Your first property purchase There have been many articles and even books written about buying property and all of them probably give sound advice, but not all of them consider the First Home Buyer and that’s what we want to talk about in this blog. There’s that exciting but at the same time anxious moment when after looking at dozens and dozens of properties a Real Estate Agent finally says “So are you ready to make an offer?”
Before we talk about the offer document let’s take a step back. Let’s look at the property once more and complete a checklist something like this:
There have been many articles and even books written about buying property and all of them probably give sound advice, but not all of them consider the First Home Buyer and that’s what we want to talk about in this blog. There’s that exciting but at the same time anxious moment when after looking at dozens and dozens of properties a Real Estate Agent finally says “So are you ready to make an offer?”
Before we talk about the offer document let’s take a step back. Let’s look at the property once more and complete a checklist something like this:
Location Is it going to suit your needs now and in the future. In other words consider proximity to schools/shops/public transport.
Resale value Generally the market dictates future resale value but many people would scare away from properties on major thoroughfares or where noise might be an issue.
Neighbours This is a tricky one but I recall when we bought our first house we drove past the property at night and again at the weekend just to see what was happening. In our case no problems but its probably worth the time and energy.
If you are still sure this is the home you want we now come to the offer part of the process and you need to be aware this is a binding legal agreement. For the purposes of the exercise lets assume you and the agent have agreed a price but pay attention to the following:
Cash offer Unless you’ve got a few spare million in the bank do not be swayed in to putting a cash offer on the property. Even though you might have your finance pre-approved do not take this as a cast iron guarantee. Always use the subject to finance clause and specify your broker (Select Mortgage Services) or a particular lender. Do not put the words “any lender” in the finance clause. There is a reason for this strategy. If your finance is not approved by the lender (broker) you nominated end of story however if you put “any lender” the vendor can make you go from one lender to the next until you either finally get an approval or you have been declined umpteen times. And don’t forget the more enquiries from lenders on your credit history the less favourable it will look to the next lender.
Conditions You are making an offer subject to some matters being addressed to your satisfaction. For example you may wish to pay for a property inspection at your expense or a white ant certificate. The agent will write these down on your offer. But there are other less obvious conditions you may wish to add. There are no rules about what you can and can’t make a condition so lets include some others. What about the flyscreen on the front door? Or maybe subject to an inspection of the reticulation system. Or the retaining wall being fixed?
The vendor may choose to fix all your conditions or may try and negotiate. In other words he might say what about $1,000 off the purchase price and you buy as is? Its up to you.
Finance Clause We mentioned the finance clause earlier but it is worth adding a comment about the time required to get the final finance approval. Depending on how much deposit you have and how readily you can afford the repayments finance can take anywhere from two weeks to four weeks and sometimes even longer. As a minimum try for four weeks and then call your Select broker as soon as possible.
Settlement Clause Be careful! You have been warned. Try for as long as possible for a settlement date and then work towards an earlier date. There is no penalty for settling early but if you are late the vendor can charge you a daily rate of interest on the purchase price of the property. Ouch!
Of course you can phone a Select broker any time and discuss your possible purchase. We are not licensed to give legal or financial advice but we can walk you through the process of buying and help you get a loan.
Return