Sometimes, your standard, run-of-the-mill home is not enough. Buyers who sit in the upper end of the income bracket may want a little more from their real estate, wishing to spare no expense for a home that is the height of opulence. These are known as luxury, or prestige, properties.
Though demand of course varies from state to state, and region to region, there have been signs that areas with previously dormant prestige property markets are waking up lately. The Real Estate Institute of Queensland reported on March 2, for instance, that 2,600 properties across 320 Gold Coast suburbs sold for more than $1 million in 2014.
But before you join the clamouring throngs and sign up for a home loan for a piece of real estate worth many millions of dollars, you’ll want to be sure you’re making the right decision. The following few tips are crucial to keep in mind when hunting for that dream luxury property.
Choose the right real estate agent
Finding the right home often starts with finding the right buyers agent. This is true of just about any type of real estate. But with prestige properties, given the amount of capital that is being sunk into them, working with the right professional is even more crucial.
The ideal real estate agent will not only have a detailed and intimate knowledge of the area you’re thinking of buying in – they’ll also be an expert in the particular price bracket you’re targeting. They should be able to rattle off facts and figures around:
- The number of homes on the market
- How long they’re taking to sell
- The number of recent sales
And that’s just to name a few. They should also be able to tell you whether the price is right for the property you’re eyeing up. For instance, Melbourne had 59 suburbs with media house prices over $1 million in December 2014, according to the Real Estate Institute of Victoria. But were these prices an accurate reflection of the quality of the properties, or of a currently inflated market that doesn’t warrant pulling out a home loan calculator? An experienced agent will know the difference.
Don’t judge a book by its…picture?
Anyone who’s ever spent hours meticulously preparing their appearance for a party, gone, had their photo taken and been disappointed with the result is familiar with the misleading nature of photography. Whether due to lens distortion, camera flash or momentary atmospheric effects when the image was taken, photos can come out worse than the real life image.
Given this, don’t simply stop at the first photo you see of a property. Make the effort to physically check it out. You may find that the photograph omitted important features of the home, or made it look far less grand than it really is. If you can’t spare the time to make it down there yourself, consider at least using Google Earth to look at the home’s surrounding area.
But be wary. A Victoria University of Wellington study found that photos can create false or distorted memories, so that first impression may unfairly stick.
Get a home loan suitable to your needs
Because you’re dealing with such an expensive property, carrying out a home loan comparison to find the most advantageous product is essential. But your job doesn’t end there. You’ve also got to make sure you structure the home loan appropriately.
For instance, do you want to pay both principal and interest on the loan, or are you solely aiming to purchase the property for a quick-flip investment? If the latter, an interest-only loan might be your better option.
In addition to this, what kind of rate do you want: Fixed, variable or both? If the latter, then you’ll have to decide how much of the value you’ll put under each rate option. Finally, there are the home loan features to consider. A 100 percent offset account might be useful in this circumstance in order to keep your interest payments to an absolute minimum.
And while you’re at it, be sure to get a home loan pre-approval letter from your lender. This will put the seller’s mind at ease, and let them know you’re serious about the purchase. Happy hunting!