So, you have decided it is time to buy a property? It is a big step to make, but an important one that can make a big difference to your life. It is also be quite a long, complicated, and confusing process, particularly if you have not been through it before.
If you are not sure where to start, or what to expect, here are the main steps to buying a property. While the exact process will change slightly from location to location, these are the general steps every buyer takes.
- Calculate your budget
Before you begin looking at properties, you should work out how much you have to spend.
Your budget will determine what you can buy, and where, so it is important to know this upfront. Starting with your budget in mind will also help you to manage your expectations throughout the process.
As part of this, you should look into your financing options. Chances are that you will require a loan to cover most of the purchase price. As such, how much you can borrow will have a major impact on your final budget.
With that in mind, many market experts recommend seeking loan pre-approval before beginning your property search. This will give you a clearer picture of exactly how much you can spend and help you to avoid overcommitting. It can also speed up the process once you have found the perfect property, as your application will be partially complete.
- Work out your criteria
Once you have set your budget, you should think about what you want to spend it on.
If you are buying a property to live in, think about what you really require. This could be the number of bedrooms and bathrooms, the location or area, or good access to public transport and schools. Also consider what you are willing to compromise on and what are absolute must haves.
If you are buying an investment property, consider the type of returns you are after. This could be a high rental yield, great capital growth potential, or a combination of both. Also, think about your long-term investment plans, including your main goals for your portfolio (e.g. building wealth, supporting your retirement, etc.).
- Look for the property
Once you have a clear idea of what you are looking for, you can begin your search. This involves two main activities, researching and inspecting.
Most buyers begin their search online as most available properties are listed for sale on the main real estate sites. Most listings will provide details and pictures of the main features of the property and its location. Based on this, you can shortlist the options that seem suitable.
You can then schedule an inspection to see whether these properties actually meet your requirements. While the online listing will give you some sense of this, properties can be quite different in person. Property listings are also designed to sell the property, meaning they will largely focus on the best points.
When visiting a property, pay closest attention to the features that matter most to you. Also, try to look past the furniture as it is usually not included in the sale. It is also worth remembering that minor design changes (like repainting) can be cheap and easy to make.
- Secure the purchase
Once you have found the perfect place, you can indicate your interest by making an offer. Exactly how you need to do this will depend on the sale method that the seller has chosen.
For example, if it is a private sale, you will need to submit a written offer for the seller to review. If the seller is happy with your offer, they will approve it and you will move to the settlement stage. If not, they will decline your offer and you may need to negotiate a price you are both happy with.
Alternatively, if the property is being sold via auction, there will be a public bidding process. As part of this, you will compete with other interested buyers to submit the winning offer. The auction ends when there are no further bids and the price has passed the seller’s reserve.
Sales negotiations, whether at auction or through a private sale, can be stressful. There is also a real risk of overspending as emotions take over and the fear of missing out pushes you to offer more. To overcome the stress, some buyers seek out a property investment advisor, like Search Party Property.
Once the seller has accepted your offer, you will need to pay a deposit to formalise the sale.
You will then enter into a settlement period, during which all of the final legal and financial arrangements will be made. The length of settlement will be agreed during the negotiation of the sale and will be set out in the sales contract.
Everything going to plan, at the end of settlement you will take ownership of your new property. This is when you finally get the keys and can officially call the place your own.