My house hunting experience

I would just like to share my experiences as a first time home buyer. In these past few weeks I have learnt a great deal ranging from account structures to battleaxe properties, granny flats, and floods.

I have a full time job and a salary on 70K, first home buyer. Initially, I had no idea what to do but in the end contacted a mortgage broker off this forum who has been a great help. I wanted to buy a PPOR in which I would convert into an IP after 6 months. I had 180K savings and we were able to organise pre approval for a 340K loan with ANZ’s breakfree package at 80% LVR. I was informed to look for homes around the 440K-450K mark, using a 100K deposit. I could stretch it to the 500’s but that would mean using a large amount of my money as deposit.

Initially I was not too keen on searching for properties. I would email the agents and not really go out of my way to inspect them or organise appointments. It was something I had never done before. However, in the last few days I found that I had increased motivation and made a few appointments to do open homes. The auctions I went to seemed to overvalue the properties.

I contacted my mortgage broker who was more than happy to help me with my property search and I am sure he has probably had enough of all my questions. I then had shortlisted a few properties (let’s call them A,B,C and so on).

Property A, a 4BR fibro house, was listed for 550K, with a large land to boot. The vendor wanted 520K. I made an offer of 505K, which was promptly rejected.

Property B was a 4BR fibro house with 550m of land. The vendor wanted 440K after the auction did not make it past 380K last week.

Property C was 2 houses away from Property B, a much nicer presented home – but only 3BR with 550m of land. It had only been listed for 2 days.

Lastly, Property D. A 2BR Brick house, with near 700m land. It is 2 streets behind property A. I had only found this a day ago and did not read the contract properly. It was to go on auction today.

Fast forward to today:

I visited properties B,C,D. From me and my broker’s calculations, we had worked out that property Band C would be a bargain if we bought it anywhere between 420 to 430K. The both had potential for a granny flat with side access, increasing the yield alot. After the open homes finished, I made unconditional offers to both vendors or 430K for property B and 420K for property C. There was to be 30mins before I went to the auction of property D.

Time had passed and I had registered to bid at my first house auction for property D. It was quite exciting, however I was really quite tired and the agent kept on asking me to increase my offer. In the end, my highest offer was 461K, and the property was sold for 462K. I didn’t feel too bad as it was not my cup of tea (2 bedrooms only, and I wanted at least 3).
I checked my emails and saw an email that indicated property A would sell for 515K. I was inclined to hold out as I was keen on securing either property B or C.

As I get home I got a phone call from the agent of property B letting me know that if I could offer 435K, it would be mine. As this was still undervalued, I agreed and was confused that I had bought a property so quickly! I then realised I had to find a solicitor ASAP, and being 3.00 on a Saturday, there weren’t many around. The agent mentioned that I would need to sign a 0.25% non refundable holding deposit on Monday – my broker thought the non refundable part was unusual.

When I showed my solicitor he was disappointed. As I had plans to build a granny flat under the ’10 day approval process’ he showed me the clause stating that the property was a flood control lot (need to check with council), and it would need DA for any modifications or a granny flat. I now realised why there had been no offers. After such a big day of excitement, I had been shot down. Moreso, I had the opportunity to win the auction for property D which I let slide (and for only 1K!).

So now I had nothing, as both property B and C were prone to floods. All I had was property A, and the result from property D to use as a bargaining chip.

I went home depressed. Over dinner I looked over the contract for Property D. It was also a flood control lot. This made me feel a little better as I was lucky I did not win the auction.

That’s the story of my day. Learnt a few things too – always check the contract, and see a solicitor before anything! Vendors will be willing to drop the price if you wait long enough.

Now I have the embarrassing task of rescinding my offers. And I have a huge headache.
 
wow!:eek:
In WA you would be screwed no cooling off period contract stands when offer is accepted (other than conditions)

What a weekend!
 
Actually, I would need to double check that for NSW too, as I have never bought anything before!

Also, any ideas as to how to check when a property was built?
 
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Sounds like you need a buyers agent, this purchasing caper is not for you.

You've only been looking for a few days and have already bid on 3 properties incliding a 2 bed when u want at least 3 beds!!
 
Sounds like you need a buyers agent, this purchasing caper is not for you.

haha I had the same thought, but being a BA I cannot say that for fear of being seen as shamelessly self-promoting. :p

Just reading menty's first post on this thread, so many mistakes lept out at me. But hey, we all have to start somewhere.

