Buying a home is both exciting and tense. For most people it is the biggest investment they will make in their lifetime and yet most Australians aspire to become homeowners. This guide is intended to help you to navigate through the many transactions and decisions that come with buying a new property.
It starts with the research
Any savvy investor will tell you that it is wise to research before you spend the money. Before you buy you must understand the current economic conditions in the country. Evaluate the property market in your state or territory and then in the city in which you plan to buy. This is the only way that you can prepare to make a reasonable bid or offer on a property.
Your real estate agent can help you with this research.
A buyer’s market
A buyer’s market is a situation where there are more properties than there are buyers, so buyers have plenty of choice.
As a buyer you will have a lot more choices, but be careful. If you come across a property that you really want, make sure that you make a firm offer quickly.
A seller’s market describes market conditions where there are more buyers than sellers so there is a shortage of property on the market.
In this type of market, sellers receive multiple offers for their homes because property is in short supply. Demand is high and prices are rising. Properties will move fast so if you have your eye on a home you will have to make a move quickly. It is important to understand the market in these circumstances or your offer may not be competitive.
Property
Make sure that you have sufficient funds to cover the repayments on the loan even if interest rates were to rise. Don’t forget to budget for repairs and maintenance and for property taxes.
Private sale is when the property is on the market at a set price. It is the most common form of property sale in Australia. The property will have a listing price but this is just the start of a negotiation process where the buyer and seller will discuss options before settling on the agreed price.
Once the price is agreed, a Deed of Sale is drawn up and the buyer must come up with the 10% deposit. There is a cooling off period but this may be waived. If the buyer pulls out during this period, they may lose a portion of the deposit.
Buyers can submit their best and final offer before a specific date and time. Once all the offers have been collected the seller discusses the options with the agent and decides whether to sell or not. If they are no happy with the offers, they may decide to use another method to sell or raise another expression of interest.
The property is sold to the highest bidder on auction. The seller typically sets a reserve price, the lowest bid that he will accept for the property.
Once the reserve price is reached the highest bid takes the property and the bidder must pay a 10% deposit on the day. There is no cooling off period so the bidder must have done the due diligence ahead of the auction.
If the bidding doesn’t reach the reserve, the auctioneer will commence negotiations with the highest bidder in an effort to find agreement between the buyer and seller.
In buyer’s market, a seller might be willing to accept a pre-auction offer, particularly if the price is close to the price they had hoped to get on auction. The seller might be less inclined to consider a pre-auction offer in a seller’s market, but if you’ve done your research and you’re making a reasonable offer, it’s worth taking a chance.
There is no cooling off period if you win the bid at auction so it is essential that you are prepared ahead of time. Here’s how to prepare yourself.
Now you are ready to head for the auction, bid confidently and stick to your budget.
