Introducing Episode 4
Episode 4 of the podcast is the second of a 2-part series on '5 Mistakes First Home Buyers' make on when buying property in Victoria.
In Episode 3, we discussed the first two mistakes that first home buyers make when buying property in Victoria, including:
- #1: Not saving enough money to buy.
- #2: Relying too heavily on the real estate agents advice.
In Episode 4, specialist Melbourne conveyancing lawyer, Melissa Barlas, talks about the last 3 mistakes, which include:
- #3: Not performing enough due diligence before buying.
- #4: Moving in on the day of settlement.
- #5: Too much stress and not enough fun!
Let's get stuck into it.
Mistake #3: Not enough due diligence
I wont sugar coat it.
Before you buy a property in the Melbourne property market, it's so important to do your research about the property you're wanting to buy to properly manage your risk as a buyer.
Because you want to buy safely, right?
In Victoria, it's incumbent on you as a buyer to exercise due diligence before you buy. If you don't, and you discover something risky about the property after you buy, chances are you might not be able to end the contract and get your deposit back.
I think I felt my heart rate go up a tad.
So before you buy property in Victoria, it's important to perform the following due diligence tasks to reduce your exposure to risk, to name a few:
Get the sale contract and section 32 reviewed
I can't stress it enough. Before you buy, it's important to get the contract and section 32 reviewed by an experienced conveyancing lawyer, not a run-of-the-mill conveyancer.
Tune into episode 1 of The First Home Show podcast for more information about the importance of getting a contract and section 32 reviewed by a lawyer.
Arrange a building and pest inspection
The second due diligence exercise you can do is arrange a building of pest inspection of the property before you buy.
I've talked about that in episode 2 of the podcast in detail. Please tune into that episode because it will give you loads of information about why it is important to arrange a building and pest inspection before buying.
Work out what you can afford to buy
You want to understand how much you can afford to buy by taking into account the costs I've outlined in episode 3 of The First Home Show podcast.
The cost outlined in episode 3 are important to factor into your budget, so I encourage you to tune in.
You should also ask yourself, what do the month to month costs of actually owning this property look like?
A review of the contract and section 32 by a Melbourne conveyancing lawyer will confirm the estimated rates and outgoings you'll likely pay each year.
You should factor running costs, such as rates, utilities and insurances, into your budget to determine if you can financially sustain the property.
Suss out the neighbourhood and property
Before you buy, it's important to assess the neighbourhood in which you want to buy.
Here are some examples of what you can do to suss out the neighbourhood:
Are there any neighbourhood disputes?
Speak to the neighbours to find out if there are any disputes with the owner.
Find out if there's any noise complaint issues, because that's important.
Are there amenities nearby?
Are amenities a close distance to the property? Are there schools nearby? Is the area generally safe?
Enquire into illegal works
Call the Council and see if there are any investigations into non-compliant or illegal work at the property, as you will be liable for any non-compliant or illegal work from the contract date.
Enquire into nearby developments
Call the Council to check if:
- there are any planned developments nearby that could affect your views from the property or your general enjoyment of the property.
- there are any zoning or overlays that could limit what you want to do with the property.
Is the property in a bushfire-prone area?
Call the Council or get the contract and section 32 reviewed to find out if the property is located within a bushfire-prone area.
If the property is located within a bushfire-prone area:
- you may be required to pay a higher insurance premium compared to a property that is not located in a bushfire-prone area.
- you may be required to pay higher maintenance costs per year for the property.
Does the property have a compliant pool?
If the property has a pool, are the poor barriers compliant? From the contract date, you will be liable for non-compliant pool barriers.
Will the value appreciate above the proposed sale price?
Find out if the value of the property is likely to remain the same within the next five or 10 years, or if it is going to decrease below the proposed sale price.
Speak to real estate agents in the area and look at previous sales history. Will the capital value of the property continue to appreciate over time?
If you're looking to invest and get passive income through rent, what are the average rental yields for that area? Again, speak to real estate agents and do your own research to find out.
The type of enquiries you make about the neighbourhood and the property can vary based on your specific needs and interests. Regardless of what your needs and interests are, there are many factors to consider when it comes to buying property and doing your due diligence before you buy.
Making due diligence enquiries about property is not designed to make you feel more stressed about buying. You want to do the research to ensure you're making an informed decision about the property you want to buy before you buy it.
The process is designed to enlighten you, not stress you out. You'll feel more confident and prepared, and will increase your chances of actually finding the right property for you.
For more information about the standard of due diligence that you need to follow when it comes to buying property in Victoria, I recommend you visit the consumer affairs website at https://www.consumer.vic.gov.au/duediligencechecklist.
Consumer Affairs provides a lot of handy information about what you request and enquire about before you buy a property.
Mistake #4: Moving in on the day of settlement
Mistake number four is something that a lot of us just don't consider altogether: moving into the property on the day of settlement.
At settlement, you become the owner of the property. So it makes sense that you'd want to move into the property on the day of settlement.
Naturally the anticipation of becoming the owner of your very own property or moving away from your current living situation, for example, makes you want to move in as soon as possible.
I get it.
But the truth is, moving in on the day of settlement is actually not a great idea.
For example, what if your finance is delayed and that causes a last minute delay to settle? In that situation, you've booked removalists to move your personal items into the property before the settlement actually takes place, because the settlement has been delayed.
When that happens, you find yourself wasting valuable time in your day, frantically rebooking your removalists for a later date, not knowing when they're actually gonna next be available.
And chances are, you could actually be lumped with an extra bill from your removalist company for rescheduling their service.
So for the reasons given, I highly recommend that you make arrangements to move into the property at least one week after settlement, just in case of any unforeseeable delays to the settlement.
Mistake #5: Too much stress and not enough fun!
The last mistake, and it's worth mentioning, is that there's too much freaking out and not enough having fun when your buying your first home.
The message is simple. Try not to freak out as much as possible or get overwhelmed when you're hunting for your first property.
I know it's easy to feel stressed. I get it. It's a big deal. I've been there myself. It's one of the biggest financial investment you'll make in your life for a very long time.
But it's so important to also have fun with the process. It's a joyous time for you. Think about it. You're finally in a position where you can start looking for a place of your own. That's an amazing thing and an incredible feat to accomplish.
So enjoy the journey. Enjoy the learning. Enjoy the search knowing in the end, you'll have a place you can finally call home or your own.
I hope you've been able to get lots and lots of information and value from the previous episode and today's episode about '5 Mistakes First Home Buyers Make' when buying property.
I hope you've gained clarity about what not to do as a first-time buyer, to make your life a little bit more easier when you're out there in the property market, and to buy your first home more safely.
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