400K price bracket unfortunately.

    Why were you rejected? Do you mean you didn't have enough money? I did mention I have a lot saved, I can easily do 20-30% deposit, maybe even 40% but I don't want to put all my life savings into it, I want to hold onto some cash too. You didn't comment on me doing it online? Does that Ubank one not look any good?

    It does help thanks! Was just hoping I'd get more specific answers to my questions that's all.
     
  12. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

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    As an aside

    what do u do for a living ?

    and whats the end game for this purchase and moving fwd ?

    Oay the thing off yes......... but beyond that.

    often I find we get stuck in "the transaction" and dont know what we really need to meet those YET undefined goals

    ta
    rolf
     
  13. Lindsay_W

    Lindsay_W Well-Known Member

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    Best speak to a good broker to find out what your borrowing capacity is prior to making any offer
    Also suggest speaking to a solicitor regarding the contract, offer and deposit process
     
  14. AbleTasMan

    AbleTasMan Well-Known Member

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    Thanks for the advice. I guess already know what my borrowing capacity is, it's $400K, I'm not wanting to go over that. From every online calc I've done I could borrow up to $600K and I'm sure some brokers would want to push me up higher but there's no way I want to take on that much debt, I still want to be able to live. And also a small 2 bedroom unit in the area I'm looking really isn't worth more than $400K in my opinion.

    Does it cost anything to speak to a solicitor? I guess I'm not really wanting to pay anything while I'm just looking around. Also how would you suggest I find one? can I just Google them?
     
  15. AbleTasMan

    AbleTasMan Well-Known Member

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    I'm thinking of calling the agent tomorrow for the place I saw and asking if they have had any offers, and if so what the highest offer is. Is this a done thing? Are they supposed to tell me that sort of info?
     
  16. significance

    significance Well-Known Member

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    [Yes, you can just Google conveyancers and yes, many don’t charge for the initial discussion.
     
  17. Lindsay_W

    Lindsay_W Well-Known Member

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    That's great, curious to know - how did you work out what your borrowing capacity is?
    If you're basing it on the online calcs, don't, they're useless at giving you an accurate figure. Why would a broker want to push you higher than what you're comfortable borrowing, just because you CAN doesn't mean you MUST. The reason I suggest seeing a broker regarding your borrowing capacity is because all lenders have differing policy's that you won't be aware of it just googling.

    How much of a deposit would you have for a $400K purchase price? 5%,10%, 20%? Have you factored in other costs associated with purchasing property?
    Note the size of the deposit won't generally make a difference to the seller, it's the purchase price that is the main deciding factor, however it's not the only deciding factor - the total terms of the offer would be considered. Eg. you might offer $5K less than someone else does but have a shorter settlement time frame (30 days Vs 60 days) or similar that may appeal more to the seller.

    I also suggest doing some research on the property and current market value, look at the property in person, then decide what your max offer for that particular property would be and stick to it, no matter if someone offers more than you, this is to avoid overpaying for a property based on a emotional "I really like it so I'll pay more than it's worth" kind of mindset, just my 2 cents.
     
    Last edited: 23rd Feb, 2020
  18. The Y-man

    The Y-man Moderator Staff Member

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    You MUST have you finances sorted before you go making any offers - I suggested a broker as banks can turn you down at the last minute (even with pre-approvals) if they don;t like the property - eg size of it, type, postcode (some cheap online lenders won;t do aprtments below certain size etc).

    You can deal remote with a broker over phone/email in any state, but not so lawyers. Lawyers MUST be covered for work in your state (ask - they will tell you).

    While you say you
    ll keep it forever, never say never - structuring is going to be important (eg offset account etc) if there is even the remotest chance of getting another place to move to and keeping the older one as an investment property. So many people are stuffed up when they want to do this - and you will often catch me saying "simple solution - sell" because that is the only way they can get tax deductability on interest etc.

    The Y-man
     
  19. Trainee

    Trainee Well-Known Member

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    Other than the generic guides some lenders put out, is there any government department or something that teaches basic stuff like finance first, get a solicitor / conveyancer first, offset accounts, and how the offer process (state bu state) goes?

    For people with no one to ask it seems like a minefield of nukes.

    unfortunately, something that offers all of these in one package are likely to be spruikers.....
     
    Last edited: 23rd Feb, 2020
  20. AbleTasMan

    AbleTasMan Well-Known Member

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    I work in the design / ad industry, mainly in the area of production, but not sure how that's relevant? Spend 30-40% of my time working in an office / 60-70% working from home (lifestyle choice).

    Simply to own my own place to live in, can it be that simple? If i buy now I'll have it paid off before retirement which I guess is a goal. I'm not planning on moving, it's a nice location, I've lived here / surrounding suburbs for the last 25 years. Mortgage will also be a lot cheaper than current rent.

    Sorry I'm not sure what you meant by the rest of your reply, care to elaborate?