
Below we provide you with our point of view on some frequently asked questions regarding real estate.
1. What is the first step of the home buying process?
The first step of the home buying process is to make sure your financial situation will enable you to make the purchase. You can do this by establishing a savings goal.
Once you feel as though you are in a good financial position it is time to get pre-approval for a mortgage (a written letter from your lender). This gets the ball rolling and points you in the right direction.
Why, you ask?
Firstly, you need to know how much money you are able to borrow. This then narrows down your search as you can look at properties within your budget. The process for gaining pre-approval can take some time & effort, therefore make sure to be well prepared in advance.
While getting pre-approval can be a beneficial step, it’s important to note it’s not a guarantee that your home loan application will be approved. Pre-approvals are intended to be a guide that your application fits the lender’s criteria. You’ll still need to get full, unconditional approval before committing to a property purchase.
2. Should I sell my current property before buying a new one?
There are advantages and disadvantages to selling before buying.
Let’s start with the advantages.
- Knowing your purchasing power. You’ll know exactly how much money you have available to purchase your next home.
- Funds are readily available. Once settlement on your previous property has gone through, you’ll have money available for the purchase of your next property.
- You don’t need to rush the sale. You can wait until you’re happy with the sale price of your property, without having to rush to sell because you’re maintaining two mortgages.
- It could reduce stress levels. If you buy before you sell, and selling your property ends up taking longer than expected, this can be stressful financially and emotionally.
- You won’t need a bridging loan. To help finance two properties at once.
- Vendors love cash offers. In a competitive housing market, being able to make an offer on a property without conditions around selling your old home could make your offer more attractive to vendors. If the sale of your previous property has left you with enough cashflow that you don’t need to secure lending at all, that could help you to make a strong offer to a vendor too.
Disadvantages –
- Rising property prices. There’s a chance that property prices will go up between the time you sell and buy, which could mean that you end up spending more on buying your new home than anticipated.
- Potential rental costs. You may need to pay for rent until you’ve bought a new home, as well as the hassle of moving twice within a relatively short period of time.
- Living arrangements. You may not be able to find a short term living arrangement as the rental demand is so high in the current market.
Therefore, planning and understanding your personal situation is key to a successful sale & purchase.
3. What is a mortgage and how does it work?
A mortgage is a type of loan to finance a property. The vast majority of people cannot afford to pay for their home in full, therefore they apply for a loan to mortgage the property. This is a secure loan that comes with a fixed or variable interest rate and can be paid off over 15 to 30 years. If need be, you are able to refinance your mortgage and payments in the future.
4. I have equity in my home but no cash for a deposit. What can I do?
If you find yourself in this position, get in touch with your finance provider and discuss the possibility of a deposit bond. A deposit bond is essentially the bank guaranteeing you have the equity to cover the property deposit amount. If you are planning on using a deposit bond ensure the selling agent is aware.
5. What other costs are involved when purchasing a property?
The main cost of buying a property is the purchase price itself. Beyond that you also have to pay for stamp duty, mortgage registration fees and transfer fees. Other costs you may encounter are conveyancing and solicitor fees, building and pest inspection fees, removalists and service connection costs.
6. How should I prepare my house before selling it?
The tasks that will benefit your sale the most are listed below.
- Make simple repairs – One of the biggest turn offs for buyers is wear and tear such as cracked windows, chips in tiles, scuffed paintwork etc. Small things like this instantly alert buyers there is work required. Discuss with your agent which areas you should repair and ensure you are increasing appeal and not overcapitalising.
- Clean & Declutter – Removing lots of clutter allows the prospective buyers to see the full potential of the room while also making the room appear to be larger. Cleaning the house, including the nitty gritty areas makes the house look well cared for. Giving the buyer the idea the house is well maintained and there should be no hidden problems.
- Style your home – Styling your home can make a massive difference. You have the option to hire a stylist to stage your home or hire furniture and DIY. Having furniture and accessories that appeal to the buyers can increase the value of your home and attract more potential buyers.
- Curb Appeal – Prospective buyers could take one look at your property and leave without a blink of an eye if the exterior does not appeal to them. Ensure the exterior of your home is presented neatly, open window blinds, remove fly screens and wash windows, de-cobweb etc, mow the lawns, weed the garden & plant some colourful feature plants etc.
These are just a few tasks you can undertake to increase the value of your home.
7. How do property auctions work?
A real estate auction is a public sale of a property, usually conducted by an estate agent acting as an auctioneer and is governed by strict rules. The auction is advertised for a specific place, time and date. Prospective buyers bid and the property is offered to the highest bidder at the seller's discretion. By bidding, you accept the terms of the contract on display before the auction, and will not be able to negotiate terms and longer settlement periods etc.
Prior to auction day there are usually several open homes to allow the prospective buyers to look at the property and arrange Building & Pest inspections if needed.
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