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Home Ownership Advantages
As a potential homeowner it is often hard to decide whether it would be more advantageous to buy or rent a property. Whilst buying a home may seem more time demanding and costly, if you can comfortably afford to buy a home and don't have plans of moving in the near future, buying a home has definite advantages.
By owning a property rather than renting you will be building equity by paying your mortgage while your home appreciates. This gives home owning the financial edge over renting.
Buyers in the know often buy homes that are in need of a face-lift (such as interior decoration) rather than structural improvement. The reason being that minor improvements can significantly increase a property's worth in a short period with fairly small investment.
Remember, if you buy or sell in a short period of time, you may actually lost equity. This means if you aren’t sure you want to stay in the area for over a couple of years, buying may not be the correct choice to make.
A Tax Effective Way To Save
Owning a home can be a very smart financial investment. With property investment you can save in more than one way.
By paying your mortgage each month, you are reducing your principal. Whilst this reduction in principal may seem small in the early stage of the mortgage, it will accelerate with time.
Your home will also appreciate. The appreciation on your home will vary from year to year and occasionally your home may even depreciate, however average appreciation on a home has been shown to be approximately five percent.
Mistakes Made when Buying
1) NOT PRESENTING HOME WELL ESPECIALLY FIRST IMPRESSIONS
If the first impression the buyer has is negative it can be almost impossible to sell the property to that buyer.
On the outside
1) Sweep front walkway.
2) Remove any unsightly rubbish.
3) Park extra cars away from the property.
4) Trim back the shrubs.
5) Apply fresh, clean paint throughout.
6) Clean fans, windows and window coverings throughout.
7) Keep plumbing and all appliances in working order.
8) Tiles and grouting to be in good order in outdoor areas etc
9) Make sure roof and gutters are clean and in good condition.
10) Mow the lawn frequently and manicured gardens.
11) Keep ALL areas clean.
On the inside
1) Enhance the spaciousness of each room.
2) Quick once-over with the vacuum; carpets should be clean.
3) Place fresh flowers in appropriate areas.
4) The kitchen and bathroom should be immaculate.
5) Make all beds and put all clothes away.
6) Open curtains and turn on lights for a brighter feel.
7) Put toys away.
8) Play soft music on the radio/stereo.
9) Keep pets out of the way and pet areas clean and odour-free.
10) Pack away medication and valuables.
2) NON COMITTED MARKETING WHEN SELLING A HOME
Finding a prospective buyer may take some time.
What you require is cost effective marketing program that reaches a larg-targeted market.
Ask your NER representative to develop a plan to suit your requirements.
3) STAYING IN THE HOME WITH THE PROSPECTIVE BUYER
It is more effective to allow the agent guide buyers and answer queries without external influences.
4) NOT KNOWING AT WHAT PRICE TO SELL
Listing the home too high is as bad as too low.
If the listing price is too high you may miss the people who should be looking at your home.
Your home may go stale before the most relevant buyers get exposure to it.
By the time the price is corrected, you've already lost exposure to a large group of potential buyers.
Ask your NER representative for a free appraisal.
The Buying Process
THE BASIC STEPS FOR BUYING A HOME OR PROPERTY
1) ARE YOU FINANCIALLY CAPABLE
A. Deposit
B. Repayment
C. Credit History
D. Finance Pre-Approval
E. The Agent
2) NON FINANCIAL MATTERS
1. Pre-contract step
Pre approval allows you to go house shopping with confidence.
Buying Tips
Knowing what you need; what you can afford and knowing exactly what's available at the time you are ready to buy.
Family numbers, proximity to local amenities, including schools, the sorts of work and leisure activities you like.
Knowing what you can afford
Speak with your bank manager etc. This puts you in a position where you are able to make ' a cash offer.'
Knowing what is available
Newspapers, real estate publications, the WWW, real estate offices and the internet are all good places to begin your search.
Knowing local values
Research sales in the areas you are looking. Attend as many open homes as possible. Ask an NER sales agents for additional advice.
Concluding a Sale
Once your offer has been written and negotiations are finalised you will sign a Sale & Purchase Agreement and pay a deposit; usually 10% of the sale price. Copies of the contract will be sent to your solicitor and yourself.
Settlement Day
Your financial transactions are completed and ownership of the property is transferred. Prior to settlement day you may request a pre-settlement inspection of the property to ensure nothing has changed in its status since purchase and agreed chattels are in place.
Once all settlement procedures have been finalised the keys will be released to you.
