When buying a property, preparation is everything. Not being prepared can mean that you don’t have your finance approved in time to buy your dream home. Or it can mean that you have not done enough research to know what price you should pay. Or it could mean that it takes you too long to recognize a good property. Any delays caused by not being ready to act quickly can result in you not being in a competitive position. And everything that makes you uncompetitive as a buyer has the potential to cost you money – or it could mean that you simply miss out on the right property.
Conversely, if there are obstacles that slow you down, you run the risk of not being able to act before you run into competition. And if you have to compete, you either spend more money or you miss out.
Here are some of the hurdles that can cost you money:
Waiting for a bank valuation. Find out in advance exactly what your borrowing position is and what price you can go up to before you have less than 20% equity – then get your broker to advise you on the risks of proceeding without a valuation.
Getting a low bank valuation that means you have to shop around for a new finance deal. We suggest advising your broker of recent sales that you think may think compare well with the property you want to buy. A commercially minded broker will be proactive about ensuring the valuation is realistic – he/she will pass this information onto the property valuer.
Having a bank that won’t give you unconditional approval without having an offer accepted. If you get your offer accepted before you are able to complete the deal you run the risk of the agent using your offer to leverage other buyers. Once again – get an experienced and savvy broker or bank manager who can advise you on the best way to be ready to buy.
A bank that will accept the auction price instead of a valuation yet won’t give you unconditional approval to buy prior. This could result in you missing our completely if the property ends up selling prior to the auction. Or it could force you to compete at auction instead of grabbing an opportunity to buy for a lesser price before auction – this actually happened to somebody we know and it cost them $50K.
Needing to wait for a deposit bond instead of writing a cheque. We always advise clients to ask their broker for other deposit options instead of deposit bonds. They can take days to get, as opposed to writing a cheque, which takes seconds. Some vendors don’t even want to accept deposit bonds.
Not having your deposit money ready in a bank account that you can access. If the money can be transferred within 24 hours you will find the agent will hold off on depositing your cheque – but if it is locked in a term deposit you could have some difficulties.
A lawyer that can’t be contacted. We always advise that clients use property specialists, not generalists, who can often be in court instead of being available to advise on the contract at short notice.
Waiting for a building inspector to inspect the property. Decide in advance who you will use when the time comes and have two back-ups that you can call so that you can get the property inspected ASAP if the first one is booked out.
Waiting for a strata report. Sometimes the agent has one that you can buy immediately. We usually take this option if it available. Failing that, don’t wait for your solicitor to order one, this just increases the lead time. Find out the name of a strata search company and book the inspection as soon as you decide you want to go for the property.
We are all about options – if you are able to have all your due diligence completed within a short period of time (ideally a couple of days) and be ready to proceed with either an offer or at auction, you will have the flexibility to act quickly to take advantage of opportunities that may present themselves. Alternatively, you can then sit on your hands if it is more prudent to take your time – as you will be poised, ready to act when the time is right
Please note: 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.