I posted week a few weeks ago about the things I’ve learned about selling a house, and the logical thing to do now is a post about things I’ve learned buying a house. Because obviously most of the time once you’ve sold your house you need to buy a new one or else you might end up panicking and contemplating crappy rental properties because you just don’t know where to start looking and you’re terrified by all the realestate.com.au alerts you’re getting that talk about property prices and suburbs that are booming and interest rate rises and goodness knows what else. You might be on a time frame like we were or you might not have a deadline and can look as long it takes to find the right one. Either way, you need to look out for the same things no matter how quickly you want to buy a place.
– Know your budget.
– No, seriously. KNOW YOUR BUDGET. And by that I mean your absolute, top end amount you simply cannot go over. To do this, before you even start looking, you need to talk to the bank or a mortgage broker. I would recommend a mortgage broker because they’re unbiased and they will look at getting you the best loan they can. They will look at every cent you have in the bank and your salary and ultimately say “You can afford X amount of dollars all up, which means you will be able to afford X amount of dollars per month in repayments and still actually have money for living.”
– The purchase price isn’t just the only thing you need to consider when working out your budget. You also need to include things like stamp duty, solicitor or conveyancer fees, removalist costs, new furniture costs, utilities costs, miscellaneous costs. When purchasing a house you can’t just think about purchasing a house. You have to consider everything that you need to pay for on the day you settle and get the keys. Once you’ve worked all that out, THAT’S your budget.
So, now you know what your budget is, right?
Yay, you get to start looking at properties! Since we looked at houses, that’s what I’ll be referring to. But if you are looking at units or apartments, you need to consider things like public liability insurance on shared spaces and body corporate fees as well.
– Now that you know what your maximum budget is, remember that in the current climate (here in Melbourne at least), properties are selling at 10 to 20% percent MORE than their list price. So say your maximum budget is $500,000. Don’t look at properties that are listed at $450,000 to $500,000, because it will most likely sell for a lot more than that. A $500,000 list price on a house means it will sell for at least fifty or a hundred thousand dollars more. And it WILL sell for that much more at the moment. We kept the brochures of all the places we looked at, and even if we weren’t interested in them, we would look up the sold price the day after the auction and they were, without fail, selling for as much as two hundred thousand dollars more than their list price. It was depressing, but it also made us really not bother with houses that were listed at the higher end of our budget. Your time is precious – spend it looking at houses that are a good 20% lower than your maximum budget and hopefully you’ll find something fairly quickly!
– Have an idea of what area you want to live in, and research it. A useful tool on realestate.com.au is the Sold section. You can search the suburbs you’re interested in and see what houses have sold for in those areas in the last few months. That will give you a fairly accurate idea of purchase prices.
– Don’t be married to the idea of living in one suburb. We all have dream suburbs we would love to live in, but ultimately buying a house is a combination of factors and compromises you have to make. Narrowing your search to just one suburb can limit you and prevent you from seeing an amazing house that’s just a couple of suburbs away, and you’ve missed out on finding exactly what you want because you were being suburb-ist (like racist, but with suburbs).
– The factors to consider no matter where you look include some of the following things: is the property near public transport, good schools, near work (if not, how long is the commute going to be), decent shops (how far away is the nearest shopping centre), is the property near a freeway or on a major road, etc. Basically you need to look outside the property’s boundaries as well as inside them, as the location of these amenities has implications on a number of different things, including resale value.
– As I said, be prepared to make some compromises. The property you found doesn’t have a walk in wardrobe in the master bedroom but you desperately want one? Is there still adequate storage in the property anyway? Yes? Okay, then maybe let go of that dream.
– But don’t compromise too much. When we were first looking we would get really excited about a house, but the more we thought about it, the more we realised that it really wasn’t liveable for us right now. Someone else might love it, but ultimately things like the layout of the rooms, the location, or the living space weren’t to our requirements and wouldn’t work for us without pouring thousands and thousands of dollars into it immediately. You might love a house and it might have the décor you love and the cosy feeling you’re looking for, but if it doesn’t suit your current or near future lifestyle without making massive changes to it then maybe it’s not the property for you. You have to know when to walk away.
– A good way to really work out if the property is for you is to view it multiple times. Two, three, or even four times. Go and see it as many times as you need to until you feel sure one way or the other. Also go and see it at different times of the day. Go on a weekend, then go during the week, and try to go in the evening if possible. This will give you an idea of how the house feels at different times, and also what the street and neighbourhood is like at different times. You’ll know pretty quickly if there are noisy neighbours or if the traffic is particularly bad on weeknights. These are things to consider to help you decide if you could live with them or not.
– When you’re looking at the property itself, one really great thing my husband noted is to take a good look at the exterior before you go in. If a house is meticulously maintained on the outside, chances are it will be as well kept on the inside. Things like guttering, eaves, roof tiles, brickwork or weatherboards, even the garden itself. If these things look rusty or badly weathered, or just messy, that’s something that you will have to spend money fixing once you move in. If you haven’t budgeted for that, you will have to live with the property looking like that until you can afford to fix it. Is that how you want your future home to look? True story: we went to look at a weather board house, pulled up, got out of the car, saw the state of the weather boards, turned around and got back in the car and drove away. They were that bad we knew at least one side of the whole house would need replacing immediately. It was just something we didn’t want to deal with.
