How to prepare for buying a house
No matter what the project ahead involves, preparation is always the key. This is so true when buying a house as there are so many issues to understand and a range of service providers to deal with. There are basically 2 options available to you as far as preparation goes:- 1. You engage a Buyers Agent to guide you through the total process and pay a fee of between 1.5 / 2.0% of the purchase price. On a $800K property that’s $12-16K, or 2. You decide to oversee the total project yourself. Taking option 2 means Congratulations, you have appointed yourself as the “Project Manager”.
What is the role of the “Project Manager”?
A Project Manager needs to:-
- Have a complete understanding of the preparation and planning required to implement and carry out the project.
- Set out a step by step plan so that you are always prepared for the next stage of the project.
- Understand the roles played by the service providers and how they interact with you and each other
- Be prepared before any meeting with service providers so there is no time waisted.
What should a detailed plan look like?
A detailed plan should consist of various steps that takes you from the beginning right through the total process. Lets look at the steps involved:-
Step 1 – Familiarisation
- Familiarise yourself with the process
- Understand what costs are involved
- Receive tips on budgeting
- Understand your legal obligations. Make contact with a Lawyer or Conveyancer.
Step 2 — Preparation
Never go backwards during the planning stages. Always be prepared for the next step. ie. Don’t look for houses until your preparation is complete or you could be wasting time. Listed below are all the issues to be addressed in the preparation stage:-
- Prepare a list of all the demographics required at your new location
- List all the features required in your new home. ( Tip. Each partner to compile their own list and then compare & compromise. )
- Prepare a budget showing income & expenditure for each month
- Prepare a list of assets & liabilities ie. Statement of Position
- Assemble all documents required to substantiate a loan application.
- Start to familiarise yourself with the cost analysis process.
At this point you would have a fair idea where you want to live. Now is the time to do some preliminary research for availability and prices of properties in your chosen area. This can be carried out on the internet using the criteria you have established for your property & location needs.
Step 3 – Service Providers
There are 3 main service providers that you will need to negotiate with. At the first meeting with each provider it is essential that nothing is assumed. There needs to be guidelines set on the expectations of both parties. Make sure that you obtain all the costs that you will incur from each Service Provider both directly and indirectly. A suggested order of contact would be:-
a. Mortgage Broker or Lending Institution
Armed with your Budget, Statement of Position and Documentation you are in an ideal position to make a appointment with one of the above. Your primary aim here is to obtain a “Loan Approval in Principle” so that you have a good idea of how much funding is available to you. Final approval of the loan would be subject to valuation.
b. Lawyer or Conveyancer
The legal requirements in this transaction is carried out by either of the above. Visit a chosen legal advisor to obtain an understanding of the legal process you need to go though during the purchase phase. Make sure this is carried out before any contracts are signed.
c. Real Estate Agent
Armed with the above information you are now in a great position to inspect properties knowing that:-
- You are aware of the legal process as there is a contract to sign
- You have a loan approved in principle
- You are operating within your budget which allows for some unforseen circumstances
- You have determined what amenities and services are required in your new neighbourhood.
- You have compiled a list of all that is required for your new home
This will ensure that you are well prepared when it comes to the negotiation stages .
This is a general overview on how to prepare for a new house. For a detailed account of these issues and links to various important web sites download your Complimentary How to buy a house Ebook now.
About Geoffrey Boyd
Having spent 23 years in the Financial Planning Industry, Geoffrey was
looking forward to retirement. It was then that some friends asked him
how they should go about buying a house.
This started 3 years of research into all aspects of planning and preparation when buying real estate from an outsiders point of view.
All the research, hints & tips, ebooks and software programs developed from this research are now available at www.hobig.com.au
Contact Geoffrey direct on 0448 843 214
or E: email@example.com
Home Buyers Information Guide