This information is general in nature only and does not constitute legal advice. While Budget Direct has endeavoured to ensure the information we’ve relied on is accurate and current, we do not guarantee it. Budget Direct accepts no liability for this information and recommends you obtain legal advice specific to your individual circumstances before entering into any contracts for the purchase of property or obtaining of finance.
Some of Australia’s leading property specialists share their top tips and advice on buying your first home.
Licensed real estate agent
We asked them:
What tips do you have for people starting on their search?
Start with the basics. What is your budget and don’t forget to add in the costs of buying (solicitors, stamp duty, building and pest inspections, finance application fees, etc)? Where do you want to be? What sort of home do you want (unit, townhouse, house)? Look at what you need and then add what you want.
Establish where you can afford to buy by looking at the prices being asked for properties available for sale in different suburbs. This will quickly and efficiently provide you with a target list of suburbs to begin focusing on. The key is to get into the market, pay down your mortgage, and establish equity in your home as a basis for future financial options and flexibility. Once you have gained some equity, you’ll be able to think about upgrading to a suburb you would prefer to live in.
Create a definite list of all of the things your property must have. Take this list with you when searching for homes. It’s easy to get swept away with features and renovations that you don’t really need.
Location is one aspect where it definitely pays to be flexible. If you can’t afford your preferred suburb, consider a neighbouring postcode — it could be poised to benefit from the price growth of surrounding locations, and that can mean great buying opportunities. Where you start your real-estate journey isn’t as important as where you end up.
Think about your commute to work, your social network and recreational activities and how close you want to be to these networks. Don’t just focus on the type of property, think carefully about the location. Then jump online and start searching and shortlisting some potential areas and properties.
When searching for your first home, I recommend looking for properties that you have the ability to add value to — even if you don’t plan on renovating for a while. If you invest in a property that you can add value to in the future, you are setting yourself up to be better off financially.
Consider the property’s location — is it close to schools, shops, supermarkets and cafes? Transport — can you walk to a train station, tram or bus stop? Recreation — what leisure and recreation facilities are nearby? Medical — are you near a hospital or medical centre? Ensure you investigate any new developments planned nearby such as roadworks, apartment blocks or shopping centres.
At school not many of us embraced research but now it is your best friend. Research all the suburbs you prefer, prices, liveability, schools, public transport, hospitals, etc., and all the types of houses you like. Then you are in a position to know what suits you and your budget. Use real estate forums to educate yourself. There is loads of information out there; just ask.
What are the most common mistakes that first-time home buyers make?
They need to understand the terminology and process. Everyone has advice, so it is important to find someone they can trust and who genuinely knows the process and the pitfalls.
We’ve often been conditioned to purchase things we love or are drawn to rather than what makes sense. Taking your time to do your research and calculate not only the expenses in initially purchasing the property but holding it as well can save headaches later.
This probably won’t be your forever home; you’re not looking for perfect. You’re looking for your start. Find the best you can get for your budget and take action!
Don’t let your property eyes grow wider than what your budget can stomach. To this end, your lender or a mortgage broker can arrange a loan ‘pre-approval’. A loan pre-approval means you have been approved by a lender for a category of mortgage up to a specific amount. Also, don’t fail to invest time in some family planning with your partner before buying a first home. The last thing you want is a three-bedroom house, if a brood of four is on your agenda.
I see many first-home buyers have poor negotiation skills with agents. They over-pay at auctions and private treaties and get buyer’s remorse. Think of your home also like an investment. Avoid main roads if you can and think about who will buy the property after you. Buy in high-demand areas, which means you can sell the property even when the market is in a downturn.
Borrowing too much — first-home buyers can make the mistake of borrowing to their limit. This can mean you are unable to make improvements to your property or, worse, if the unexpected happens, it could mean having to sell your house before you have substantial equity in it.
Not engaging the right experts at the right time. A buyer’s agent provides independent support to source, assess for price and negotiate to buy property. A mortgage broker helps you source the best loan with the best terms and rate. A conveyancer checks contracts for errors before buying a property. A building and pest inspector will check for costly defects in the property before buying. An insurance broker will help you source the best insurance after you have bought the property. Buying property is a complex process. Buyers often come unstuck; not with what they know, but with what they don’t know.
We don’t buy a car without getting a ‘roadworthy inspection’; do the same for the house. This means getting a building or pest inspection done before you make an offer.
What are some possibly unexpected things a first-time buyer should plan for?
Some agents take advantage of first-home buyers and pressure them into making offers and signing contracts they don’t really understand. Be ready to stand your ground on price — don’t be pressured into a deal you don’t want and, if in doubt, ask your solicitor for confirmation.
Previously, if you rented a home [and it needed to be repaired], you would have been able to call your property manager to get it fixed on your behalf. It’s always good to have a separate [home maintenance] account that you deposit money into each week to cover these unexpected costs.
Bank fees, valuation fees, building and pest inspections, and legal fees are all other costs of buying that you need to be prepared to pay. Work out your budget before you go shopping, so there are no nasty financial surprises along the way
The golden rule of home buying is to thoroughly inspect the property, and that means visiting the home at different times, on different days. The bottom line is, the more you get to know a property before you buy, the less likely you are to discover unexpected surprises after you’ve moved in. Organising a pre-purchase pest and building report will give you the complete picture on the health of a home so that you don’t face unexpected repair bills later on.
Plan your budget and save for a healthy deposit. Make sure your finance approval is still valid before you go bidding at an auction. Before going to auction, make sure you have done your research and fully understand the local property market. You will need to have looked at several comparable sales to understand what each type of property is worth.
Make sure you have a solicitor on standby, ready to review the contract and special conditions. Before settlement, make sure you have the property adequately insured as the bank will also require a certificate of currency to prove it is insured.
Additional costs on top of the property itself. These can include insurance, moving costs, stamp duty, and inspection reports. Not to mention that most older properties will require repairs and maintenance (sometimes immediately upon moving in).
Consider being flexible, including buying a smaller property in the same location or moving to a neighbouring, cheaper suburb to buy the same property type or size. For some buyers it could mean reassessing their options and switching from a home buyer to a ‘rentvesting’ strategy. It’s still possible to invest in the property market with as little as $300,000, so don’t lose hope if you can’t buy your own home. Once a property has been purchased, first-time buyers should also plan for a potential settlement delay, either on their side or the vendor’s side. Banks can often cause these delays.
Everyone has a real-estate story. Listen and learn from them. From renters not moving out in time, to services not being connected, to your finance being held up. It all adds to the story of life, so embrace the experience. Listen to all the stories, know that something will probably go wrong and just be prepared.