by Carly Susic, Melbourne property advocate
Dreaming of buying a home and ready to take action? Prepare, prepare, prepare! Knowing the process of buying a house is your first step. Understanding your goals, preparing your finances and formulating a purchasing strategy will give you the best chance to succeed in homeownership.
The process of buying a house is complex
There are elements you can do yourself, like planning your wish-list and researching the market. And there’s steps you’ll need to outsource, like building inspections and legal support.
Start with your wish list
You likely already have a good idea of the suburb and type of home you’d like to purchase. But it’s important to get more specific. Creating a detailed list of:
- the suburb/s you want to live in:
- the type of house
- must-have features
- nice-to-have features
- how many bedrooms and living spaces
- work-from-home requirements
- access to amenities
- proximity to family and friends
- the lifestyle of the area
Consider what you need outsourced. In the process of buying a house, you need third-party expertise. These are:
- a conveyancer or solicitor
- a building inspector
- a mortgage broker
- a buyers’ advocate
- banking pre-approval
More on these later; let’s dive into the process of buying a house.
Get your crystal ball ready
Thinking of your future will help solidify your home requirements. If you’re getting older, your mobility may be reduced, so being within walking distance from shops and amenities will help you stay connected with your community. Or if you have young children, they will be at high school in a few short years—is a school accessible?
Research the areas
It’s important, especially in the 2024 fickle property market, to thoroughly research prices. Knowing what price a typical 4-bed home, 3-bed townhouse, 2-bed villa or 1-bed apartment goes for in each suburb will help you formulate realistic pricing expectations. You can access plenty of free data on RealEstate and Domain. Buyers’ advocates will know and understand the pricing of properties and exactly how to evaluate each individual property. We have access to even more data not available to all buyers. So it may be worth engaging an advocate to find more specific information, such as recent property prices for comparable homes in your desired areas.
Check out your desired areas
It’s worth looking on council websites to see if there is any development or changes to planning in the immediate area. In Melbourne, plenty of suburbs like Box Hill, Essendon are earmarked for huge infrastructure projects. These projects may either add or decrease value to your suburb, making it a good buy for you, or they may influence prices, making it no longer affordable for you. On the other hand, if the area you like is pencilled in for a development it can also impact your desired property if it’s located too close to a freeway or a large apartment block. Check planningalerts.org.au to see what local projects are on the cards. Also, call the local council to see if the property you like is in a flood zone or has an overlay that restricts your renovation options.
Just found a home and need to buy quickly?
We often work with clients who have found a house just weeks or days prior to the auction. In this case, they need to quickly understand the process of buying a house. It may be that you’ve extended your search criteria and just discovered the property. Or perhaps the quote range has changed and it is now in your budget. Or you have just started looking and found a great home immediately. Even if you are in a rush, never skip these steps to ensure you make a wise financial decision.
Get your finance pre-approval
Using a mortgage broker or your bank, get your finances in order so you know the bank has confidence in your ability to service the loan. This way, you can bid knowing you have pre-approval for finance. Always, always, always stick to your financial limit — buying a home you can’t afford will give you all sorts of stress in future.
Inspect the property several times
Always go back for a second or third inspection. Often our clients are wowed by the first inspection but on the second visit, they notice things that they overlooked last time. The more often you view a property, the better feel you get for it. Forget the pretty styling and focus on the key features — the layout, the flow, the light and how you will move through the space and live in the home. Go back to your original wish list and see if this home really does tick your boxes before proceeding. Compare it to other properties in the area and determine if the price is right for the market. If you have any doubts, keep in mind that more homes are always coming on to the market. Don’t buy unless it’s absolutely right for you.
Get the section 32 and contract from the agent
This document lists all the relevant information about the property so you can make an informed decision. It will include:
- the vendor’s details
- title document
- mortgages or other charges on the property
- covenants, easements and restrictions on the land
- zoning
- other information pertinent to the sale of the property
Once you have the Section 32, you should have your solicitor or conveyancer review it, to ensure there are no terms or issues you should be concerned about. If the property is about to go to auction, most conveyancers will strive to turn around the review quickly. It’s very important that you don’t skip it, even if time is against you.
