With the booming property market in WA and the basic price of a home reaching around $350,000 home buyers are finding that purchasing a home is almost out of reach for those in the low to middle income bracket and especially first home buyers. Entering into the property market has never been more important than in recent years to build equity and realize the ‘Aussie dream’ of owning your own home. If you are in the position of buying a house in WA then there are some important steps to follow for successful home buying.

Firstly get yourself a pre-approved home loan before looking at properties. This will give you an advantage over other home buyers that may be interested in the same property as you plus you will have more negotiating power. Shop around to find the best interest rates and a loan type that suits your circumstances. Make sure that the properties you are looking at are affordable in comparison to your income, monthly expenses, loan repayments and any future increases in interest rates. As a general guide, loan repayments should not exceed 36% of your gross monthly income. Lenders will want you to provide evidence of your income, savings and deposit history to secure a home loan.

Identify the search parameters of the type of house you are looking for including the number of bedrooms, bathrooms, living areas, outdoor entertaining, size of the block, whether you need a carport or garage, a new or older style home? Ask yourself what your favorite suburbs are and which locations actually fit into your buying budget. Do they have the local facilities that you need such as medical, banking, shops, trades and services, restaurants, video stores, post office and schools? Once you have worked out the type of house you are looking for and the location, then research the papers and internet for listing prices and the prices properties in those areas have recently sold for.

Negotiating a Sale Price

When you have found the ideal home for your needs then with the help of a buyer agent, or if you are dealing directly with the sellers agent you will need to decide on a starting offer. Compare recent home sales in the same area to the sale price of this home and its specifications, a reasonable first bid offer can be 5 to 8% lower than the listed price. You can negotiate the sale price with the seller from there, if any repairs need to be done to the home then factor this into the sale price.

Once the sale price has been agreed upon by both parties then a settlement date needs to be set, usually 45 to 60 days from the contract signing date. Make sure that your offer is subject to finance being successfully obtained and a house inspection report being completed prior to settlement. Thus if any significant construction or pest issues are discovered the sale can be re-negotiated and repairs made, or the offer to purchase rescinded. A deposit of 1 to 10% of the purchase price is usually required at the time of signing the contract and is paid to the agent to be held in trust until the property is settled.

Buying Tips

• Insist on a pest and building inspection being carried out prior to settlement

• Check and more importantly ask if there are any illegal building additions that have been made to the property ie. completed without local council approval.

• Also ask if the property has any restrictions or covenants.

• Identify all the costs associated with buying the home including stamp duty, settlement agents fees, legal fees, loan application fees, council rates, water rates, title transfer fees, building inspection costs, removalist fees, re-connection costs of utilities and add these costs into your budget.

• Include a settlement inspection in your purchase contract list of inclusions to be carried out 1 to 2 days prior to settlement. This way you can ensure the property is in the same condition as when you viewed it at contract signing. If any repairs need doing then confirm this in writing with the seller.

• Make sure that everything discussed and agreed to with the seller and their agent is put in writing, citing all purchase conditions and inclusions on the contract of sale.

Buying a home is a big investment emotionally and financially, being prepared throughout the purchasing process will help you avoid many common pitfalls that unwary buyers face.

© Brendan Leahy Real Estate

www.blre.com.au

For a first time home buyer, the process can get quite overwhelming, giving you the feeling that the financial decisions are rapidly spinning out of control. When it comes to real estate, most people don?t have a lot of experience or know a lot about it. In all actuality, buying a home is actually a simple process. All you need to do is understand the basics, which will go a long way in helping you buy your very first home.

The first thing you should know is to avoid pre payment penalties at all costs. What this means, is that if you buy the home then later want to sell it before the balance of your mortgage is due, you?ll have to pay a penalty. You can find a variety of great loans that don?t include these types of penalties. If you find a loan that does include pre payment penalties, you should immediately turn it down and look for another loan.

You should also be on the lookout for good ARM?s. If you have a good ARM, then your interest rate and monthly payment will adjust at the exact same time. This will make sure that your interest doesn?t affect your monthly payment. If your interest rate does affect your payment, then you will notice the unpaid interest reflecting the overall amount of your loan balance.

