Seven Habits of Highly Effective Home Buyers

January 15, 2012 Leave a Comment

If you find the prospect of buying your first property a little intimidating, don’t worry. Doing some basic research is easier than most people think. It increases your confidence and reduces the chance of making a mistake.

Buying a home is about the biggest financial commitment you’ll ever have to make. However, it’s also going to be an exciting turning point – one that will almost certainly make the most impact on your lifestyle. For many it will be something never done before. Selecting the right home in the right area, organising finance and negotiating the sale – it all sounds a little daunting. Yet it isn’t as complicated as you may think! Turning the home of your dreams into a reality is easier if you’re prepared.

Why seven habits of effective home buyers? Because over the years we’ve seen some traits (habits) the our successful buyers share. What is a “successful buyer”? Let’s just define it as someone who finds the home they want, and gets through the often home buying process without killing themselves, a loved one, the seller, or their real estate agent.

Effective Habit #1: Get pre-approved for a loan

Don’t miss out on a ‘hot’ property, do everything you can to be able to push the ‘GO’ button. It is wise to seek “approval in principle” from your Lender, meaning the Lender has given you approval to borrow up to a certain figure.  This step will save you the grief of looking at homes you can’t afford and put you in a better position to make a serious offer when you do find the right one.

Buying a home is not a task undertaken everyday. It’s important to understand the process of real estate, what you can comfortably afford and the type of loan product best suited to

Choosing the right home loan from the many products available can be daunting. It’s important to understand all the alternatives before making your choice.

It is crucial to work with a good lender throughout the home buying process. Talking to several brokers as well as a finance adviser will definitely help you sort the wheat from the chaff. There are two options available to you when organising finance. You can apply directly to a finance institution or you can use a mortgage broker to help you through the process.

A lending institution will apply a “Qualifying Ratio” which is the percentage of a home buyer’s gross income that can be prudently allocated for debt, based on personal income.

As a general guide, lenders limit the total sum of monthly mortgage principal, interest, tax and insurance payments to 28 per cent of the borrower’s gross monthly income. Furthermore, they may limit the total of all long-term debt payments to 36 per cent of the borrower’s gross monthly income.

Effective Habit #2: Define your must haves, like to haves, and cannot haves

Shopping for a property should be an exciting adventure. If you have a clear picture of what you want and how much you can afford, it can be a fun and rewarding experience.

Face it — when working within a budget, sometimes you have to make some compromises. Knowing what you really need can help narrow your home options and also make decisions easier when it comes to making an offer.

The first step is to decide what kind of home will suit your tastes, your lifestyle and your budget. Start an all-family member housing priority discussion before beginning to look at your options. Determine what you MUST have in a home. Then determine what you would LIKE to have in a home. Talk to your agent about these things. Don’t forget to include what you CAN’T have in a home — that will often be more important than anything else.

Aside from basics such as the suburb, number of bedrooms and price range, there are other important things to consider, depending on your circumstances. Take your time and consider things like proximity to schools, transport and amenities, and the condition of the property. Does it need major repairs?

Don’t know exactly what you must/like/can’t have in a home? That’s OK, it happens ALL the time. Your agent can help you by showing you different homes in your price range with different features to help you get a better understanding of what you’d like in a home.

But at some point you are going to have to make decisions and not wander aimlessly through every home that may possibly fit some undefined set of criteria. That would be a waste of your time, the time of your agent, the home sellers, and everyone else that is involved in a real estate transaction.

Effective Habit #3: Be realistic

Naturally everyone wants to get the most home they can for the least amount of money. Which is, of course, in opposition to the home seller, who wants the most money for their home.

Think about what your expectations are, and work with your agent to see if they are realistic. There’s no point looking for a mansion if you can only afford a cottage. You’re not going to get everything a $300K+ home has to offer for say $160K – it just doesn’t work that way. Once you’ve set your price range, identify the suburbs that have properties in that range – it will save you a lot of legwork. Work closely with your agent, ask them for recent sale prices of similar properties in the area, build that trust and get out there and find that perfect home!