The danger I suppose, is that menty is thrashing about with access to nearly $0.5M :eek: and stands to potentially make an error. This can severly cramp the ability to build a portfolio, if property #1 does not grow or is overpaid for, as ability to redraw from equity can be a long time coming.
 
I do agree that there is a huge risk there that I am taking.

Still on the hunt for a lower cost property which will allow me to keep a much larger portion in an offset account.

I have found that it is quite a fun process going through all these properties. Eventually if I do decide to pack it up and forget about it I do believe a BA would be a wise choice.
 
Pretty sure in VIC we have a 3 day cooling off period in which you could of backed out, is it not the same in NSW?

Have never heard of a non refundable deposit in Real Estate, looks like the Agent screwed you over.
 
haha I had the same thought, but being a BA I cannot say that for fear of being seen as shamelessly self-promoting. :p

Just reading menty's first post on this thread, so many mistakes lept out at me. But hey, we all have to start somewhere.

The danger I suppose, is that menty is thrashing about with access to nearly $0.5M :eek: and stands to potentially make an error. This can severly cramp the ability to build a portfolio, if property #1 does not grow or is overpaid for, as ability to redraw from equity can be a long time coming.

i agree 100%. menty it might be worth you calling prop or jacque (just 2 names that obviously spring to mind, i apologise if ive forgotten anyone else) and speaking to them to at least find out what it is they can do for you. 10 min phone call might save you some heartache

even if you dont end up using a BA you could do a lot worse as an inexperienced buyer than spend a few mins talking to people who buy houses every day
 
To the OP... slow down, breathe, and then take 10 mins to write down your property MUST HAVE's and NICE TO HAVE's.

This would be things like suburb, number of bedrooms, renovated or original condition, number of car spaces/carport/garage, type of street etc.

You should not negotiate on the MUST HAVE's (so long as they are reasonable within youir price bracket). Your NICE TO HAVE's may come and go as you inspect properties inside your MUST HAVE criteria.

You have gone in a week from sitting on a computer emailing agents to gettinig out there and offering on everything you see. One extreme to another. And on properties which are a wide range of sizes and prices.

Take your time and research research research. For every "bargain" you may miss there will be another.

Also you really need to decide if you are buying with your heart (ppor) or head (IP). The two often dont go together, and you may find yourself falling in love with a house that makes no sense (logically or financially) as an IP.

If you are 100% certain that it will be an IP in 6 months, then focus your search on properties that may need some cosmetic renovation which you can buy under value in a slow moving sydney sales market, prepare for rental with a reno then get the maximum rental value (and hopefully revalue for equity release/refnance when it is converted).

Check comparable sales and rental returns on similar houses. If you are going to have a measly return (personally for me thats under 6%) then its not a good buy (unless there is some other factor like soon to be built infrastructure or subdivision possibilities).

Lastly, the people here are friendly and more than happy to help with your first steps into property. We were all first buyers once, and the vast majority are happy to share their experiences and advice.

Good luck
Dave
 
Looking...looking...

Methinks you are too anxious; are you in a rush to beat the Dec deadline for first home buyers' stamp duty concessions?

Was at WeSucks bank last Sat ; held up by 2 young homebuyers (read: single male in late 20s to 30s...) they were holding files i guess of salary documents etc....they were spending so much time with the loans officer...

BE careful; you don't want to save a "small" concession and lose even more by buying the wrong house!:eek:
 
All understood. I have been searching For properties that need a little Reno work that I can do in the 6 months. I am able to search for comparable sales and rent histories via pricefinder. With regards to a 6 percent yield, I find that it is hard to achieve in the Sydney area, unless there is something like a granny flat.

Anyway, here is a short list of MUST haves, and NICE to have:

Must have
- 3 bedrooms
- land greater than 500m
- exterior ok
- not on main road
- close to train station (10 mins walk max)
- not in flood, bush fire or heritage zone

Nice to have
- approved granny flat
- price 440 to 460k. Can push if needed
- close to a decent school
- potential growth in the area

I just realised I don't have many !
- able to be sub
 
Actually, I would need to double check that for NSW too, as I have never bought anything before!

Also, any ideas as to how to check when a property was built?

It's on the sale contract.

Regarding CP, in NSW the contract can be changed ; no compulsory requirement for a cooling period ( but most will have at least 5 days) .

