1. Prepare a wish list
Make a list of the attributes you most desire in a property, including your ‘must have’ features, such as location, number of bedrooms or parking.
2. Organise your finance in advance
Loan pre-approval is a big advantage. Approach your lender or have a mortgage broker visit you to find out how much you’ll be able to borrow and what your repayments will be so you know how much you have to spend. Having your finances organised gives you more chance of securing a purchase and is an asset when negotiating with vendors. If you’re bidding at auction, make sure you have adequate funds in your cheque account to pay the deposit.
3. Organise your lawyer or conveyancer
Make life easier by having a conveyancer or lawyer that you can engage as soon as you take out a contract on a property. If you don’t know of one, ask a real estate agent you’re dealing with – they can generally recommend a reliable contact.
4. Additional expenses
While your lender will identify upfront costs such as mortgage insurance and stamp duty, you should also be aware of other expenses which will factor into your ongoing costs. Maintenance costs, land tax, council rates, home insurance and strata fees (if applicable) should all be investigated so that you know just how much to budget for on top of your mortgage repayments.
5. Do your research
Invest the time in inspecting as many properties as possible. This will give you a better understanding of the market, put you in a better position to negotiate, and help you recognise a bargain or an overpriced property. Sources such as The Sydney Morning Herald Home Price Guide also provide useful comparable price information.
6. Sign up to Property Alert services
Most agencies and all of the major property search sites such as domain.com.au and realestate.com.au have ‘property alert’ facilities. Simply enter your details and your property requirements and you’ll be emailed as soon as a property meeting your criteria is listed. This helps give you a jump on the market and saves considerable time. Sign up to Landfield property alerts
7. Register your interest
Register your interest with your local agent - a lot of properties are sold which never make it to the wider market - often the best blocks and best homes are never marketed or advertised, they don't need to be! Your agent should have a network of potential buyers, builders and developers - register your interest with them and when something pops up meeting your criterion they'll pick-up the phone and let you know - remember vendors would rather not have to fork out $$$ for advertising and run Open for Inspections if they don't need to, its a win-win for you and the vendor.
8. Pest and building inspections
For the few hundred dollars these will set you back, they are absolutely worth it for your peace of mind. They will help ensure you don’t end up with unknown problems which could cost you thousands down the track.
9. Pre-settlement inspection
Visit the property on the day of settlement to be sure there are no surprises. Be absolutely positive that the property was left exactly as you had agreed upon in the contract.
10. Determine the Value of the Property yourself
It's important to do your research as we mentioned earlier to get an idea of what a property maybe worth by comparable sales BUT it's really important to determine 'How much is this property worth to you?'. The quoted price is a guide provided by the real estate agent but ultimately the site will be worth X to a builder because he can sub-divide and worth Y to another because they may have family living in the street and their kids go to the local school.
Points to consider when determining the worth of a property:
- Potential for Capital growth
- Potential for Negative Gearing - Tax benefits, or
- Potential for Positive Gearing - Cash flow from rent return
- Potential to add value through renovation
- Potential to Sub-Divide
- Life style factors - nearby schools, friends, family - How much is that worth to you?
And lastly it's always a good idea to ask a real estate agent who has direct experience selling properties in your area and you can book a market appraisal for your property with us at your convenience.
11. When buying land or an old home - Buy to Sub-divide
If you're looking at a block of land or an old home to buy, always consider its sub-division potential - buy to sub-divide. Even if you're not planning on sub-dividing the block now, other buyers may and that significantly changes the value of the site. If you've been beaten at an Auction recently and observed the price fly way above your expectations, it's more than likely because the other buyer has determined they can sub-divide the site, which greatly increasing its worth. A common misconception is that you need to own the block to determine its potential to sub-divide - No you don't! Call the local council in question and ask about overlays and planning schemes, also as a rule of thumb generally sub-divisions can be no smaller than 300m2, so a 600m2 site can be sub-divided in two (this is a rule of thumb only). If in doubt ask the Real Estate agent selling the block about its potential STCA.
12. What does STCA mean?
STCA is a term often attached when describing potential development sites - The term means "Subject to Council Approval". Example: "A Multi-Unit development site (STCA)" or "Site clear and ready for Dual Occupancy (STCA)" - it is an indication by the vendor/real estate agent that the site may have the potential for such use, it is not a certificate of planning or a permit. The term and phrase is intended to make you aware of what we discussed above about 'Buying to Sub-divide', this shouldn't scare you off a potential property but be another factor that you consider when purchasing the property.
If you wish to discuss future plans for developing and seek further advice feel free to contact Francis Van Gulick who has been involved in more than 100 developments in the Manningham area.