You?ll also want to get pre approved for your house as well. This lets the seller know that you are serious about buying, and will normally work in your favor to give an edge – which is especially handy if there are several others interested in purchasing the home. Getting pre approved will also save you a lot of time as well. If you can?t get approved for a loan, you shouldn?t waste your time inspecting it, trying to get a good interest rate, or negotiating with the seller for your ideal price.

Before you purchase a home, you should always be aware of how much you can afford. Before you attempt to purchase a home, you should always go over your budget and figure out how much money you can spend on a mortgage payment. If you manage your money smart and know your finances, this shouldn?t take you hardly any time at all. On the other hand, if you don?t know your finances, this will take you a long time indeed.

If you?ve already purchase your first home, you should always avoid taking any type of home equity loan. These loans can be very tempting when you get in an emergency and need cash, although most home equity loans add up to more than the value of your home. You should never, under any circumstances take a home equity loan, as there are many other ways that you can clear up your personal problems without having to jeopardize your home.

Keep in mind that the above are just a few basic tips and that there are many other things you?ll need to know before you buy your very first house. You?ll need to be familiar with private mortgage insurance, special loan programs, fixed rate and adjustable rate mortgage, and several other things. Buying a home is an easy process, once you know a bit about it. If you familiarize yourself with buying a home and learn all that you can about what is involved, you?ll find the home buying process to be easier than you ever thought possible.

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If you have been thinking about purchasing a real estate property for personal use or as an investment, you?ll need to hire the services of a real estate investor. If you play to finance your home through a bank or other lender, you?ll more than likely need to get the property appraised first. Banks and most lenders want to know the value of the home for your protection, as well as make sure that the home they are financing is worth the total amount that you take on the loan.

In most cases, the appraisal indicates that the home does indeed meet or exceed the asking price. In some cases however, the appraisal will come back saying that the home is worth less than the selling price. If this is the case, the buyer normally has to either drop the deal or try to negotiate with the seller to get a price that meets the appraisal.

For those very reasons, a real estate appraiser is very important. When you are dealing with a home, one appraisal can make a deal or break it. Even though you may not be financing your purchase through a lender or the bank, you should still make an effort to get the home appraised and find out the true value. You should also make a point to find the best appraiser that you can afford. If you hire an appraiser who isn?t that experienced, you?ll pay for it later when you discover that the property isn?t worth what you paid for it.

A real estate appraiser will go through the home performing an evaluation, and then provide you with a written evaluation after he has gathered all necessary information. Appraisers will also taken into consideration the replacement costs as well. Also, they will have to very land descriptions as well. There is a lot of work involved with appraisals, which is why it?s so very important that each step of the process is performed correctly by a qualified real estate appraiser.

If you have a real estate agent, he or she will more than likely be able to make a recommendation. Keep in mind that this doesn?t mean the recommendation is the best; it?s just someone who your agent works with. To ensure that you get the right appraisal on your home you?ll need to find yourself an appraiser who is capable of completing the job.

When you look for your real estate appraiser, you should look for someone who comes highly recommended. You can ask family and friends for their opinions, or search local papers, even the Internet. If you take your time and search for the best real estate appraiser that you can find ? you?ll normally get an appraisal that is right on target.

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The real estate crash of 2008 appears poised to make the downtown of the last couple of years look like nothing at all. While the market crash is certainly disturbing, real estate market crashes are really not anything new. The real estate crash of the late 1980s certainly caused plenty of concern. During that time; however, many investors learned to use creative marketing strategies in order to survive the crash. Whether you currently have a property in a market where sales have slowed down or you need to move your property off the market quickly, there are strategies you can employ in order to avoid becoming a victim of current market conditions.

During the market crash of the 1980s many sellers found it helpful to offer to pay some or even all of the closing costs for the buyer. In many situations this can be a highly successful tactic; however, it does not work in all situations. In some cases, the lender may place limits on the concessions the seller is allowed to make. This is often the case if the buyer is purchasing the property using a Fannie Mae or Freddie Mac loan.

