Top three tips for first home buyers
We've assisted thousands of first home buyers. Here are the three most important things they need to know about buying a property.
Learn and understand "the game"
Naive first home buyers are vulnerable to making huge mistakes, largely thanks to a lack of knowledge and manipulative real estate agents. Remember that the selling agent acts in the best interests of the property's owner, not in the buyer's best interests. And nothing the agent says is legally binding: only what's included in the contract + vendor statement/section 32 is legally binding. First home buyers should arm themselves with basis real estate terminology, knowledge about how to inspect a property without getting distracted by display furniture, as well as the "buyer beware" principle, the "auction rules" and the process for making an offer. And never let emotions take over in a rush and cloud your judgement - there are plenty of other properties out there. If you buy the wrong one, it could be a financial disaster that negatively impacts your life for years to come.
Sort out your finance pre-approval before making any offer
Pre-approval is the lender's confirmation that they are happy to lend money to you, based on certain conditions. It usually lasts for about three months, but it's not a 'blank cheque' - it's always subject to a valuation of the property you propose to buy, and the fullfilment of any lender conditions (such as providing your most recent payslips, proof of building insurance, or a rental appraisal for the property). When buying a property via private sale / Expressions of Interest, a "subject to finance approval" special condition can be included in the contract - it's usually built in to the contract already, under the heading Loan, near where the settlement date is written in. This then generally gives you 14 or 21 days (14 is the most common time period) to ensure your lender obtains a valuation of the property and completes their assessment of your personal financial circumstances, so they can issue you "unconditional approval" (= the next stage after pre-approval; then loan documents are prepared).
Don't unknowingly buy a property with serious building defects
There are a lot of properties out there with dangerous flammable cladding, building defects, water leaks and damage, mould and also apartment buildings from the 60s/70s/80s/90s now in need of significant, expensive capital works (like new window frames and roofs). Recent media reports suggest a third of all newish (built in the last decade) Victorian apartment buildings have seriously defective balconies and water leak issues. Illegal conversions of garages-to-bedrooms, and illegal backyard decks, which have been built without the proper Council and building permits, are probably “uninsurable". Buying a property with illegal building work and/or building defects can be a huge risk for a purchaser to take. Getting a building + pest inspection done (even though it might seem expensive) is always a wise investment for a purchaser, to rule out any nasty surprises.
Note: the above is general information and should not be considered as legal advice.
Image via Freepik