Being realistic also applies to things besides the home itself. Buying a home in a low price bracket and expecting no repairs or maintenance? Good luck with that. Buying a home and thinking if the building inspector finds anything wrong with it (other than major structural problems), I’m not buying the house? Well you might as well stop right now because I can assure your there aren’t any homes where the building inspector finds nothing to report.

Don’t wait for the perfect market conditions – they will never appear and you’ll miss out on significant capital growth. Just be realistic. It will greatly reduce your stress levels.

Effective Habit #4: Be flexible

As a home buyer, it is important to be flexible. Unless you are having a home built to your exact specifications, it’s very unlikely that you will find the absolutely perfect home for you. Maybe you find a home that has everything except the perfect kind of flooring, colours, kitchen, whatever. If you have some flexibility built into your must haves and likes, you will find the entire process much less painful.

Don’t be tempted to make a very low offer in an attempt to grab a bargain as others may also be making offers and you could miss out. If you really want the property make sure your offer is realistic. The more attractive you can make your offer in terms of price and conditions, the more likely your offer will be accepted.

Effective Habit #5: Understand the home buying process

You don’t need to understand every step of the home buying process — that is your agent’s job. But the more you do understand, the less stressful and mystifying the process will be. Buying a home is a stressful event. Anything you can do to reduce that stress will go a long way not just toward saving your sanity but in helping ensure the transaction moves to settlement.

So, you have found a place you’d love to call home? Once you’ve considered other comparable nearby properties, take a deep breath and make an offer – IN WRITING!

There are two ways to do this:

Unconditional offer:

An unconditional offer is when you offer an amount to buy the house as listed (with or without drapes, fixtures, etc.) without adding or negotiating any other conditions.

Conditional offer:

A conditional offer is when you offer to buy the property only if certain conditions are accepted by the vendor. These must be listed on the Contract of Sale. For example, your offer may be conditional on arranging finance. If finance cannot be arranged within a certain period of time, the offer becomes void. For your own protection, you should nominate a specific lender as your source of finance. Leaving out a nominated lender or having open-ended finance conditions on your Contract of Sale may force you to take up finance at substantially higher rates, perhaps shorter terms, and from a lender you would not prefer to deal with. Another condition might be an extension of the settlement period. If the seller does not accept the conditions, further negotiation may take place or the offer may simply be declined.

Also be aware that if making an offer, never assume that your agent or the property owner will come back and forth to you – and you should take the approach that your first offer may be the only opportunity you get to obtain the property. A willing seller may not wish to wait around and may accept a reasonable offer from another buyer.

Do not be afraid to ask your agent questions. Lots of questions. Be advised that everyone in the process tends to toss about terms and jargon that only those dealing with real estate on a daily basis understand. Sometimes we forget we’re speaking in a different language. Don’t be shy. If there’s a term you don’t understand, ask.

Effective Habit #6: Be responsible

When you are looking at potential homes, be responsible and respectful that you are in someone else’s home. It’s OK to look in their cupboards, to flick light switches, to turn on the stove. But be responsible and leave the home in exactly the same condition you found it in.

Much of this habit really boils down to two things: 1) use common sense; and 2) treat others how you expect to be treated.

As a home buyer, you are going to have to work with a lot of different people in order to make sure your transaction progresses and ultimately settle.  Once an offer has been negotiated you’ll pay the deposit to the real estate agent who places it in a trust account. This is also the time when you should

  • Organise your solicitor/conveyancer
  • Arrange the balance of the purchase price—that is finalise the finance and sign the mortgage documents.
  • Organise any inspections
  • Insure the property

Effective Habit #7: Have fun!

We already mentioned that buying a home is a big step – both financially and emotionally. Take a look around at lists of “life’s most stressful events” and you’ll see things like taking on new debt, financial change, moving — that’s buying a house. You are about to enter into one of the single largest financial transactions of your life. Stress is a given.