Most "holding" deposit has a CP... hence why it's a bit suss if the agent place a term of no CP- Quick sale.

----

All in all, don't rush the buy; enjoy the experience of learning and take it slow....as virgo mentioned the ~$14k stamp duty is not a low considering your going to be spending $440-500k on a property.

If you buy the right property and it goes up by say 3%- you make your money back in term of the stamp duty within that first year. :p



who was more than happy to help me with my property search and I am sure he has probably had enough of all my questions.

Never!, always free to take a call + email.:)


Regards
Michael
 
All understood. I have been searching For properties that need a little Reno work that I can do in the 6 months. I am able to search for comparable sales and rent histories via pricefinder. With regards to a 6 percent yield, I find that it is hard to achieve in the Sydney area, unless there is something like a granny flat.

Anyway, here is a short list of MUST haves, and NICE to have:

Must have
- 3 bedrooms
- land greater than 500m
- exterior ok
- not on main road
- close to train station (10 mins walk max)
- not in flood, bush fire or heritage zone

Nice to have
- approved granny flat
- price 440 to 460k. Can push if needed
- close to a decent school
- potential growth in the area

I just realised I don't have many !
- able to be sub

Hi Menty

It's all a learning experience and it's great that you're out there doing inspections- which is a lot more than many armchair investors do. It's really the only way to learn and see what's going on in a market. Your above criteria seems reasonable enough, though obviously I don't know what areas you've been searching in?

Some tips for next time:

Ask the agent all the questions re: your criteria above BEFORE you arrange inspections.

Check the contract (149 certificate) to see if property is affected by bushfire, flood, heritage, road widenings etc. Also check that it's suitable for affordable rental housing - granny flat building. Much easier if you can erect a GF via complying development rather than going through council. Do a search here on the forum on this subject and happy reading :)

If you have access to PDS check for surrounding owners, power lines, watercourses, industrial areas, road positions etc. Do as much DD before inspecting that you're possibly able to.

Be upfront with the agents about your criteria (especially granny flats) and maintain regular contact with all of those in the areas you're looking.

Ask lots of questions on forums like these
Good luck!
 
Of course. Im doing this now :)
At first I was a little hesitant but I found that the agents are more than happy to answer my questions
 
... I found that the agents are more than happy to answer my questions

You just have to watch their answers :rolleyes:+ ask the right Q's + ask the same Q a different way. Here's an email convo that I had with a selling agent 2 weeks ago when we were looking for a house with an existing approved granny flat.

Propertunity to REA: Is the granny flat on this property council approved as a granny flat or just as a rumpus room etc? Is the electricity separately metered? We have a finance approved client from Brisbane who may be interested.

REA: Dear Alan,
The downstairs granny flat is council approved with a combine living/kitchen & a separate bedroom but it is not separate metered. Please let me know if your client would like to inspect.

Propertunity: Our client is in Brisbane, he is paying us to inspect suitable properties.

I know I have already asked, but are you certain that it has been approved as a granny flat with a kitchen? And if so, when was it approved? And do the vendors have a copy of the approved plans that we could view?
Is the laundry shared with the house or is it separate……
As we find many times, when checking with council that they are sadly, not approved to lease out separately or to have a second kitchen in.

REA: Dear Alan,
I will confirm with the vendor and check if they have any plan or document. The laundry is sharing by both upstairs and downstairs.

Propertunity: OK,
I’ll wait to hear back from you.

REA: Dear Alan,
Talked to vendor and confirmed the granny flat bathroom is approved but not the kitchenette. The plumbing from the kitchenette is from the laundry which is on the back.

Propertunity: This is as I suspected, thank-you. If the kitchenette is not approved, then as a whole, it is not approved as a separate granny flat.
As such, our buyer client would not be interested. Additionally, we do not want to have a shared laundry situation. We’ll have to pass on this one.

REA: No problem, Alan. If we have any other properties will let you know.

So as you can see, we came full circle from being approved - Yes, to being approved - No.:eek:

It'd be funny if this was just an isolated incident....but it happens all the time on various issues. :(
 
Propertunity, my understanding of QLD processes, the room once approved as living space, is just that "approved". If a plumber then installed a sink, and sent in the required documentation, it is an approved "sink" and that area can then be used as a "kitchenette, and is "approved". Also, council does not allow for seperate electricity or water metering, unless they are approved as a "flat" and the zoning allows for it. They do so, so that they cannot be occupied by other than family members.
 
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