Archive for category: Buying

Do This Before You Even Think About Buying Your First Home

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checklist written white notebook

Buying your first home is one of those life occasions that can invoke both excitement and terror, both at the same time. The excitement is dreaming big and spending days looking at property until you have some knowledge of your local real estate market. The terror is the reality of signing up for a mortgage that may take years to repay.

Where to Start?

The starting point is to find out how much money they can borrow. This will vary depending on individual incomes, the size of the deposit and the policies of various lending institutions. Saving enough for a reasonable deposit is a big obstacle for first home buyers, so most state governments have a range of assistance programs. For example, in Western Australia, eligible applicants can access up to $2,000 to help reimburse them for incidental expenses associated with purchasing a home.

Incidental Expenses Plus a Deposit – Are You Kidding?

What are incidental expenses? As if saving a deposit wasn’t hard enough, other costs that need to be covered are mortgage registration fees, conveyancing fees, valuation and inspection fees, mortgage insurance premiums and lending institution fees. This is not a complete list as these costs can vary from state to state and this program may not be available in every state.

State Government Grants to Help Out

The biggest assistance package for first time home buyers is the First Home Owner Grant that is offered by most states, including Western Australia. The grant provides up to $10,000 to those eligible, and again, this amount can vary from state to state. This is an excellent boost to the finances for those buying their first home. There may be time limits on the application process, so it is wise to check the eligibility criteria before making any decisions.

Our property sales professionals here at Bunbury Real Estate know our local market and are ready to assist first home buyers find a suitable property at a price they can afford. We also can help with general information about these grants and other actions that buyers should take before deciding on a property, but as in most matters, they should also seek other independent advice.

Keep Some Extra Cash Aside

This could be in the form of valuation fees and building and pest inspection fees to check for faults or other problems. Stamp duty is levied by the state governments, payable by the buyer and is calculated on the selling price. Buyers should also insure the property immediately they sign the contract of sale. Calculating these costs in advance and setting money aside to meet them will allow the first home buyers to enjoy their new home without immediate financial stress.

Do Your Research Before Buying Your First Home

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buying a home

Buying your first home is one of life’s most exciting experiences. Most buyers get caught up in all the obvious activities such as selecting a location, inspecting housing stock, planning renovations and shopping for furnishings to suit their chosen property. With some basic knowledge of lending practices, they have also secured a mortgage and have moved into their first home.

What They Didn’t Know

A few years later, with more information and experience behind them, many of these buyers would now admit that there were some important things, had they known them at the time of purchase, would have changed the way they approached their quest.

A Mortgage is Just the Start

The first thing they would have done differently is to monitor their spending habits. Although they had saved a deposit, they underestimated their spending preferences. They were able to cover the mortgage, but other regular expenses attached to home ownership such as property rates, insurances, repairs and maintenance were a struggle until they controlled their spending. In hindsight, they should have created a realistic budget, which included the non-essential purchases that they had to forgo to achieve their home ownership dream.

Don’t Fritter Away Your Deposit

Some buyers underestimated additional costs that ate into the deposit they had saved. Fees and charges, such as stamp duty, transfer fees, building and pest reports, conveyancing costs and solicitors’ fees can amount to thousands of dollars. The better alternative is to research these costs and save extra money to maximise your deposit. If additional costs are chipping away away at your deposit, you need a good strategy for setting up a budget.

These are all issues that we are familiar with as property managers. At Bunbury Real Estate, we spend time with prospective buyers to find out the types of properties they would like us to show them. We also do our best to qualify each client to make sure that we are not wasting their time showing them properties that are out of their price range.

Pay Extra Each Month and Shorten the Loan

Many buyers wish they had understood more about the actual cost of the interest on their home loan at the start. Those who paid the minimum off their mortgage each month were not really getting ahead, while those who paid more than the minimum were reducing both the principal amount of the loan and the interest. This also shortens the term of the loan if the extra payments can be sustained over time.

Insure It Before You Own It

Finally, most first-home buyers did not know that they needed to insure the property they had under contract, even though they were weeks away from settlement. This was an unexpected up-front expense, but essential to protect their financial interest in the event that the property was damaged prior to finalising the sale.