If the property has an owners’ corporation
If you are purchasing a villa, unit, apartment or townhouse on a block of two or more, check the body corporate information. Understand the annual fees and levies you will be charged for cleaning, maintenance and property insurance. Get a copy of the previous body corporate meetings and see what items are being discussed. Are there issues in the building? Are there works pending that may be costly or inconvenient — or impact the resale value of the property? Contact the body corporate manager and ask to see prior major works like roof or window replacement or if any of these are expect in the near future. The minutes of the last meeting can be pretty telling of what living in the building is like. The minutes will show complaints about rubbish or noisy parties on weekends. One area that often gets disputes is parking, so inspect the car park to see what access is like. Consider the number of visitor spaces (if any) and how hotly contested car parking is in the area as well as any street signs out the front with restricted parking.
Get a building inspector
Again, if time is of the essence, it is still important to have an expert builder review the property. They are looking for the things you can’t see: plumbing, roof, sub-floor issues, mould or damp, or termites. Many building inspectors have saved our clients from poor purchase decisions by spotting these problems and giving our clients a lucky escape or allowed them to purchase confidently knowing what items may need attending to and being able to factor that into the purchase price .
Discuss the terms of the sale with the agent
The contract of sale will specify the deposit amount of 10% of the total sale amount; this is standard for all sales. You will also need to know the settlement date, which could be anywhere from 30-120 days. Some vendors want longer settlements. In some cases, the deposit and settlement date can be negotiable, so get any agreements in writing. For example, you might get the agent to agree to a 5% deposit and a longer settlement. This must be done prior to bidding at auction and agreed upon by the vendor.
Determine the level of interest
The agent can give you indications of how many serious buyers are in the mix for the property.
You can ask questions like:
- where do you think the interest is, have other buyers given feedback on price?
- How many parties are you expecting to be bidding or making offers?
- Are you going to be taking offers prior to the auction and if so:
- would a short settlement help the vendor?
- what is the chance of a boardroom auction?
- if someone makes an acceptable offer, do others get right of reply?
You can read our guide to boardroom auctions for more tips on this scenario.
Prepare for the auction
Auctions can be emotional and stressful so consider an advocate to bid on your behalf. We will help you prepare for the auction and determine the best strategy. You may like to start strong to intimidate other bidders or you may like to wait till the final moments—many factors will determine what is the best auction strategy. Hopefully you’re ready to win the keys.
After the auction
If you are the successful purchaser, congratulations—head inside and sign the contract of sale. At this point, make sure that any variations to the contract or special conditions agreed upon prior to the auction are inserted into the contract. With the emotional flurry and excitement of purchasing, it can be easy to forget this. Take your time to reread the contract before signing.
If the home gets passed in to you
If you are not successful at auction, the next best outcome is having the home passed in to you. This means you had the final highest bid, which was still below the reserve. This gives you the exclusive benefit of negotiating first with the vendors immediately after the auction. Many homes are sold under these circumstances so you need to be ready with a strategy to handle the post-auction negotiations.
If you have the property passed into you, the agent will invite you in to negotiate. You may be prepared to increase your offer slightly here, if your budget allows, If the reserve is beyond your budget, walk away. After time the vendor may change their mind and reassess the price. Otherwise the property will be kept on the market as a private sale.
If you are the underbidder
When you miss out at the auction and the property is passed on to someone else, it can be very disappointing. But there is always another house to be found. Read our guide to what to do when you are the underbidder at an auction for more tips.
To summarise the process of buying a house
- Prepare your wishlist
- Research your desired areas
- Confirm your finance and pre-approval
- Review the body corporate minutes (if relevant)
- Inspect the property again
- Get the section 32 and contract of sale reviewed
- Get a professional building inspection
- Prepare your auction strategy
Contact us for assistance
As buyer advocates we can help you with the process of buying a home and help you make the best possible investment for your lifestyle, family and financial situation. Contact us for a no-obligation consultation.
