Buying property in the Australian market, one of the world's most expensive markets, could be quite a recking nerve ordeal, especially if you are doing it for the first time. Here's our take on some of the essential steps involved in making an offer.
#1 Decide on the offer price
This is easier when market movements are more balanced as compared with the current circumstance. With rapidly rising prices, determining the current market price could become challenging, especially if you may need to attend several auctions before making a winning bid as a buyer. Professional evaluation of every prospective purchase may become pretty expensive. A more economical approach to finding the right offer price is to look at historical and recent sales data of similar properties. You could also rely on professional evaluation websites. Most of these websites provide an approximate price estimate for free. Consider opting for a paid yet affordable membership for a few weeks or months to support your research during your property purchase journey. Alternatively, you could also request your mortgage broker for guidance on the correct price estimate. Most mortgage brokers have access to paid and reliable real estate data that could help arrive at an accurate price estimate. Also, remember that it's best not to lowball your offer. Try to go a little above the price estimate. Making a lowball offer will adversely impact your negotiation chances. For more information on evaluating property in a hot market, click HERE.
#2 Be thorough with property checks and inspections
Avoid compromising on property due diligence to hasten your purchase. Opt for professional inspection that encompasses the following
- Pest infestation
- Structural Soundness
- Council approvals
A detailed report by a licensed professional offering all this information is called a 'Building Report'. Another hack to securing a building report more affordably is to look up a property inspection website that may have already conducted an inspection of the property you are looking to buy. Your mortgage broker can guide you on this front.
#3 Get your finances ready
Acting fast is imperative in securing the right deal. Be organised with your finances. Preferably have a pre-approval in place so that you know what you can afford comfortably. To access a quick guide on 'Pre-approvals', click HERE. Before paying a 10% or 20% deposit, you may also be required to pay a small holding fee to the real estate agent. This figure is usually $1000 but may vary.
#4 Get the property contract professionally evaluated
In addition to a thorough property inspection, make sure that you get the contract evaluated professional as well by a reliable conveyancer. Most conveyances charge between $1000 to $1500 per contract. However, you may be able to negotiate the first few contracts for free if you are attending a few auctions. Once again, your mortgage broker can connect you to the right conveyancing professional.
#5 Decide between a conditional and unconditional sales contract
A 'conditional offer' a binding contract for a purchase that is subject to certain conditions. This could include structural soundness, council approval etc. An 'unconditional' offer, on the other hand, has no conditions associated with it. If you are confident of the property and have conducted thorough contract evaluations and property inspections, then consider an 'unconditional contract' to boost your attractiveness as a buyer.
#6 Remember an offer is not equivalent to signing a sales contract
Despite making an offer, there are several stages during which you may choose to not proceed with the purchase. The seller may reject or counter your offer. To negotiate well, be prepared with adequate research to support the rationale behind your offer price.
#7 Act fast but rationally
Acting fast is imperative, but it does not imply a trade-off between purchase speed and due diligence. Don't skip professional contract evaluation and inspection. To act fast, you could begin working on several aspects parallelly like getting a pre-approval, researching the property price, searching for online property inspection reports etc.
Buying property does involve several steps, but you can make your property buying journey hassle-free with professional guidance. Mortgage brokers are usually paid a commission by the lender when they settle a loan. Their services are, therefore, generally free for borrowers. In addition to guiding you through your purchase journey, your broker will scope the market for the right home loan fit and handle all the loan paperwork.
Reach us for the best way forward as per your circumstances.
The information is a compilation from various sources for your benefit and should not be relied upon in lieu of appropriate professional advice.