But buying a home is also an exciting time! There isn’t a law that requires you to mope around, dreading every moment. There’s nothing wrong with having fun during the process. Hopefully you are working with an agent that you enjoy working with. That doesn’t mean you all need to participate in group hugs or go camping together. But it’s OK to laugh, to enjoy yourself, to have a little fun in the process.

The Bottom Line

Buying a home doesn’t have to be torture. If you understand the process, work with the right people and try to have a little fun along the way there is no question that you can find a great home and get to move into your new home. Think about the habits shown here, do a little online research, have open dialogs with your agent and lender and you too can make it through a home purchase.

Preparation is the key. Understand your rights and have everything in place. And no, applying seven habits, or even one hundred habits is going to ensure you have a successful home buying experience. Nothing can guarantee that. But you can certainly increase the likelihood of a less stressful and successful transaction by applying some of the habits listed here along with advice from your solicitor/conveyance and your agent.

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Seven Habits of Highly Effective Home Sellers

January 8, 2012 Leave a Comment

Your property will possibly be the most valuable asset you will ever sell so it’s important to heed professional advice in order to maximise its sale price.

Selling your property is not a task undertaken everyday. When you’re selling, it’s important to be fully informed and plan each step carefully.

There is something to be learned from how home sellers have approached the often complex task of putting their home on the market, and more importantly, closing the deal.

Effective Habit #1: Be Realistic

Property is one of those rate things with no recommended retail price. What your neighbour sold their home for last year, or even last month, doesn’t matter. What you “lost” because you didn’t sell your home at the peak of the market doesn’t matter. The enemy is any other property for sale within your area and price range.

Selling a home ranks WAY up the list of “life’s most stressful moments”. But you have to understand and be realistic about your home’s value, your neighbourhood, and the real estate market you’re in. There are many factors that impact the potential sale of your home. You do not have control over current market dynamics (economy, interest rates, outlook, consumer sentiment, employment, wages) or local supply versus demand. But there are things you can control (presentation, cleanliness, street appeal, availability). Address what you can control, and understand the impact of what you can’t. Realistically.

Effective Habit #2: Be Open to Suggestions

You’ve selected a real estate agent to help you, trust their advice. After all, you wouldn’t visit a doctor and then tell them how you should be treated. Your real estate agent will be able to add real value to the process and is an essential component in selling for more. Sure, you may not be able to do everything they suggest, but at least listen and consider suggestions your agent may have for the best way to present, market and sell your home.

Effective Habit #3: Be Available

YOU don’t necessarily have to be available to buyers interested in your home, but you do need to be flexible with inspection times. In fact, you should avoid staying inside the house while a buyer inspections. Buyer’s sometimes feel they cannot openly discuss concerns with your agent in your presence. Golden opportunities may there be lost. Should it be necessary for you to remain at home, be courteous but don’t force conversation with a potential buyer. The buyer wants to inspect your home – not pay a social call. However, should you be asked questions about the home, the neighbours or the area answer them.

At times you need to be able to vacate the premises with reasonable notice – and occasionally with unreasonable notice. Your home can not be sold if potential buyers can’t view it. “No inspections on weekends” or “Inspections only between 11:00am and 1:00pm on Thursdays and Fridays” won’t cut it.

Effective Habit #4: Be Smart

Understand the local real estate market. Understand the home selling process. Understand the buyers’ cycle (you may not be buying, but you want to understand what your potential buyers are dealing with).

Why understand all this? KNOWELDGE IS POWER!

How do you understand all this? Let your agent help you understand it. That’s what you’re paying them for.

Effective Habit #5: Invest in a Marketing Campaign

Choosing a marketing plan that ensures your home is exposed to the maximum number of buyers is critical to achieving the best price.

YOU CAN’T SELL A SECRET! This is a well-known saying in the real estate industry. In other words, a property may be immaculate, fresh and supremely interesting but if you don’t tell ‘the world’ you will struggle to sell for more.

Let’s now look at an effective marketing campaign.