Buying First Or Selling First – A Constant Conundrum

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buy a house first or sell first

One of the regularly debated issues in residential real estate is whether it is best to sell first before buying another property, or better to buy something else before selling. This is the dilemma most sellers face once they have made the decision to place their home on the market, and unfortunately, there is no definitive answer. It depends on individual circumstances.

When Buying First There is No Urgency to Sell

When sellers plan to buy another property first, there is no urgency for them to sell their current property. They still have a comfortable place of residence from where they can search for their ideal next home. They are also in an excellent negotiating position, especially if the seller is under pressure to get a quick sale.

Buying first means no regrets for a missed opportunity. And if the circumstances are right, there is also the option for capital gain on both properties in a rising market. It also means that there is no nightmare rush to vacate the original property before settlement. This allows for a leisurely and stress-free move to the new property.

Buying First

However, there are some traps when taking this route. For example, securing a loan for the second property will place sellers in the position of having two mortgages. If the original property should be slow to sell, the financial strain may force a sale at a reduced price. Also, sellers may not have the option of buying first if their lenders require that the original property be sold first.

Our sales professionals at Bunbury Real Estate deal with these issues every day. They know whether market conditions are weak or strong, and if the type of property the client is looking for is available in their search area. Clients researching the pros and cons of buying first or selling first should discuss their situation with one of our sales professionals so they can make informed decisions.

Selling First

Selling first gives the owners time to research the market and settle on a price, and to prepare the property for sale. They have the flexibility of considering offers and negotiating settlement terms that suit them. Financially, they would be more attractive to lenders when applying for a mortgage for their new property.

Don’t Wait Too Long

Regardless of whether the market is moving or stable, the golden rule in this situation is, if possible, to buy and sell in the same market and not wait too long to secure the next property. If property prices rise sharply, sellers could be left unable to afford the homes they had hoped for. Neither choice of selling first of buying first is wrong provided all circumstances are considered before deciding.

How Property Market Trends Affect Pricing

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property market trends

In a depressed property market, the biggest frustration for sellers is that they won’t be able to sell their home unless they sell at any price. However, once the market starts to move in either direction, it is essential to monitor the trends before changing the price. It also equally important to seek professional advice when pricing your property.

Check Market Trends Before Changing Pricing

It is the same situation in the rental market. Most lessors look to the end of any tenancy as an opportunity for a rent increase. However, if the rental market is depressed and vacancy rates are high, good tenants are hard to find. Again, monitoring the property market is vital before tinkering with rental prices.

Does Supply and Demand Really Rule?

Like most sectors of the economy, movements in real estate are driven by supply and demand. According to market economic theory, as a commodity becomes scarce, prices rise. This prompts more suppliers to enter the market to satisfy demand, which in this instance is real estate. As prices continue to rise beyond the capacity of the market to pay, demand weakens, suppliers leave the market and prices fall.

Swings and Roundabouts

Some markets are much more volatile than others, with large swings back and forth depending on trading conditions. Some parts of our agriculture industry, for example, can have trends that range from high to low in one or two growing seasons. Thankfully, the trends in the real estate industry are more long term. But this does not mean that we can ignore the market.

As both selling and letting agents, our ability to respond to property market trends is part of our service . The staff at Bunbury Real Estate keep up to date with property market statistics. This allows us to advise both our clients if they need to adjust their rents or sale prices.

Additional Advice to Keep Everyone Informed

We also like to clarify to clients that there is no Australia-wide property market. Even within the same state, there are differences between regions. For example, the market in a capital city will be different from an inland market with corresponding differences in pricing. It would be unrealistic for a seller in a regional town to expect the same price for a comparable property near the beach.

The current overall market trend in all states shows strong buyer activity and low levels of quality housing stock. Along with low interest rates, improving business and consumer confidence, a growing economy and COVID vaccinations being rolled out, our industry should be stable for some time.

Are You Considering Future-Proofing Your Investment Property?

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building house rolled up house plans

Property investment across the country is still generally sound, despite the difficult year just gone. As a society and an economy, however, we have learnt the hard way that we should always be prepared for the unexpected. We should always have a Plan B – just in case.