Why Own Your Own Home
SOME REASONS TO OWN YOUR OWN HOME
Stable Monthly Housing Costs
A greater sense of belonging to your local community
This includes budgeting (no rent increases) and the tax savings you'll most likely have.
Freedom to get on with other pursuits.
Individualism you can do what you want with your new property.
A commitment to something, a sense of stability
Closer contact with the children than in an apartment complex
Children feel more secure
You can change things, a feeling of being in control
REMOVING THE STRESS OF BUYING A HOME
First there are the transactional needs, like finding the home that is just right for you, finding a seller who is realistic, negotiating the price, filling out the paperwork, handling the escrow, and arranging for the move.
But there are also emotional needs that are involved when moving, and this is where the biggest stress comes in. Any competent agent will handle the transactional needs for you, but if your emotional needs are unfulfilled, you'll be frustrated and may not act in your own best interests.
1. Begin with the end in mind.
Have your ultimate goal in mind.
2. Be flexible.
Be conservative in your cost estimates thereby allowing you to pay unexpected costs.
3. Trust in the process.
The procedure may be long and complex though our NER representatives can guide you through the process.
.4. What is your alternative?
No matter what obstacles present themselves there is normally a solution that our NER representatives will be aware of.
First Home Buyer
WHEN CONSIERING WHETHER TO BUY YOUR FIRST HOME.
HOW LONG YOU PLAN TO LIVE IN THE HOME.
You should plan to stay in your home at least 4 years to cover buying and selling costs. If your property experiences a major economic up turn, the length of the time to cover these costs could be shortened, and the opposite is also true.
HOW LONG THE HOME WILL MEET YOUR NEEDS.
Cater for any medium term growth. Having an idea of what you'll need will help you find a home that will satisfy you for years to come.
YOUR FINANCIAL HEALTH - YOUR CREDIT AND HOME AFFORDABILITY.
Some say that you should refrain from borrowing as much as you qualify for because it is wiser not to stretch your financial boundaries. The other school of thought says you should stretch to buy as much home as you can afford, because with regular pay raises and increased earning potential, the big payment today will seem like less of a payment tomorrow
WHERE THE MONEY FOR THE TRANSACTION WILL COME FROM.
Typically homebuyers will need some money for a down payment and closing costs. However, with today's broad range of loan options, having a lot of money saved for a down payment is not always necessary - if you can prove that you are a good financial risk to a lender. If your credit isn't stellar but you have managed to save 10-20% for a down payment, you will still appear to be a very good financial risk to a lender.
THE ONGOING COSTS OF HOME OWNERSHIP.
Maintenance, improvements, taxes and insurance are all costs that are added to a monthly house payment. If you buy a unit, townhouse or in certain communities, a monthly homeowner's association fee might be required. If these additional costs are a concern, you can make choices to lower or avoid these fees. Be sure to make your realtor and your lender aware of your desire to limit these costs. If you are still unsure if you should buy a home after making these considerations, you may want to consult with an accountant or financial planner to help you assess how a home purchase fits into your overall financial goals.
The Purchasing Process
Offer to Purchase Realestate
Once you find the home you want to buy, the next step is to write an offer. Because of the large dollar amounts involved, especially in today's litigious society, both you and the seller want to build in protections and contingencies to protect your investment and limit your risk.
The seller is going to review your offer carefully, because it also affects how he or she lives the rest of their life.That sounds dramatic. It sounds like a cliché. Every real estate book or article you read says the same thing.
Buying a Home
The home is probably one of your major asset acquiitrons.
The more prepared you are at the outset, the less overwhelming and chaotic the buying process will be. The goal of this page is to provide you with detailed information to assist you in making an intelligent and informed decision. Remember, if you have any questions about the process, I'm only a phone call or email away!
Special Conditions in a Purchase Offer
In most purchase transactions there may be a slight challenge or two, but most things will go quite smoothly. However, you want to anticipate potential problems so that if something does go wrong, you can cancel the contract without penalty. These are called "special conditions" and you must be sure to include them when you offer to buy a home.For example,Some buyers often agree to purchase a home before selling their existing home. Therefore, you should ensure that a condition of your offer be subject to the sale of your property giving yourself sufficient time to obtain a unconditional contract on your property and additional time for settlement.
Deposit Money
After you have come up with an offer price, the next step is to determine how large a deposit you want to make with your offer. You want the deposit to be large enough to show the seller you are serious, the amount of deposit can only be a maximum amount of 10 percent of purchase price.
The Settlement Date
It is absolutely essential that you include a settlement date as part of your offer. This way both you and the seller can make plans for moving, and the seller can make plans for buying his or her next home. Though most transactions actually do settle on the right date, do not be so inflexible that a delay creates insurmountable problems.