  1. It attracts buyers with increased chance of attracting offers, resulting in a great sale!
  2. It encourages competition between buyers resulting in top prices being paid!
  3. It is an insurance policy against underselling. Every suitable buyer in the market will see the advertising and will make the decision whether or not to inspect further. Those buyers who do view and want to the property will vie for the chance to buy!

Think about it…would you like the first buyer or the best buyer.

Effective Habit #6: Balance Emotion with Logic

Selling your home and all the things involved with the transaction can be very exciting, but many times it is an extremely stressful event.

Home sellers not only have to worry about their home remaining clean and available to buyers on a daily basis but they often have other important things that they could be doing to ready themselves for their move. It is also true that most Sellers have a tremendous amount of pride in their home and want to make certain that the marketing and eventual sale price are reflective of that pride.

The moment you list your home for sale, it just becomes a house on a shelf – 1 of many. You may not like what the market tells you but it will never lie to you. If you don’t have inspections you will very likely not receive any offers. If you have inspections and still don’t get any offers you must be prepared to adjust the price. Don’t take it personally.

The best homes remain unsold due to price!

Effective Habit #7: Don’t Be Afraid to Ask Questions

This is YOUR home you are trying to sell. You need to be comfortable with what is going on. If there is anything you don’t understand, ask your Real Estate Agent for clarification. Don’t be embarrassed about things you don’t know. You don’t sell a home every day. Most real estate terms and jargon aren’t important to you 99.9% of the time. But they are important now, and often agents tend to forget we frequently speak in a foreign language. There are no stupid questions. Ask.

The Bottom Line

These “seven habits” can help you through the home selling process. There is every chance your efforts will be rewarded with more buyers and the potential for buyers competing for your home, a faster sale and a better price. You will also be able to take comfort in the knowledge that you did your absolute best to influence the value of your home and your stress levels may be greatly reduced.  It may also greatly reduce the stress levels of your real estate agent as well. That’s not a bad thing. People don’t like stress so anything that can be done to alleviate a stressful situation is a good thing.

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Renting Versus Buying – The Housing Dilemma

December 6, 2011 Leave a Comment

Is now the right time to rent or buy?
Is now the right time to rent or buy?

Current market conditions coupled with increasing housing affordability, has many renters questioning if now is the time to stretch their budgets and commit to buying their own home.

But serious consideration needs to be given to the person’s individual and financial situation to ensure they make the right decision.

The advantages of each housing option should be weighed against the drawbacks to find the one that best suits specific needs and individual situations.

Renting offers great flexibility with the option to relocate from home to home and area to area, as the need arises, is often a cheaper alternative to buying, with monthly rental payments usually less than a mortgage repayment for a comparable property and without the other incidental costs which can be incurred as a home owner.

One of the greatest financial and stress-free advantages of renting is that property maintenance costs, repairs, rates and insurance bills are the responsibility of the owner, and not the renter.

Despite these many advantages of renting a property, there are some disadvantages which will make buying preferable, particularly in light of escalating monthly rentals.  The most obvious one being the difficulty renters face placing their own personal stamp on a rental property.

There is also the fact landlords can inspect their property whenever they wish, with sufficient notice, potentially disturbing the renter’s privacy.

But the biggest disadvantage of renting is that the property can never be paid off by the tenant, making the money lost for good, without any chance of recovering it in a sale of the property.

This is where First National can really help.  We offer advice and assistance based on the necessary knowledge, experience and skills to understand the market, its trends and its weaknesses and opportunities to ensure home buyers and renters make the most of their finances over the long term by considering the impact on personal net wealth and cash flow over a lifetime.

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Lend A Hand For Renters

November 28, 2011 Leave a Comment

Is NRAS is losing its edge as affordability improves?

While the network supports NRAS in principle, it is no longer effectively impacting on rising rents, leaving those most in need of assistance flailing in their efforts to make ends meet.

First National is calling on the government to look at changing NRAS so it has more relevance and achieves what it set out to do, or consider other forms of assistance such as bringing back some of the grants and other incentives that were obviously phased out too soon.

