Going once. Going twice.
Helping your kids get into the property market can be emotional and stressful for the whole family. That’s why it’s important to stick to the timeless basics as you navigate the journey.
In our last blog post, we talked about the various ways parents can assist their child with covering the home deposit. In this post, we’ll move on to the buying process itself and the many considerations involved.
In property, there are plenty of pitfalls for the young and inexperienced. So as a parent, it pays to temper your child’s excitement and make sure they do their homework before jumping in.
Here are five important points you and your kids need to consider:
1. Establish their buying potential.
Before your child begins looking at properties, get them to see a mortgage broker who can evaluate their situation and direct them to the best products across the mortgage market. A good broker will help them determine their borrowing potential and recommend a product structured around their needs. A broker will assist with pre-approval so they know what their limit is. It’s great to have a budget (i.e. personal limit below your max borrowing) but it’s also nice to know how high you can go, as quite often we need to pay that little bit more for the property we set our hearts on.
2. Do plenty of research.
To avoid paying more than fair market value for a home, encourage your child to inspect as many properties as they can and follow sale prices closely in the areas they are considering. You can be a part of this process. If you have owned a property yourself, you may notice issues with a home that your child may not. So offer to tag along on a few inspections if it suits.
Make sure your child is looking at suburbs they can realistically afford. One good way to find value is to look for slightly cheaper suburbs close to high performing suburbs. History shows there is usually a flow-on effect as buyers realise they can’t afford the suburb they really want to live in.
Develop an understanding for the variables that are affecting local property prices in the areas you’re researching. Proximity to main roads, public transport, shops, sporting grounds and schools can greatly influence prices for similar styles of homes. You want to be as close to local amenities as possible.
3. Get proper legal advice.
Before making an offer, have the contract of sale reviewed by a professional. A solicitor or conveyancer will also be able to identify issues with the Deed of Title and any prospective ownership issues. Strata title management clauses should also be looked at and State Authority rights relating to zoning and future development should be investigated. This last point is really important. A property may appear cheap until you discover that a six lane freeway is scheduled for development behind you back fence. A good solicitor or conveyancer will help you identity any possible issues.
4. Consider a Buyers Agent.
Often buying a property takes skillful negotiation and if the property you are buying goes to auction, bidding can be quite nerve wracking. A buyer’s agent understands the property market, property values and the sales process. This could potentially save you thousands of dollars as they take the emotion out of the purchase by acting on your behalf. This is well worth consideration.
5. Buy smart.
When attending open homes and inspections, look past the ‘staging’ of the property. Smart vendors often decorate homes with expensive furniture to win hearts and increase prices. Make sure your child is looking at the real value of the property.
Inspect the property several times before making an offer. Understand the floor plan and make sure it suits your kid’s needs.
Get a structural report from a builder and a pest inspector to ensure the property is sound. If the property needs renovation, get a quote on the work before purchase. What may look like relatively small changes can often be much more expensive than you think. So it’s best to know up front what your total outlay would be. This way your child will know what they can offer on the property, taking all additional costs into account.
Helping your child follow these five steps will take a lot of the headaches and hassles out of finding the right property. In our next blog post, we look at some of the issues a parent can face going guarantor on your child’s mortgage as well as how to minimise these risks.
What to do next?
For more information email or give us a call to speak with one of our property specialists.