Whether it’s your first time purchasing a home or you’ve done it before, the real estate market can be difficult to navigate even for the most seasoned of us. Here are the top three things you should know before you start playing.
1. Be honest about your financial situation.
Regardless of your excitement, this is the first step you must take before beginning your search. Home loan repayments and the expenditures of owning a home have a greater influence on your budget than rent payments, so keep that in mind.
While it may be tempting to borrow the maximum amount available on a house loan, consider how much the repayment would be and whether it will fit into your budget. Consider how much you’re willing to pay each month as a maximum payback. To obtain an estimate of repayments, use our repayments calculator.
The biggest cost to consider at this point is your housing deposit, which will be at least 10% of the property’s value, regardless of how much you can borrow.
If you’re ready to buy a house, you’ll need to know how much money the bank will lend you so you can move into your own place. Before making an offer or bidding at an auction, speak with one of our home financing consultants and apply for pre-approval to validate your borrowing power.
2. Consider renovating.
If you currently own a property, remodeling it could save you the time and money of searching for a new home and paying substantial expenses like stamp duty, legal fees, and real estate agent charges.
Of course, remodeling has costs and drawbacks, such as finding a new place to live while the work is being done or going over budget and schedule. Furthermore, you may have already determined that purchasing is the best option. If this is the case, speak with one of our experienced best home loan consultants to learn more about the financials of both selling and buying a property.
3. Make a deal on your own terms.
This is likely to be the most important financial choice of your life, so the last thing you want to do is buy anything on impulse because you’re under pressure.
- You always have the option of walking away. It’s completely acceptable to do this even if you have a firm price ceiling in mind. The bottom line is that there will be other properties available.
- Be mindful of your feelings. Real estate agents work for the seller’s best interests, and will exploit any personal ties you may have to the property in order to close the deal.
- Even after you’ve signed a purchase contract, you have three clear business days to reconsider the purchase and pull out if necessary.
Here are a few pointers to remember when you’re ready to negotiate:
- Consider supply and demand. You may be in a position of power (one of only a few potential buyers) if there has been minimal interest in the home, there are many similar houses, or the real estate agent is being aggressive.
- Instead of going with the asking price, go with the market. Don’t use this as a starting point if you’ve seen similar residences on the market selling for less than the asking price.
- The price isn’t the only negotiating instrument at your disposal. You can also haggle over settlement conditions, which is very useful if you need to move in soon. You might also offer a leaseback as an inducement to a seller who isn’t ready to sell just yet, or you could look into negotiating repairs and furniture purchases for them.
- The agent must close the deal. Even though they work for the seller, they frequently need to complete a sale in order to be paid, so it’s worthwhile to work with them as well.