Have your support team ready
Buying a home is expensive, it will typically cost you at least $500 – 600 in reports before you get to an auction and be in a position to bid. Some home buyers will try to save a few hundred dollars by skipping building and pest reports, or checking contract with solicitors and can literally risk thousands of dollars. Don’t let this happen to you.
If you have found the right home and it’s being sold at auction you need to consult a lawyer (or solicitor) before you sign anything. At the end of the day, the home will cost hundreds of thousands of dollars, and a lawyer could cost a few hundred but will provide you priceless independent advice to double check the contract and make sure there aren’t any odd terms and conditions in there.
The same goes for your mortgage broker. You want to make sure you have a reliable pre-approval in place that fits with the maximum amount you will bid at auction. It’s also important that you have the right type of home loan that fits in with your goals both today and tomorrow.
When you meet with your mortgage broker make sure you discuss the specific property that is going to auction; some banks have issues when properties have non-standard features like when the floor area is under 50 square metres, and others have restrictions on certain suburbs and postcodes. If you have discussed the property with the broker before the auction, and even ordered a valuation, you can be sure you are sitting in a strong financial position come auction day!
As a broad rule of thumb, make sure you double check with your mortgage broker before buying any property that fits in these criteria:
- ☑️Smaller than 50 square metres inside
- ☑️Land size over 2 hectares
- ☑️Doesn’t have standard title and zoning
- ☑️Not in a major town or city
- ☑️Includes incentives like furniture packages, or rental guarantees
- ☑️Is run down, or in disrepair and needs lots of work to fix up
Buyers’ agents are real estate agents that represent you as a buyer, and they are becoming increasingly common these days. Buyers’ agents can help with sourcing, researching and even bidding on your behalf at auction. If you are nervous about bidding, living interstate or need some help with detailed analysis on the property, a buyer’s agent could be a good option to consider. They generally charge a fixed percentage fee on the purchase price, and this can range from $2000 to $10,000, depending on the property’s value.
And finally, building and pest reports to look at the building (structural soundness) and pests are what I would consider a mandatory cost when buying a home.
Should I Use the Building and Pest Report Supplied by the Real Estate Agent?
While these building and pest reports are generally completed by third parties, it was completed under the instruction of the real estate agent who is employed by the seller to sell the property. The real estate agent isn’t there to work for you, so it’s important to be wary of this fact.
You want to maintain your independence and get your own building and pest inspector to do your report. While it might cost you an extra $500 – 600 it could save you tens of thousands over the long term.
If you need help with a lawyer, building and pest inspector, or buyer’s agent get in touch and we would be happy to recommend someone.
Home Buying Team Checklist:
- ☑️Have you found a mortgage broker, and have they provided you with an RP Data valuation and home loan pre-approval?
- ☑️Have you found a lawyer, and have they checked your contract of sale?
- ☑️Have you found a building and pest inspector, and have they completed and walked you through their report?
- ☑️Do you need the help of a buyer’s agent, and will they help bid on your behalf at the auction?