First National says while it is good news for the property market to get first home buyer activity increasing as a result of the market conditions, it is not good when it is done at the expense of those renters who can least afford it.

Struggling renters need access to assistance schemes that meet their circumstances and offer real assistance, which NRAS initially did, but has since failed to recognise the growing demand of assistance required, making it obsolete.

We don’t see property market conditions altering too dramatically in the near future, and certainly not to the extent that they will improve the situation soon enough.

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Do I really need Landlord insurance?

November 18, 2011 Leave a Comment

Not all tenantsare bad, but you do need to make sure you are covered
Guard against this sort of nightmare...
Guard against this sort of nightmare…

should something go wrong.

While most tenants take good care of the proper they are leasing, those that don’t may intentionally cause extensive damage. Intentional damage is not covered by many standard home insurance policies nor is the failure to pay rent.

The valuable common features of a Landlord Insurance policy include:

  • Malicious or intentional damage to the property by the tenant or their guests
  • Theft by the tenant or their guests
  • Loss of rent if the tenant defaults on their payments
  • Liability, including for a claim against you by the tenant, and
  • Legal expenses incurred in taking action against a tenant.

It’s important to remember that not all landlord protection policies are the same. Some, for instance, are designed to be used in addition to a typical home and contents or strata title policy while others are more comprehensive.

Some policies allow cover for the contents of the property. This is particularly important if you rent a partially or fully furnished property. Speak to your First National Property Manager and they will be able to help you find the right policy.

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Agents Should Rate In Energy Scheme

October 20, 2011 Leave a Comment

First National Real Estate believes real estate agents have a role to play in any national mandatory disclosure energy efficient rating scheme, so long as it is the right role.

The proper policy and regulations need to be in place, and the appropriate people prescribed the role they are best suited to play.

A national and consistent approach is crucial to any future success of a scheme of this nature.  Current state-based schemes already produce inconsistent ratings and results due to software flaws or subjective interpretation of results often compounded by a lack of correlation between actual energy performance of houses and their star ratings.

The real solution to the mandatory disclosure issue lays with government and industry working together.

Government needs to get the scheme right and put it in place with appropriate support strategies, both in terms of financial resources and implementation, which means getting the regulations and policies passed, educating the general public on the benefits of energy efficiency ratings and funding ongoing research and development.

It then falls to real estate agents to promote the ratings through the marketing of the properties they have on their books to buyers and lessors.

The real question is how assessors are selected and trained and accredited.  It is important that they are independent of the real estate profession so no potential conflict of interest is perceived by consumers.

The First National Real Estate network is committed to environmentally efficient principles and prides itself on its green initiatives – it fully supports a national mandatory disclosure of energy efficient ratings scheme, as long as all players act in the interest of the environment.

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ATO Yet To Alter SMSF Rules For Renovations

October 17, 2011 1 Comment

The Australian Taxation Office (ATO) has yet to alter its intepretation of rules around using self-managed superannuation funds (SMSFs) to renovate property, despite recent reports that may suggest otherwise.

A recent First National Real Estate Burnie media release suggested that funds from within a SMSF could now be used to renovate properties.

Instead, First National Real Estate Burnie can confirm that the ATO has issued a draft ruling, and at this stage it’s just accepting comments on how it proposes to change its interpretation of the relevant SMSF rules.

The draft ruling can be obtained from the ATO website and comments are being accepted until October 28. A copy of the draft ruling can be obtained using the short link included below.

First National Real Estate property managers continue to prepare for the anticipated increase in interest in property from SMSF investors.

Draft ruling: http://bit.ly/nAJP3E

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Look beyond fees for effective management

October 13, 2011 Leave a Comment

Nearly 150 of First National Real Estate’s property managers recently gathered in Melbourne for the network’s annual
Property Management Conference – ‘Network, Share, Evolve’.

The professional development forum was chiefly focused on issues affecting the efficient management of millions of
dollars of property investments nationally.