Short-term vs. Long-term Tenancies

Residential property investors have generally had a steady cash flow as the demand for rental accommodation has been strong. Indeed, they have not usually been forced to choose between short and long-term tenancies as both options have been available. However, the times are changing.

Flexibility a Key Benefit

There are some advantages to short-term tenancies for owners. Flexibility is a key benefit. The property can be used by friends and family for short periods between tenancies. Bad tenants can be moved on quickly. If a lucrative long-term opportunity comes along, the owner can move back to a long-term arrangement.

Higher Rental Returns; Less Wear and Tear

Short term rentals often attract higher rental returns, especially in competitive locations. There is less wear and tear as the properties are inspected, cleaned and repaired after the end of each tenancy. Also, the owners have the flexibility to sell the property at any time as they’re not locked into a long-term tenancy.

Our professional property managers at Bunbury Real Estate work hard to ensure that our property owners maximise their rental returns – both short- or long-term rentals. Every property is given the same care and attention. All tenant references are thoroughly checked.

Long-Term Rental Income Security in Uncertain Times

None of these benefits are as important as security for some investors, especially in these uncertain times. Many owners are relying on the rental returns to pay the mortgage on their investment properties. They prefer the stability of long-term lease agreements with a set date. This allows them to plan their cash flow as the rental income comes in at a constant rate. They also are not vulnerable to off-season variables that may see their properties vacant for weeks at a time.

Fewer Costs, Simpler Management Arrangements

In addition, owners have fewer costs as long-term tenants usually pay for utilities. Properties are not being advertised every few weeks or months. Owners are not refurbishing or paying clean-up costs as often as short-term rental owners. Long-term owners are also not interacting regularly with their property managers.  For them, this arrangement makes managing their investment simple and stress free.

Is Buying an Apartment That Has Not Been Built a Good Idea?

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Apartment living is increasing in popularity in our capital cities and some of the large regional centres. With demand showing no sign of slowing in the short term and with stocks of new and older apartments in short supply in some areas, home buyers and investors are turning towards buying off-the-plan.

Pay a Deposit, Sign a Contract and Wait

For those unfamiliar with this method of buying real estate, the prospective buyer selects the apartment they want from plans and artist impressions of the completed product. They pay a deposit and sign a contract to buy an apartment that will be built in the future or is in the process of being built. At this point there is no completed physical property to be inspected.

Fixed Price Protects Buyers from Price Rises

There are upsides to this way of buying but there are also downsides. Starting on a positive note, when buyers sign the contract the price is fixed, protecting them from price increases that could occur in a rising market by the time the building is completed. Also, buyers pay a reduced deposit, and as they do not settle the transaction until construction is completed, they have extra time to sort out their financials.

Stamp Duty Concessions and Rebates

There are also savings on stamp duty, as in most states, if the buyer signs the contract before construction starts, stamp duty is only levied on the value of the land, not the entire contract price. In Western Australia, the Off-the-Plan Duty Rebate Scheme offers a rebate of 75% on the duty paid on residential multi-tiered apartments, subject to certain conditions.

What Goes Up Could Come Down

On a negative note, one of the downsides to buying off-the-plan is the possibility that after buyers have signed the contract, the market could fall substantially, and unless it recovers before the building is finished, those buyers could be forced to settle on an apartment that has fallen in value.

What If the Developer Can’t Finish the Project?

Another downside is the possibility that the developer may go into liquidation before the project is finished. Like any major purchase, buyers should exercise due diligence over the financial stability of the developer. This is one of the biggest risks in buying off-the-plan. If this happens, buyers may lose their deposits, so it is worthwhile to investigate the reputation of the developers.

Our staff at Bunbury Real Estate are experienced in sales and property management, and coupled with comprehensive local knowledge they are well positioned to find the right property for every client. They have many apartment options to offer clients looking to buy, as well as providing advice to existing apartment owners who want to rent out their apartments and need up-to-date appraisal information.

To Rent or Buy – That is the Question

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man and woman carrying boxes

Owning a home with a yard big enough to accommodate two cars, a caravan and a pool was once the holy grail for most Australian families, but demographic and lifestyle changes have given dwelling buyers far more options these days, than those available to their parents. