You might be that smart, lucky one who doesn’t need any expert’s help to find the home of his dreams. Yet, for many people, it makes sense to hire one to take care of the tedious tasks and nitty-gritty details of the home buying process.
Some of you might find a good real estate agent who will recommend neighborhoods that fit your needs, while also warning you about its possible drawbacks. However, there is also the possibility of coming across shrewd ones, who might take advantage of your inexperience and bore a hole in your pocket.
Homes are most people’s biggest life investments, and so it’s not wrong for you to be choosy about who you want as your representative. Further, you do not want to come across as dumb. So, you need to be equipped with the industry jargons as well.
If you are determined to buy a house at the best rates and with less hassles, then you also need to seek answers to the right questions. Here are seven of them to establish your grasp on the home buying process.
#1 How will I know the property’s worth?
This is one of the most important questions but many people don’t think to ask it, says Buyer’s Agent Stefan Miraglia, Director of IPC Property in Adelaide. Investors should question the agent on why they think the house is worth what they are selling it for.
Ask them to provide you with a recent sales report that shows other similar properties and what they sold for in recent times. Investors should ensure whether the house they are buying is fairly priced compared to the rest of the local market and they are not overpaying.
#2 Why is the vendor selling?
There are times when people are desperate to sell off their property for logical reasons like a job change overseas. In such cases, it will proof beneficial for a home buyer in negotiating the final price. Knowing the reason for selling a house can save home buyers thousands of dollars.
In cases where a vendor has already bought another property, they would be in more hurry to sell it off. If they are looking to buy a new property they may like a longer settlement period.
There is a limit to what the real estate agent can tell you because they act on behalf of the vendor and so are likely to present information that is more positive about them.
#3 How long has the property been on the market?
Knowing how long a property has been on the market is another way for home buyers to saves themselves from burning a hole in their pockets.
There might be a property just around the corner and you just can’t take your mind off it. So you decide to buy it but later realise that it was a bad impulsive decision because you ended up paying more than you required.
Remember to research always comes handy everywhere. So, if you find out that a property has been on the market for more than 2 months then it is either wrongly priced or there is something wrong with it.
If a property in Australia is correctly priced then it is bound to sell off within six weeks. Ask your agent if the property was taken to auction and failed to sell and if so, then what happened at the auction. If the property was passed in at auction make sure you ask if the pass-in price was from a buyer or a vendor bid.”
#4 Do I need to be pre-qualified before house-hunting?
Yes, it is important, as a homebuyer, to be pre-qualified when thinking of buying a home. Especially in case of first time home buyers, mortgage and financing become the prime subject of discussion. So, when you talk to your estate agent, do not forget to question him/her about the same.
A good mortgage broker can recommend and help you pick the right loan for your needs. Ask your mortgage broker to get a pre-approved loan for you as this gives you a realistic view of what you can afford. A pre-approved loan is valid for up to 3 months and can prove to be a great negotiation tool when purchasing a property.
Potential homebuyers should understand the type of financing and amount that they are qualified for and whether they are able to purchase a home within the planned timeline.
Staying up-to-date with all the information discussed above can help in eliminating any disappointments, and also save you time.
#5 What exactly am I signed up for?
Get your mortgage broker to explain what you’re signing for, including the home loan amount, loan term, the interest rate, or any one-off or ongoing fees, what the loan features are, whether you will be penalised for paying out the loan early, and/or whether your mortgage is a Principal and Interest or Interest Only loan.
All this information should be given to you in writing by your broker when you plan to buy your home whether you are a first- time home buyer or not.
#6 Can I afford to buy this property?
This is an obvious question that most home buyers ask themselves before buying a home. It is a pricey affair to buy a house. Just because the banks are willing to finance you for buying a home, it does not mean that you will be able to service the debt and also maintain your lifestyle.
This is the time the to practice putting aside the repayment amounts, and factoring in aspects such as interest rate increases, to see if you can really afford it. Home buyers need to understand their budget and if required then consult their mortgage broker or bank to completely understand their financial position.
#7 Why am I buying?
Do you know the reason for buying a house. Many times people buy a home just because people around them are doing so. So, if that is the reason or if you are unclear about why you are buying a house, then news is that it is not time to buy property.
If you are unsure of your intentions of buying a house then you also be unclear about the type of house that you want to move in to and the amount that you want to spend.
Over to you
Buying a home can seem like a monumental task if not done correctly. There will be many instances where you might feel that you are pushing your agent by bombarding them with numerous questions. However, the truth is that if you are dealing with the right agent they should be obliged to provide you with all answers and with utmost transparency.
The seven questions above will help you get a good start with the home buying process and prepare you to jump on the property ladder. Getting a mortgage for your home is a long term commitment; therefore, you should speak to your mortgage broker to understand the financial aspects of the home buying process.
Happy home buying to you.