Top tips for buying your first home

Buying your first home can be a very daunting prospect. Not only is it one of the biggest financial commitments of your life, but it’s also made harder because the process is so unfamiliar. To help make your first home buying experience less stressful, here are 10 top tips from property valuer and industry expert Gavin Hegney.

About the event

Gavin Hegney: First Home Buyer event

To help make your first home buying experience less stressful, here are some top tips from property valuer and industry expert Gavin Hegney.

Video Transcript (PDF, 71KB)

Top 10 tips when buying your first home

1. Make a list of your ‘must haves'

“You need to be clear on a few non-negotiables when buying your first home,” Gavin said. That might be the location you want to buy in, the size or type of your property or perhaps the particular features of a property or nearby amenity. Gavin said having a list of reasonable non-negotiables will help first home buyers gain focus and narrow down their search.

2. Take advice but use it carefully

“Property is a very unique and a personal thing,” according to Gavin, adding that first home buyers will often take advice from their parents, friends, family or real estate agents. While it’s important to listen to that advice, Gavin said, make sure you take your own circumstances and objectives into consideration when making your decisions.

3. Land appreciates in value, buildings depreciated in value

Gavin said that a property often viewed as a single entity, however there’s actually two aspects to it – the land and the house (i.e. building) that sits on it. “Every dollar you have tied up in your building component depreciates roughly 2% per year on average,” according to Gavin – that means the building goes down in value. He said land is typically the component that will rise in value over time, and first home buyers should be aware of how much the land and building are worth separately.

“Every dollar you have tied up in your building component depreciates roughly 2% per year on average.”

4. Look at sales figures to gauge price movements

To gauge the condition of the market, Gavin said to look at the annual change in sales figures in the area where you’re looking to buy. “Sales activity picks up before prices pick up – it’s a good lead indicator for price movement,” he said. “If you see for sales signs staying up longer, then sales volumes are probably dropping. But if you see sold and under offer occurring quite quickly, then sales volumes are probably increasing.”

5. Try before you buy

Making the leap to home ownership is a big financial commitment. To make sure you can afford it, Gavin suggests to determine how much it will cost you each week, and start putting that money aside to see what impact it will have on your lifestyle. “Look at how much you can borrow and what your repayments will be, and make an allowance for insurance, property maintenance, council rates and other costs, and then put that money aside out of your weekly budget. If it doesn’t impact your life too much, then you know you can afford the property, because you’ve already adjusted your lifestyle,” he said.

6. It’s what you buy, not what you pay

When it comes to property, most people want a bargain, according to Gavin. However, he said just because a property is selling cheaply doesn’t make it a good buy. “Good property you generally pay more than what you’d like to,” he said. “Poor properties you get for bargains, but it’s usually cheap for a reason.”

“Look at how much you can borrow and what your repayments will be, and make an allowance for insurance, property maintenance, council rates and other costs, and then put that money aside out of your weekly budget.”

7. Buy for the next 10 years

“What’s your life look like in the next 10 years?,” Gavin asks. “Don’t buy for your needs immediately today, because life changes quickly.” He said to think of how you might accommodate a growing family, if you can renovate or add on an extra room. “You don’t want to be in a positon where you bought a property and in 3 years’ time realise it’s no good for you anymore,” he said, highlighting the high cost of buying and selling property makes it expensive to move houses regularly.

8. Location, position, timing

Most people have heard the phase, location, location, location. However, while location is an important factor for first home buyers, Gavin said it was also important to be aware of the position of the property within that suburb. “There might be a particular pocket within a suburb that’s nicer, it has a park or nice street, that’s ideally what you’re looking for within the suburb,” he said. Timing was referencing where in the property cycle that you’re buying your property.

“Don’t buy for your needs immediately today, because life changes quickly.”

9. Secure pre-approved finance

Gavin said it’s smart for first home buyers to gain pre-approval for their home loan before they find their perfect property. “That’s a no brainer because you can go house hunting with a degree of confidence about what you’re budget is, and that you have finance ready to go.” It can also put you in a stronger position when negotiating with the sales agent, he said.

10. Use the contract to your favour

Gavin said if you have any concerns about a property, make sure to put them in as a condition of your contract. For example, if you have concerns about the quality of old renovations, include a clause in the contract that’s its subject to a building inspection. “If there is any uncertainty about the property, make sure to put it in as a condition of your contract. Don’t take the risk on yourself, just put it in the contract.”

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Things you should know

The information contained in this article is of a general nature and is not intended to be nor should it be considered as professional advice. You should not act on the basis of anything contained in this article without first obtaining specific professional advice. To the extent permitted by law, Bankwest, a division of Commonwealth Bank of Australia ABN 48123123124 AFSL / Australian credit licence 234945, its related bodies corporate, employees and contractors accepts no liability or responsibility to any persons for any loss which may be incurred or suffered as a result of acting on or refraining from acting as a result of anything contained in this article.