Everyone wants to find a bargain when house-hunting and in a real estate market such as this; when house prices are either flat or declining, now could be the time to get a foot on the property ladder.
When it comes to buying real estate, the truth is that you always get what you pay for. However by understanding the market, knowing what to buy and choosing the best finance options, bagging a bargain is possible. Here are some lessons to help you buy, negotiate and secure a home loan like a professional.
Do the research
A property in a bad area may be priced cheaply, but if no one wants to buy or rent it from you there is little chance of achieving capital gains. A true bargain can be a regular-priced property that has something unique about it, which not everyone recognises, or potential for improvement such as with a renovation.
First, you will need to know what to buy and the answer will depend on your circumstances and goals; are you buying to live in a property, or do you want an investment with the potential for high yield? How much income do you have available, and do you have the skills or patience to renovate?
Second, to really understand property values you’ll need to do the legwork. Use free housing data sources, for instance reports from Australian Bureau of Statistics, or RP Data (detailed reports may come at a cost). It also pays to get out and inspect properties; not just online, but also in person. Talk to real estate agents and property managers to gauge demand in the area and local sale prices.
Negotiate to win
At the time of making an offer, amateur buyers can become emotionally involved, losing sight of the bigger picture and even paying too much for a property. Professionals keep financial perspective and as a result have the upper hand when negotiating on price. Set a price ceiling and stick to it, or have an agent or friend negotiate on your behalf.
Finally, choosing the best home loan or investment loan can mean long-term financial gain of tens of thousands of dollars. That’s because the amount of interest paid on say, a $400,000 home loan repaid over 25 years, will differ significantly depending on the interest rate charged.
For example, the average of the big four’s standard variable home loan rates is around 7.4 percent. At this rate, a borrower will repay $2930 per month and $478,997 over the life of the above loan.
By opting for one of the cheapest rates on the market, at around 6.2 percent, the same borrower would cut monthly repayments by more than $300 and save more than $91,000 long term assuming the rate remains steady. Clearly, it is at this stage in the buying process that the real bargains are to be found.