Because of changes to Australian tax law, investors can now borrow for the purposes of property investment and this has resulted in an exponential increase in the amount of property acquired by Self Managed Superannuation Funds (SMSFs). As a result, property managers must be prepared.

A recent tax ruling now allows trustees to use money in their fund to renovate property as well. That means property managers need to be equipped to guide landlords who own investments, as part of their SMSF, toward appropriate, cost effective renovations, using licensed tradespeople. First National Real Estate has taken steps to assure that its
property managers are aware of qualified specialists in the industry and can point customers towards a range of providers.

According to First National, most property investors spend too little time assessing the skills of their property manager and need to look beyond fees when choosing who will manage their investment portfolio.

Property Managers frequently manage real estate portfolios exceeding the value of most financial advisors yet rarely
receive such recognition.

The commitment required to effectively maintain properties, quality client relations, legislative compliance, and,
excellence in customer service is sometimes extra-ordinary or even super-human.

Yet, when choosing a property manager the network indicates that the majority of landlords and investors look only at
management fees, thinking that property management represents little more than the collection of rent.

Investors need to consider the systems and experience behind the agency that they are entrusting the management of their properties to.

Professionally qualified and trained property managers bring so much more to the equation than rent collection. You only need to experience one problem with a tenant to begin to understand the importance of a comprehensive appreciation of the laws governing tenancy. Paying a slightly higher fee for a more professional manager makes a huge difference, even without a problem tenancy.

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Warm Up Winter Buyers

June 28, 2011 Leave a Comment

Selling your home is nerve-racking at best but there are some things a seller can do to maximise the value of their property, even when the weather is cold and things look a bit dull and gray.

The most important tip is to appoint a well-respected, reputable and trustworthy real estate agent because they have a duty to achieve the best price for their clients, keep their finger on the pulse of the market and  keep their clients educated and informed on current market trends.  

Agents are encouraged to think creatively and strategically to shorten the number of days properties are on the market and maximize the price of the property, including updating photography, being positive and upbeat, using all the marketing tools such as social media and networks, and making sure the seller sets the right price. 

Here are a few things sellers can easily undertake and afford to present their properties in the best possible light: 

  • Paint a few feature walls to create visual impact.  Consider using the services of an interior decorator for a quick consultation and some ideas.
  • Add a few personal touches like family photos and memorabilia around the place to give that ‘homey’ feel
  • Keep lights on during inspections to add an interesting touch and make sure curtains, shutters and blinds are open – letting in as much natural light as possible as well as make rooms feel much more spacious.
  • Make sure everything is clean including windows, both inside and out and light fittings.
  • Place some flowers in vases to liven things up a bit, and even consider spraying some perfume around (but not too much!)
  • Turn on heaters so that the temperature inside the home is comfortable, inviting the buyer to linger longer, especially on cold days. 

Another key tip is that sellers should always try to keep in mind who they are selling to, just like any other product that is for sale. 

At the end of the day, sellers should put themselves in the place of the buyer, think about what would they look for and make sure their home delivers as best as it can. That’s what First National Real Estate does – they think of their clients and put them first, because that’s what they would like if they were clients.

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Girl Power Shouldn’t Be Turned Off

October 26, 2010 Leave a Comment

Women are an increasing force to be reckoned with, but it seems more than one in four real estate agents continue to ignore them in the home buying process.

Research conducted on behalf of First National Real Estate by Newspoll shows almost 26 per cent of women surveyed felt real estate agents took more notice of their partners/spouses.

This needs to stop.  It is discriminatory, bad business practice and not good for the industry overall.

Statistics show the number of women planning to purchase property on their own has more than doubled in the last two years alone.  Their growing numbers and level of importance in the home buying process makes them a key demographic group that should be at the forefront of everything a real estate agent does – from the way they market a property, to the ‘inclusive’ nature of conversations with prospective buyers.

The survey, conducted by Newspoll, interviewed 1200 women from around Australia, across all age groups, and found that the older women got, they more they felt they were not being considered, or listened to by real estate agents.

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