These loans are often attractive to many buyers because they are able to make a lower down payment. In return; however, sellers are frequently limited to concessions of 3% of the total amount of the sales price if the buyer is making a down payment of 10% or less.

In this case, you may need to come up with an even more creative strategy in order to sell your property. One option that many used during the market crash of the 1980s was to raise the price of their property. At first glance, this strategy may certainly seem as though it would be counter-productive. In reality; however, it is a very creative way for you to provide assistance to the buyer with their closing costs.

Here is how this strategy works. Basically, you agree on a price with the buyer and then raise the price by a certain percentage. That money is then given back to the buyer during the closing. On a $150,000 home with a 3% price increase that would amount to $4,500. This money would go directly to the buyer and help them in paying their closing costs. In return, the buyer would obtain a loan for $154,500 and essentially be able to cover their closing costs using their mortgage.

For this tactic to work the home must be appraised for the higher price in order for the buyers to be able to obtain the mortgage loan. Of course, the buyer must also be willing to pay the higher asking price and understand that their monthly mortgage payment will also be slightly higher as a result.

Many sellers are reluctant to make any concessions at all, preferring to try to obtain as much money as they can from the asking price for their property. In a down market; however, it is important to keep in mind that basically every month the property sits on the market is costing money. Over a period of several months this could ultimately amount to far more money out of your pocket than you would give up by making concessions early on in order to sell your property as quickly as possible.

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When it comes to buying foreclosures, every investor needs to be aware of certain aspects that can either make or break their bargain. The appeal of a foreclosed property is often found in the hidden potential that a home is thought to possess, but the fact that it can be purchased at a price that is often far less than the current market value is an equally attractive incentive to most buyers. While foreclosed properties can and often do produce a profitable return for investors, it’s important to keep the following in mind when perusing properties:

- Not every foreclosure is open to inspection. This means that you may or may not be able to view or evaluate the property, and could be required to make a decision based on nothing more than a visual and any information provided in the foreclosure listing.

- If a foreclosed property is open to inspection, it will be up to potential buyers to hire an inspector for the purpose of evaluating any necessary repairs or improvements. This will aid investors in the decision as to how much money they wish to pay for a property by giving them an indication of the work and cash needed to restore it.

- If you plan on buying foreclosures while they are still inhabited, either by the previous owners or renters, you will be responsible for removing them. In some cases, eviction may even be necessary.

- Buying foreclosures means purchasing a property ‘as is’ with no guarantee as to its condition.

- Investors who plan on buying foreclosures from HUD are permitted to enter the bidding process if no person(s) wish to bid as an owner-occupant. The initial phase of a HUD foreclosure auction is open only to those who wish to live in the home.

- Each state handles the process of buying foreclosures differently, but nearly every one offers a redemption period that would allow the former owner to regain control of the property by catching up on payments and interest. Buying foreclosures means that you need to be aware of local laws and how they may affect the ownership of a property.

- If you require financing, it’s important to check with a lender to arrange for a mortgage before placing a bid on a foreclosure. In at least one respect, buying foreclosures is similar to the purchase of other real estate in that the failure to complete the transaction may result in the loss of any earnest money provided.

- Prior to buying foreclosures, or any other type of real estate investment, do your homework. Homes built before 1978 may contain lead paint, which is why it’s important to learn as much as possible about the home’s age and condition, along with other potentially concerning aspects of real estate before signing on the dotted line.

- Successfully buying foreclosures as an investor means knowing the current market value for comparable properties in the area. If you plan to restore the home, you will need to figure in the cost of repairs and calculate a reasonable selling price in order to determine a feasible profit.

- Investors considering buying foreclosures can find local listings through realtors, lenders, the U.S. Department of Housing and Urban Development (HUD), the Department of Veterans Affairs (VA) and various other public auctions.

The information contained in this article is designed to be used for reference purposes only. It should not be used as, in place of or in conjunction with professional legal, financial and/or investment advice regarding buying foreclosures. For additional information, consult an attorney who specializes in real estate and/or financial matters.