5 Mistakes First Home Buyers Make & How To Avoid Them
In This Week's How's The Market | Edition 49
5 Mistakes First Home Buyers Make & How To Avoid Them
Investors Are Coming Back
Melbourne Population Overtakes Sydney
5 Mistakes First Home Buyers Make & How To Avoid Them
1. Wanting More Than You Can Afford
When you first start looking at properties, it can be tempting to look at properties that may fall above your budget. This can be further complicated by the fact that properties will generally be underquoted and some agents will make you feel like you have a chance so you attend an auction and can be emotionally drawn into a property. This is never a good scenario as it gives you false hope for properties that are outside of your price point.
The best way to figure out what properties in your price point look like
is to look through the sold section in realestate.com & domain.
2. Not Doing Enough Research
Whilst this may seem like an ambiguous statement, it has to be, as there are so many areas of research that need to be carried out. On a macro level, these may be which suburb you want to live in, have you actually lived there before? Do you know what traffic is like at peak hour? Are there great amenities?
On a micro level, this may be checking for easements, planning overlays, getting contracts reviewed, organising building and pest inspections and understanding how to negotiate these clauses into a contract.
We also often find first-home buyers surprised regarding the cost of owning a property so make sure you check what council & water rates are plus insurance and the owner's corporation fees.
Overall, take your time and make sure you are comfortable with the area, property, street contract and costs before making an offer.
3. Not Getting Pre-Approved For Your Max Budget
Firstly, you want to make sure that you are getting a pre-approval before researching and making offers on a property. Real estate agents will take you more seriously and you can also have a better understanding of what you can afford.
A common mistake we see is from people who don't want to take the largest loan out that they can afford and so in turn get a pre-approval for less than their maximum borrowing capacity.
Please keep in mind, we are not suggesting to always spend to the max of your pre-approval, however, you want the option to have more money available than less because if you change your mind it's much harder to get your pre-approval increased than it is to spend less than your max.
4. Listening To The Media
The media's job is to sell advertising and because of this, they need to use clickbait titles and hyperbolic stories to suck people in. The property sector is an extremely loved sector in Australia and because of this, it's always in the news.
Our advice is, to take media headlines and articles with a grain of salt and get all of your property research from those who work in the industry day in and day out. Real estate agents will be experts on their local area, buyers agents may be experts on a more significant portion of a state and research firms like SQM and CoreLogic often provide insightful free reports.
5. Forget Who The Agent Is Working For
Some agents are lovely people and those that are really good at their jobs, may make it seem like they are on your side. This is not the case. You should always remember that an agent has a legal responsibility to represent their client by getting the highest price possible for them on their property.
Whilst most agents are great, some can also be unethical and lie in order to try to push you to your max. If you are not experienced in dealing with agents, our recommendation is to keep some of your cards to your chest and never tell them what your maximum number is.
What The Agents Are Saying
Investors are coming back.
The agents I have been speaking to within the affordability/first-home buyer markets under $800k have been saying they are noticing more investors coming back into the market.
The agents closer to the city have said they are seeing the most competitive buying still in the downsizer and professional couple space. The properties that are doing the best in this market are luxury units & townhouses on smaller blocks with minimal upkeep.
The Wow Factor!
184-186 Stanley Street, West Melbourne
‘West Melbourne: Four-storey house has Harry Potter-style secret bookcase door to hidden room’
This is a great Wow Factor that acts as a talking point of the home buyers won’t forget!
Price Guide: $1.6m - $1.7m
In The Media
Melbourne overtakes Sydney as Australia’s most populous city
This one isn’t property related this week. But what do you think this could mean for Melbourne and Sydney real estate prices?
We know there is a correlation between population growth and house price growth. Perhaps I will deep dive on this next week!
Final Thoughts
The market has taken a turn.
This Saturday we saw the highest auction clearance rates since Oct 2021 with much less stock on the market compared to this time last year.
Demand is clearly still rising on the ground with large numbers of groups through open homes and many properties selling well above reserve price.
Thanks for reading this far!
We value feedback and if you have any suggestions on what you would like covered in the future please email me at tristan@tomii.com.au
Happy Buying!
Note: This is my opinion, please seek your own expert advice when making decisions.
