HOW TO BUY A HOME

Keen to get started but not sure how it works? Our step-by-step guide will show you the way

We walk you through the nitty-gritty details of each step on the way to property ownership

Home is where the heart is, so it’s really not surprising that househunting can be fraught with emotion. And if you’ll allow us to borrow a few words from Shakespeare, as much as “the course of true love never did run smooth”, the path to your dream home can be paved with twists, turns, dead ends and annoying mini roundabouts, metaphorically speaking. Well worry no more, because as veterans of that bumpy journey, we’re here to help with the expert assistance of Veronica Morgan, founder of Sydney-based property buyers Good Deeds (gooddeeds.com.au) and co-host of Location Location Location Australia. Just don’t forget to invite us to your housewarming.

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Before doing anything else, see a mortgage broker to find out how much money you have access to. “That will frame everything,” says Veronica. “It’s just day-dreaming otherwise, not to mention time wasted looking at houses that may not be in your budget.” Submit your paperwork for loan pre-approval as soon as possible.

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Next up, make a list of what you want and where. “If you’re in a couple, do this separately,” says Veronica. “Write down your absolute must-haves, your would-likes, location, type of property – everything. You’ll find there’s stuffff that’s high on one person’s list and not on the other’s. This is going to be one giant exercise in compromise.”

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Start hitting open houses in the area you like, but remember this: you’re not there to buy. This is purely research. “Keep a record of sale prices versus agent price guides. Over time, you’ll work out what properties are worth and what your money can buy. Sydney median house prices rose by over 10 per cent for the past four years running – and in some areas it would be way in excess of that. Month-on-month, you’re getting priced out of the market so you need to educate yourself quickly so you can act fast,” says Veronica. Meanwhile, if you’re buying interstate, “local knowledge is key”, so clue yourself up on difffferences in process by checking the Real Estate Institute (REI) or fair-trading sites for each state:

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Based on your research, can you afffford what you were hoping for? “If not, start looking at the next ring of suburbs or relaxing your criteria,” says Veronica. At which point, you’re ready to start shopping for real.

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You’ve found place you like! Ask the selling agent for copy of the contract to let them know you’re interested. “That way, they’re less likely to sell it to someone else without you knowing about it,” says Veronica. Then take the contract to a solicitor or conveyancer. “They’ll check there are no unfair clauses, and that you’ll be buying what you think you’re buying. If any amendments are required, they’ll recommend them.” The most common types of property titles are: Torrens title: You’ll own the house and the land it’s on. This is the standard house contract. Strata title: You’ll own your unit, but common property – often including doors and windows – is shared. Many changes to the property need to be approved by the body corporate or strata. Company title: You’ll own a ‘share’ in a company that owns the title. This is an older system for apartment buildings, and is becoming less common in favour of strata titles. At this point, your journey will take one of three avenues, depending on how the property is being sold.

Now’s the time to perform your due diligence. If it’s a strata title, order a strata report – the selling agent may have one available for purchase or your solicitor can order one. “Ensure there’s a robust sinking fund, and that there are no major building issues, pending legal actions, or levies forecast for big upgrades or repairs,” says Veronica. For a non-strata title, ask your solicitor to order a building and pest inspection, or organise one yourself. “Although this isn’t required for strata titles, it’s a good idea if the building looks poorly maintained.” Your mortgage broker will let you know whether a valuation is needed for loan approval. If so, the bank or lender will organise this. Also consider how much you’re prepared to fork out. “Thanks to your research and price-tracking, you should have an idea of what the property is worth,” says Veronica. “But if it’s a great property that really suits you, you might be willing to go over what you think market value is. Set that limit before entering into negotiation, otherwise you risk paying too much or stopping too soon and losing out.” Once you know your top figure, arrange your deposit – usually 10 per cent of the property value, 20 per cent if you want to avoid paying lenders mortgage insurance. When you make an offer, this will be taken by the selling agent and held in trust. If your offer isn’t accepted, you’ll get it back. If it is, the deposit is passed on to the vendor at settlement.