Questions to ask when buying property?

Here at Good Deeds HQ we regularly get asked the same questions about buying and selling a property. Have you had one of these questions on your mind? What questions to ask when buying property?

When it comes to investment, where are the best areas for capital growth?

We like to play it safe with property investment and get very concerned about the risk people are prepared to take in their quest for making money. We continually encourage people to buy in safer areas with more guaranteed growth potential, such as within a 10km radius of Sydney’s CBD. This, of course, depends on your budget.

If you have a limited budget and cannot afford to buy in these areas, there are other investment options. Saved between $150K or $200K?  This is a lot of money if you are buying shares but not much if you are buying real estate. I’d recommend talking to a financial planner about all the options available to you before deciding on a property.

If it comes down to a choice of a house in the outer suburbs or an apartment close to the city, we are true believers of established apartments close to the city. In Sydney, the further you are from the CBD,  the longer time periods between market peaks and troughs. But you must be very careful not to buy close to an area that has an oversupply of new stock.

If you are looking at buying an investment as a potential tree change, the first thing is to ask yourself what you want to gain from the investment. If it is a lifestyle choice and something you want to live in one day, then you may take a very long-term view and realise that you are paying for a beautiful location. But if you’re after capital growth, be very careful of buying too far away from a major city. If you want rental yield have a look into what rents are achievable and ask local property managers what features are required in a property to get top rents. 

Should I upgrade in a flat market?

Absolutely! Especially if you will be selling a quality property in an area close to Sydney’s CBD.  There will always be buyer interest, even in a slow market. 

The only way you will know it is the bottom of the market is when prices start to move and by then it will be too late. In a hot market, the people who do best are the downsizers.

Should I keep my current home and make a modest upgrade or sell up and make a big move?

Many of our clients are plagued by this question before they come to see us. So much of the answer depends on your needs now (kids, dogs, schools, jobs etc) and your budget now versus if you sold first. Often the compromises you would be making are too great compared to the sort of property you could afford by putting all your eggs in one basket. You also need to consider whether the improvements you could make to you own home would suit your needs or whether you would be overcapitalising.

Remember, get expert advice from your accountant before making a final decision as there are also tax implications.  Know questions to ask when buying property.

What improvements should I make to my property before selling?

The best person to give advice on this would be your trusted local agent.   They know what buyers are looking for in properties in the area better than anyone.  Getting an appraisal of  your property will give you a good idea as to what needs to happen to get the best price possible.  In many areas, I would recommend using a stylist and a good agent will be able to advise on whether this is necessary.  Most real estate agents have stylists that they use regularly and recommend. 

Depending on where you are, it can be normal for property to sit on the market for some time until the “right” buyer comes along.  You don’t want to throw good money after bad,  so it’s a good idea to be cautious before spending your hard earned cash on property improvements to help the sale.

How do you find that trusted agent? Talk to your friends in your local area, get recommendations and get to know the agent that sells a lot in your area.

Should I make a pre-auction offer?

Many buyers are keen to make a pre-auction offer purely because they fear auctions. But in the end, they run the risk of paying too much. We strongly recommend getting a buyers’ agent to advise you. But in the absence of that, do your price research and understand what you believe the property is worth before making an offer – forget what the agent is quoting because it will ultimately sell for what it is worth.

If the agent is quoting a lot less than you think the property is worth, they will probably get quite a bit of buyer interest and a strong pre-auction offer (in the realm of what you think it is worth) could snap it up and help you avoid the competition of an auction.  Don’t leave this too late in the campaign as chances are that other buyers will be ready to act and you could start a process that ends in an “auction” on the end of a telephone. This needs to be avoided as much as possible as you can’t “eyeball” your competition as you can at an auction.

On the flip side, if an agent is quoting more than you think it is worth, chances are that other buyers feel the same way and nobody is prepared to bid at auction. If you are the only buyer to register, you would be in the box seat! A pre-auction offer in this circumstance would be a waste!

Most importantly is that your budget is always set before you find a property and each property has to have an individual limit set according to what it is worth. It is good to have questions to ask when buying property.

Why bother selling with an agent?

DIY sale is fraught with problems, no questions around that one.   We know real estate agents often get a bad rap but there are loads of very professional ones who really add value to the sale process. Selling your own home is a very emotional process and it’s important that you maintain a professional manner throughout the whole negotiation process.  If you mishandle a potential buyer, it might be a while before the next one comes along. Trying to save money by doing it this way could very well send the wrong signals to a potential buyer.  As well, most buyers prefer to deal with an agent instead of the owner.

I know it can be tough if you are trying to sell in a slow market but get yourself a great agent you trust and stick with them.

If the agent is not working hard to secure a buyer, move on and get a new one fast.  The same principal applies if you have a property manager that isn’t getting you a tenant. When you engage a professional agent you need to take their advice. Remember, they are the experts.  As well there’s always something to be done if there are no offers or rental applications.  You need to take a serious look at the whole process as it could be a pricing issue or maintenance and presentation issues too.

If you don’t trust the agent you’re using,  you will never take their advice.  Do your research and look for the most active one in the area and already know what questions to ask when buying property!

Further reading:

Capital growth or yield? Which will make you rich?

When Is The Best Time To Buy A Property And Stop Looking?

Published: June 16, 2016

DISCLAIMER: Good Deeds buyers tips are intended to be of a general nature. Please contact us for advice that is specific to your individual circumstances. You may also need to get advice from other professionals such as an accountant, mortgage broker, financial planner or solicitor.

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