Purchasing A Home
Purchasing a home to occupy is a very personal choice, probably the most expensive investment you will ever make, and it is imperative to meet most (if not all) the needs and requirements of all family members for your current situation and future needs.
As a general rule, visit the property over several days and times to see what the noise levels, traffic, wind, sun and amenity is like. Knock on the neighbours’ door and introduce yourself, ask them how long they have been there, and have a general chat about the neighbourhood, and what they like or dislike about living there. If you do purchase the property they will be your neighbours and you will know them already. Always take plenty of photos as it is difficult to remember specific details. Have a chat to your accountant and bank manager before you start your search as there might be certain advantages or restrictions that you are unaware of.
Here are some of the points that I personally consider when purchasing a home:
- As they say “Location, Location, Location”. This is one of the important aspects for the purchase of your new home. Check whether the property is close to all the amenities that you require (schools, shops, public transport, parks, beaches, medical services).
- Enquire with your local Council and your Solicitor to see if there are any planned infrastructure developments for the area so that you can ascertain the impact it might have (new highways, roads, by-pass, large developments).
- Be mindful whether the property is located on a main road or main thoroughfare. If you are looking to purchase a unit or townhouse, inspect where it is in relation to common areas within the complex. Being closer to the gym or pool may sound great but when it’s being used up to 15 hours a day it may become a problem.
- Being on the top floor, without a lift, when you are young, and fit might be favourable, however it might pose a problem for a family with young children, with shopping bags and strollers, or as one gets older. Additionally, if there is a lift in the building, there can be a greater cost the higher up you go in a block of units and are reflected in your Strata levies.
Check the direction of the sun. This can be an issue with the property being too hot or too cold and can impact on your electricity and gas bills.
Building or Strata Inspection
Some houses over 100 years old are in great structural condition whilst some properties recently build have had to be demolished because they were poorly built. Don’t rely on the fact that a property is new or has been approved by Council. Always get a Building or Strata inspection. This will give you an indication of any issues that may be there.
Rely on your senses (sight, smell and hearing) when you do a preliminary inspection of the property.
- Look around for any damp patches on walls, floors or carpets. Check the outside of the building, check the condition of weepholes and if they covered with dirt, it could be an issue. If the house is on piers have a look underneath.
- Smell for mould or dampness as this always indicates an issue. If there is incense, essential oils burning, or bread baking in the oven this can potentially be an indication that something is being hidden.
- Listen for noises of creaking floor boards, wind, traffic, loud music, airplane flight path.
Whilst none of these issues may preclude you from purchasing a property it’s a good way to be fully informed. Some of these issues are negotiation points.
Layout and design of the property
Whilst most internal improvements require Council approval, always look at the possibilities and multi-functionality of the space for current and future use. For example, can 4-bedroom house become a 3-bedroom house with a Granny flat? Can you put up a small internal wall and create an additional living area? Can you place a well-designed wall unit into a Studio and create an efficient workspace?
Solicitor or Conveyancer?
As mentioned previously, purchasing a property will be one of the most stressful experiences you face. Contracts are often complex and mostly written by Solicitors. Whilst most Contracts have a standard format and conditions there are often Special Conditions, Restrictions and Easements.
My long-term advice is to build up a personal relationship with a solicitor, who you trust and feel comfortable with, to meet your personal and legal requirements. For a small additional fee, your Solicitor will scrutinize the contract and let you know if there are issues of concern and take you through the legal process. You don’t want to be stuck with a property that you want to renovate but has a historical listing, where you can’t paint your fence the colour you want, plant a garden of your choice or install solar panels on your roof.
Questions to ask the selling agent
- Why is the vendor selling? You will be amazed at what agents sometimes disclose.
- How long has the property been on the market? This is usually also easy to check on-line.
- What is the level of interest?
- Have there been any offers? (Sometime the best offer is not the one accepted).
- What is included in the sale? Sometime people are attached to their portable building (garages, gazebos, curtains, taps). Never assume all fixtures and fittings are included in the sale.
Offer personal feedback to the agent regarding problematic issues, for example the property is too dark, or too noisy etc. This generally goes back to the vendor.
Purchasing an Investment Property
Purchasing an investment property is a slightly different proposition and requires some additional factors to keep in mind.
- Look for properties that are close to transport and amenities as it is easier to rent.
- Keep in mind that most building repairs and expenses are a tax deduction.
- When buying an investment property, you need to purchase with your head not your heart. The opposite is true for a home you want to live in.
- Try to find a property that can grow to meet different demands. For example, gauge whether the alcove in a one-bedroom unit can be converted into a study. This will add value to the property.
- It is good practice to have your finances in place before you place an offer on a property, as you can make an offer quicker, you can negotiate more vigorously, and you will be considered to be a more serious investor.
- Another important point is to check that your lending institution will lend on this specific property, in this specific area. At the time of writing this – some banks have ceased lending on properties once they have reached maximum exposure within the complex or area. In general terms, the bank does not want to be overexposed or overinvested in any particular suburb or sector.
- Make sure you always get a strata or building report. These will alert you to issues within the building and help you make an informed decision.
- If you are uncertain about the purchase, walk away even if you have spent time, effort and money on reports and contracts. It is easier and cheaper to walk away than make a purchase that you will regret.
Be aware that purchasing “off the plan” often has associated risks and you don’t always get what you pay for.