BUYING AN ESTABLISHED PROPERTY
Common mistakes to avoid. Do your research and complete your own due diligence.
If you are new to property ownership you may not realise that when buying a property you are responsible for doing your due diligence to ensure there aren't any unwelcome surprises once you move in. We share some key mistakes that could prove costly in the longer term:
Not doing your research
The more you look around the more equipped you will be to identify 'the one'. Spend time in the neighbourhoods that you are considering buying into, attend lots of home opens and speak to local real-estate agents. Develop a list of criteria to help you purchase with your head, rather than your heart.
Not performing inspections
The two most common inspections to be performed by an independent third party are a building and pest inspection. Yes, this will cost you a few hundred dollars, but could save you thousands in the long run. It's also important to complete a final inspection of the property prior to settlement to ensure everything is in good working order and any required works have been completed.
Not reviewing strata meeting minutes
If you are purchasing a strata titled property it is important to review the minutes of the past few years meetings. This will let you know how much money the complex has in the bank for unexpected maintenance and if there are any large maintenance activities planned that may require additional levies (e.g. external painting). No one wants to find out an additional $300 per quarter is required for the next 12 months when they only budgeted for levies of $300 a quarter!
Not speaking to a mortgage broker about finance
If you go straight to your bank you are limiting your options. Engaging a mortgage broker early in the process will enable you to understand your borrowing capacity (across a wide variety of lenders) so that you can narrow your search within a budget. Your broker can also assist you obtain pre-approval and will help you select a competitive mortgage product and structure to meet your objectives.
Lack of understanding around purchase costs
It's important to understand purchase costs as a majority of these will need to be paid for upfront. Generally the largest expense is stamp duty but there are also items like settlement fees and lender application fees to take into account. Your mortgage broker can provide a funds position report, to give you an accurate estimation of these fees.
Don't forget the real-estate agent works for the seller and, unless you have engaged your own buyer's agent, it is up to you to perform your own due diligence.