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- 1. Don’t focus on the “median price”
- 2. Looking at sold prices is more useful than looking at ‘for sale’ prices
- 3. Don’t judge a book by its cover
- 4. Inspect more than once before you make an offer
- 5. There’s always another property around the corner
- 6. Remember that interest rates move both up and down
- 7. Don’t forget that the costs don’t end when you’ve bought
- 8. The property market moves in cycles
- 9. The homebuyers’ secret weapon – having a buyer’s agent on your side
Buying your first home is a significant milestone that requires careful planning and preparation.
For most people, it’s the biggest financial decision they’ll ever make.
With so much at stake, it’s essential to have a good understanding of the property market and the home-buying process.
Here are 9 things every first home buyer needs to know before taking the plunge:
1. Don’t focus on the “median price”
With the myriad property statistics available these days, one that sometimes is given too much attention is the median price of a city or even a suburb.
Yet with all the reports about medium price changes, many home buyers believe that the median price is the average price of all properties sold in the area.
The median price is not an ‘average,’ and isn’t necessarily even indicative of prices in an area.
However, the median price is the middle price of the set of sales figures available.
This means that an equal number sold below that price as did above, suggesting that cheaper properties have also sold.
It’s crucial to understand that changes in the median price can suggest changes in value, but it is often a change in the composition of sales.
For example, if an expensive new prestige development is launched, the sales prices are likely to increase.
This doesn’t mean that nearby older units have gone up in value.
Therefore, first-home buyers should consider multiple factors while analysing what’s happening in the local housing market.
2. Looking at sold prices is more useful than looking at ‘for sale’ prices
While browsing for properties, it’s important to look at sold prices instead of just for sale prices.
Sold prices are more effective since they indicate what properties have actually sold for, particularly when the sale is recent and of a similar property (with similar attributes and in a comparable location).
What property is listed as is not necessarily what the vendor will end up achieving?
Some properties go for more or less than their listed price.
Therefore, buyers should conduct thorough research and consider sold prices along with listing prices.
3. Don’t judge a book by its cover
It’s essential to look past your initial impressions when considering a property.
The house’s appearance, such as an outdated kitchen or a weird colour scheme, might turn you off from purchasing it.
However, the discount you might achieve on the property due to its presentation can easily outweigh the cost to rectify the bad style choices.
If the problem is fixable and cheap so, then you may be able to get the home of your dreams for a discount.
Therefore, it’s worth considering the potential of a property and factoring in renovation costs.
4. Inspect more than once before you make an offer
First impressions can be deceiving.
Therefore, it’s essential to inspect a property multiple times before making an offer.
Visiting the property at different times can help you understand the neighbourhood better.
Buyers should check the property in the evening and during peak hours to assess the noise levels and traffic.
Inspecting the property thoroughly can help you make an informed decision while purchasing.
And don’t forget to make any offer subject to a “building and pest inspection” to ensure there are no hidden surprises.
5. There’s always another property around the corner
It’s natural to become emotionally attached to a property and stretch your finances to acquire it.
However, it’s important to remember that there will be other opportunities to buy a home.
Stretching yourself financially beyond your limit could cause financial strain in the future.
Therefore, buyers must prioritize purchasing with their own financial ability in mind.
At the same time, if your gut feeling tells you that the property isn’t right, don’t ignore your instincts.
You need to be comfortable with the purchase they make in the long run.
6. Remember that interest rates move both up and down
If you’ve been in the market for some time you’d know that interest rates have moved up from historic lows to what some people consider reasonably high levels.
However, rates are around the average level; one would expect to have paid over the last decade or two.
So it’s important to understand the impact of a change in rate on your loan, particularly if you’re opting for a variable rate, and know what you can afford.
It’s also important to have a contingency plan in place to cover you in the event of job loss or other financial setbacks.
This may include taking out insurance or building a financial buffer into your loan-to-value ratio.
By being prepared for the unexpected, you’ll be able to weather any financial storms that come your way.
7. Don’t forget that the costs don’t end when you’ve bought
Buying a property is a significant financial commitment, and it’s important to remember that the costs don’t end once the sale is complete.
There are a range of ongoing expenses associated with owning a property, including council rates, strata levies (if applicable), insurance, and maintenance costs.
Before buying a property, it’s important to factor in all of these costs and ensure that you can afford them on top of your mortgage repayments.
If you’re upgrading from a rental property, your bills will likely be higher, and you may need to purchase additional furniture or make other changes to the property.
It’s essential to budget carefully and ensure that you can meet all of these expenses without stretching yourself too thin.
8. The property market moves in cycles
Don’t believe anyone who tells you property prices always go up.
While property can be a sound investment over the long term, there are no guarantees, and it’s important to be prepared for the possibility of price drops.
This means being realistic about the potential for future growth in the area you’re looking to buy in and ensuring that you’re comfortable with the long-term prospects of the property.
In conclusion, buying your first home can be an exciting and daunting experience.
By keeping these 11 things in mind, you’ll be better prepared to navigate the property market and make an informed decision about your purchase.
Remember to do your due diligence, budget carefully, and be prepared for the unexpected.
9. The homebuyers’ secret weapon – having a buyer’s agent on your side
Many home buyers feel like the property buying process is stacked in favour of the sellers because that’s who the agents work for.
And that’s why more and more homebuyers are turning to buyer’s agents for help.
Read more: Are buyer’s agents worth it?