– Once you’re inside and you’ve had a look around, consider the floorplan. As I said, we found quite a few places that we loved, but the floorplan was too small or the rooms were arranged in a really odd way. Short of doing an extension or knocking down walls and renovating the whole place, there’s not a lot you can do to change those things, so you need to be happy with the internal flow of the rooms. If you feel like it’s uncomfortable and rabbit-warren-y, and you don’t have the budget to do those big renovations, then walk away.
– Consider other things like bench space in the kitchen (you want a LOT of bench space, trust me. It’s something I obsessed over every time we walked into a place to look at it), storage space throughout the house (for example, our current unit only has storage in the bedrooms and laundry. There are no cupboards anywhere else in the house which is kind of annoying), how is the bathroom laid out, etc. Don’t be afraid to come armed with a tape measure to measure up spaces to see if it’s bigger or smaller than where you currently live.
– Don’t pay too much attention to décor. By that I mean paint colours and the furniture. Those things can and will most likely change. Look at things like the condition of the curtains and carpet/floorboards, the tiled areas, the age of the bathroom and kitchen fittings and fixtures. Open cupboards to look at how much storage there is. Anything that is fixed to the house is something you will have to live with. If it’s not in a good enough condition now, you will be the one fixing that with your hard earned cash.
– If you feel like you need an unbiased opinion, bring a friend or family member with you to inspect the house. Someone who is sensible and thorough – they’ll probably vocalise all the things you’re unsure about and possibly point out things you haven’t thought of. It’s always nice to have a second opinion.
– Dealing with real estate agents is another tricky part of the game. They all can’t do enough to help you – in theory. We were very specific about what we wanted and we always tried to ask a lot of questions about the house – how old is it, why are the sellers selling, when was the home extension done, etc. It’s really, really easy to tell when an agent doesn’t know anything about the house beyond the price. We pushed back with a particular agent when we felt his answers to our questions weren’t correct and it reinforced our opinion that his properties were not worth looking at just because of his lack of knowledge about the homes he was selling and his dismissive nature.
– That being said, some agents are fantastic and truly know what they are doing, and can’t do enough to help you, which is always reassuring. The agent who sold us our new home has been super helpful and very available, and always gets back to us promptly which is great.
You’ve found a house. YAY!
– Once you’ve found the house you love and you’re ready to make an offer DO A BUILDING AND PEST INSPECTION first. They cost about $700, which sounds like a lot, but if you’re paying $500,000 for a property and you don’t find out until after you’ve bought it that the ceiling is rotten and the floors have termites and there is no insulation, that’s going to cost you a crap load of money to fix. Wouldn’t you rather spend a smaller amount of money now for peace of mind instead of having to take out a second mortgage to fix everything that’s wrong with the house? We did some building inspections on houses we were interested in, and they all turned up issues that were serious enough to make us reconsider bidding on the properties.
– When you’re ready to bid at the auction or make an offer for a private sale, be prepared to negotiate. This is the most stressful part. With an auction, you know it’s over and done within about fifteen minutes. I’ve never bid at an auction, but my impression from attending a few is that you just go in low and know your limit. If it helps, get a friend or a relative to bid for you. They aren’t attached to the property and won’t get swayed by the agents at the auction who will push them to offer more. If you’re bidding by yourself, just remember to stick to your budget. You might go to three or four or even seven or eight auctions before you have success, but it’s good practice in not getting attached to a house. You might not win at your first or second auction, but you’ll get better at knowing how to play the game and knowing when to opt out.
– Buying privately is a lot more stressful (in my opinion) because you don’t know if there are other offers or what they are. You have to be prepared for a bit more back and forth and this can take days. You go in, make an offer and hope that they accept it. Often, they won’t accept it straight away, so you have to make a higher offer, then possibly another higher offer. But the same principle stands. When you’ve hit your limit, make it clear to the agent and be prepared for the fact that you might not get the house. Don’t be swayed by the agent pushing you for more money, and again, take a friend or relative with you to the agent’s office to make the offer, just for moral support if you need it.
– Be aggressive if you need to be. We found that a lot of properties were selling before auction. People were obviously seeing the house they loved and just offering top dollar straight away. Towards the end of our search I said to my husband that maybe we needed to be a bit more aggressive as well, and when we found our house we pursued it immediately.
– Finally, remember that what you think a property is worth is not what the market necessarily says it’s worth. It sucks to get attached to a property time after time and keep missing out at auctions or private sales, but it’s part of the game. You just don’t know what other buyers have in their bank account and you might miss out a few times before you have success.
All of that being said, I’m a big believer in the right house finding you, and this was definitely the case for us with our first home and again with our new house. Be open to looking at something that on paper doesn’t seem that appealing – it might be exactly what you’re looking for. Being aggressive can help a lot; when we found our place we walked out of there knowing it was meant to be ours. So we jumped on it and it worked out. It was a risk, but sometimes you have to take a risk to get what you want. Just remember that taking a risk doesn’t mean blowing your budget, it just means trying to swoop in and grab something before other people realise how great it is!
Also, once you buy something, there is no greater feeling that hitting “unsubscribe” to all the real estate emails you get, AND to knowing that you don’t have to spend any more weekends out all day looking at fifteen thousand different houses. And finally, even though buying a house feels like you’re temporarily hemorrhaging money, but it’s for the greater good. It’s a solid investment in your future and if you stick to your budget in the long run you’ll be glad you have a permanent place to call home.
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