Regular Price Cycles
Recession and Expansion
There are times when the economy is brisk and everyone feels confident about his or her prospects for the future. As a result, they spend money. People eat out more, buy new cars, and they buy new homes.
Then, for one reason or another, the economy slows down. Companies lay off employees and consumers are more careful about where they spend money, perhaps saving more than usual. As a result, the economy decelerates even further. If it slows enough, we have a recession.
During such a time, fewer people are buying homes. Even so, some homeowners find themselves in a situation where they must sell. Families grow beyond the capacity of the home, employees get relocated, and some may even find themselves unable to make their mortgage payment - perhaps because of a layoff in the family.
Supply and Demand
When the supply of available houses is greater than the supply of buyers, appreciation may slow and prices may even fall, as happened in the early eighties and the early to mid-nineties.
If you are lucky enough to purchase a home during a slow period, you can be reasonably certain the economy will begin to show strength again. At times, real estate values may even surge drastically. In many regions of the country, this is precisely what occurred in the late eighties and nineties.
Should You Try to Time the Market
One problem with attempting to time your purchase to the business cycle is that no one can accurately predict the future. Another challenge is that interest rates are generally higher during a depressed market and income may not be keeping up. For that reason, fewer people can qualify for a home purchase than in more prosperous times.
Why You Should Not Wait!
Plus, this strategy generally works best for first-time buyers. People who already have a home usually need to sell it in order to buy their next one. If a "move-up" buyer wants to buy a home during a depressed market, that means they usually have to sell one during the slow market, too. If a seller wants to sell his home to take advantage of a "hot" market when prices are fairly high, they generally have to buy their next home during that same hot market.
Current Market Analysis
Comparable Sales Mulitple Listing Service
Most of the public is aware that the Multiple Listing Service is a private resource where Property Agents list properties available for sale. Recently, the public has been able to access some of that information on such sites as Realestate.com.au, Property.com.au, and others.
Once a property is sold and the transaction has closed, the selling price is posted to the listing in the Multiple Listing Service. Over time, it has become a huge database on past sales, containing much more information on individual homes than can be gleaned from the public record. This information is only available to real estate agents who are members of the local Multiple Listing Service.
Your agent will provide you with this data to help determine your offer
Comparable Sales - Pending Transactions
The most valuable information would be the most current, of course. A sale last week has more validity in helping you determine a purchase price than a sale from six months ago.
The problem is that there is no actual record of the sales price until the transaction is completed.
The information is not available in the public record because no deed has yet been recorded.
Neither is the information available in the Multiple Listing Service. Once a property is under contract, it becomes a "pending sale" and all pricing information is removed from the listing.
Prices are not posted until the property has settled.
This protects the seller in case the transaction falls apart and the property is placed back on the market.
It would give an unfair advantage to future potential buyers if they already knew what price the seller had been willing to accept in the past.
However, if a Realestate Agent has a reason to know a sale price, they can usually find out through professional courtesy. Also, some real estate brokerages post sales information on a transaction board in their office.
Your Offer Price
Determining Your Offer Price
When you prepare an offer to purchase a home, you already know the seller's asking price. But what price are you going to offer and how do you come up with that figure?
Determining your offer price is a three-step process. First, you look at recent sales of similar properties to come up with a price range. Then, you analyze additional data, such as the condition of the home, improvements made to the property, current market conditions, and the circumstances of the seller. This will help you settle on a price you think would be fair to pay for the home. Finally, depending on your negotiating style, you adjust your "fair" price and come up with what you want to put in your offer.
The first step in determining the price you are willing to offer is to look at the recent sales of similar homes. These are called "comparable sales." Comparable sales are recent sales of homes that compare closely to the one you are looking to purchase. Specifically, you want to compare prices of homes that are similar in square metreage, number of bedrooms and bathrooms, garage space, lot size, and type of construction.
Other Factors Influencing Your Offer Price
Gathering and analyzing information from comparable sales helps to establish the range of prices you should consider when making an offer to buy a home. More weight should be given to the most recent sales, but even so, you need to do a bit more analysis before setting upon the price you will offer. That is because you also need to consider the condition of the property, improvements, the current market, and the circumstances behind the seller's decision to sell.
How Home improvements Affect Your Offer Price
Even when comparing exact model matches within a tract of homes, you should note whether the previous owners have made any substantial improvements. Cosmetic changes should be largely ignored, but major improvements should be taken into account.
Most important would be room additions, especially bedrooms and bathrooms.
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