04 Oct Buy Right – Property Purchasing
The basic principle of buying low and selling high is a solid one, however, in these economic times it is harder than ever to secure that elusive low price unless you are in the right place at the right time. There are just not that many good properties on the market at the moment, with most people opting to wait for better times rather than drop the sell price of their beloved home.
While it is true there is a right time to buy and a right time to sell, I am personally less hung up about purchasing at the lowest possible price*. My priority has always been to secure the right property. Everyone has heard stories of ‘the one that got away’ purely based on the purchaser’s dogged determination to pay a rock-bottom price and not a cent more. So while there are numerous things to consider when purchasing the right property (location, family composition, basic needs, flow of liveable areas etc), here are my five top tips that have bode well for me in my 20 years of buying and selling property.
Tip 1: Think Finance First When Property Investing and Work Out What You Can Afford
These days you really need to have a minimum 20% deposit. If the property is your family home (i.e. not for investment) the larger the deposit the better, particularly since the interest repayments will not be tax deductible. Talk to as many financial institutions as possible and do your research on rates and contract terms. Have your finance pre-approved so you are in a better position to negotiate and move quickly on the property you desire.
Tip 2: Secure The Services Of Experts And Use When Negotiating Property Price
Find a reputable builder and pest inspection expert and commission property reports from both. Ask friends for referrals of who they have used in the past or search the Yellow Pages / Web and hire one with good references. Have your contractor estimate the cost of any potential structural issues. Sometimes you can use these cost estimates as a point of negotiation. Of course it is not reasonable to expect the vendor to drop the price just because you feel the bathroom is outdated and in need of an upgrade. However, if for example, there is a water mark on the ceiling and a building inspection finds there is a leak in the roof, it is reasonable to have estimates drawn up outlining the cost to fix the roof and repair the ceiling and to deduct this cost from any offer to the vendor. Same with a squeaky wooden floor, which could be the beginning of a greater sub-floor issue.
Tip 3: Do Your Research On Property Prices In The Area
Calculate what homes in the area actually cost and in particular, the property you are interested in. Don’t just use previous sales in the area as a guide. Crude sums like checking out the value of the land and what it would cost to build the type of house that sits on it, will give you a rough idea of where to start. Hire a property valuer if you cannot conduct this analysis with any reasonable degree of accuracy for yourself. Remember, your lending institution will always want to conduct an appraisal of the property for themselves. This is to ensure if the debt goes bad they will recoup their money, so it’s doubly important that your estimates are accurate, particularly if you are close to your lending limit.
Tip 4: Stalk And Get to Know The Neighbourhood When Investing
Frequently visit the property at various times of the day and night. What are the noise levels like? What is street parking like? Who else uses the street? Who are the neighbours? What is the drainage like when it rains? Is there a school close by? Is the street a peak hour thoroughfare? There can be a vast difference from one end of the street to the other.
Tip 5: Look Beyond the Mess And See The Property Potential
When inspecting properties, don’t be put off by poor presentation. Look beyond the clutter and mould in the bathroom. Instead, look at the possibilities. Properties that present well always attract a premium as the price will be driven up by competing interest. Conversely, houses that present poorly have fewer people interested and can sometimes be the best ones to buy, in terms of value. Presentation is always irrelevant if you are looking to renovate anyway.
Abide by these five basic principles and the rest will generally take care of themselves. These fundamentals have not let me down in my years of buying and selling property. I’ve lost count of just how many people have warned me against ‘paying too much’ only to say a few short years later “wow, that was such a good buy!”
Important note: *The premise of paying that little extra in order to secure the right property only rings true if you view property as a long term proposition (i.e. eight years or more) and are not seeking to flip the property for profit in under five years.
About Linda Delaney and North Shore Interiors
Linda Delaney is the owner and manager of North Shore Interiors, a company that provides interior design, decorating, styling and project management services to Sydney’s lower north shore and greater Sydney metropolitan area.
Linda has been seen in Habitus, Inside Out, Grand Designs Australia and Money magazines. She is also a regular contributor for leading Australian interior design publications, Home Design and the annual Design & Decoration. Watch out for more of Linda’s work featured in the media.
Contact Linda at Linda@nsinteriors.com.au or on 0432 716 558.