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So you’ve found the perfect place: find out from an expert what happens next

So, you’ve found the perfect place to make your first home. This will probably be one of the most intense times in your life – intense and exhilarating! It’s that time between falling in love and committing to buy, either at auction or private treaty, where time compresses and so, so much happens. It can feel overwhelming, a whirlwind of emotions and required brain power. Before you take this step, we thought we’d share some things to think about. We asked established real estate agent Kelly Santos to give us a zoomed-in picture of this part of the process, to help you make the right moves when you get there.

Hi Kelly, thanks for taking the time. Before we talk about what will happen after you’ve found a home you want to make your own, what are some general things to consider about this time?

Buying your first home can be overwhelming, and there’s a lot of emotion involved. So it’s key to do extensive property research and your due diligence. You really want to assess whether the property is right for you. I always say to buyers that you’re never going to get a 10-out-of-10 property, but if it ticks 8 of those 10 boxes, go for it. It’s also easy to fly through inspections and get really excited but not actually look at things critically. So take a checklist with you.

And it’s true that a lot of first home buyers can often be wary of real estate agents, but it’s really important to build a relationship with them so you can ask the right questions. So much of the home-buying process benefits from communication with your agent.

What’s the first thing a first home buyer should do when they’ve found the place they want to buy?

If you’ve found a nice place that’s ticking all the boxes from your checklist, the next thing you want to do is get a strata report, or your pest and building report, and review it.

A strata report is for apartments or townhouses. It will tell you the financials of the block and give you an outline of how the building is maintained – what’s been done so far, what’s coming up, and how much is sitting in the sinking fund or the capital works fund. That fund holds the money that is used when the building needs maintenance, repair or improvements.

With a freestanding home, you might need building and pest reports. These evaluate if the building itself is structurally sound and if there is anything else that’s needed, and the pest reports outline if there has been any termite damage or other pest problems.

If those reports check out, and you’re going to put in an offer or go to bid at auction, then it’s time to get your contract of sale reviewed by a conveyancer or solicitor. And when a property is not being sold at auction, it may be possible to offer a contract subject to satisfactory building and pest inspections.

What advice do you have for a first home buyer who’s trying to get their head around the contract of sale? Any tips or watchouts?

Don’t try and do it yourself! It really needs to be reviewed by a conveyancer or solicitor. Sure, you can look for key things – say, if you’re buying an apartment, you can see the strata plan and it can tell you the size of the apartment, what comes on title, and so on. But ultimately, with clauses and the legal details, a solicitor or conveyancer is worth every single dollar. Leave this to the experts.

How should a buyer prepare themselves for different types of bids or offers? What are the things to know?

First home buyers often have ‘conditional’ home loan approval, and that can mean your offer will be subject to finance. In this case, this means you shouldn’t be buying at an auction. If you want to, you really want to double check with your lender that you’re in a position to do so.

So, in a way, a private treaty tends to be a nicer way for first home buyers to buy, but making an offer kicks off the negotiation. This is where it becomes really important to be having conversations with the real estate agent. You want to say things like, “Great, we love the property. What’s the price feedback been on the property?” And: “What would take it off the market today? We’re keen.”

This step will take you further down the road to snagging that property before someone else. Keep in mind that, depending on the market and what state you’re buying in, there are different ways to negotiate at private treaty, like expressions of interest or, in some cases, a best-and-final offer scenario where an agent can say, “We have a few parties interested in the property. To condense the negotiation process, by 5pm today put your best-and-final offer forward in a closed envelope.”

Sticking with private treaties for a moment, what happens after you’ve made an offer? It’s not over yet, right?

Be prepared for the negotiation. I always say to a first home buyer: “Leave yourself a bit of wiggle room. You want to be able to have a bit of rope to play with.” It’s very rare that the first offer that you put forward is going to be accepted.

And once you make that offer, be ready for things to move quickly. You want to make sure that you’ve given your solicitor or conveyancer notice with something like: “Hey, I’m about to put in an offer on a property. My intention is to buy it. Can you review the contract?”

It’s all about making sure that all your ducks are in a row. You can get so caught up in the negotiation process that it’s important to step back and make sure you’re factoring in things like conveyancer and solicitor costs, stamp duty & transfer fees, your building reports or your strata reports, any levies and maintenance costs. Keep these in mind once the negotiation process starts.

So private treaty involves offers and negotiation. What do you need to keep in mind in case you make a successful bid at auction?

When that hammer falls and you’re the successful bidder, there’s no turning back. You have to be prepared to pay the agreed deposit (usually between 5 and 10 per cent) . You need to make sure you have access to those funds in the form of a bank cheque or electronic funds transfer to provide that straight away to the agent. You will be signing the contract then and there, too. So make sure that any changes to the contract have been agreed upon prior to the auction. The last thing you want to do after successfully winning the auction is say, “Oh, we want to make changes to the contract.” It’s too late. You have to have those changes agreed to before the auction.

Thanks for the chat, Kelly. Any final words of advice?

In the end, whether you’re buying at auction or private treaty, and wherever you are in the process, I always say to get a second opinion from a family member or someone who has done it before. It’s always smart to get another opinion.

Also, connect with a good real estate agent and help them guide you. A good agent loves helping first home buyers. I’ve got a lot of clients who were first home buyers and we’ve now upgraded from their one-bedroom apartments to freestanding homes with kids in tow. The more you understand from them, the better your position will be to put forward an attractive offer to the seller.

Kelly Santos’s six tips for being ready to buy

  • When inspecting a place that looks like “The One”, avoid emotion, think critically and measure it up against your checklist.
  • Make sure your inspections and reports are completed and checked over.
  • Always have a conveyancer or solicitor review the contract of sale.
  • Be ready for things to move quickly once you make an offer.
  • If you’re making an offer at private treaty, leave yourself wiggle room for negotiations.
  • Only proceed to auction when you know you have your finance and contract sorted.

Important information
Any advice in this article does not take into account your objectives, financial situation or needs, and you should consider whether it is appropriate for you. This does not constitute tax advice. Please seek your own independent tax advice accordingly. Before making a decision in relation to our home loan products, you should read the Terms and Conditions booklet and Fees and Limits schedule, available at ing.com.au or by calling 133 464. All applications for credit are subject to ING’s credit approval criteria. Fees and charges apply. ING is a business name of ING Bank (Australia) Limited ABN 24 000 893 292, AFSL and Australian Credit Licence 229823.

In relation to our credit products, you should consider our Terms and Conditions booklet, Fees and Limits Schedule, Credit Guide and Key Facts Sheet available at ing.com.au when deciding whether to acquire, or to continue to hold, a credit product.

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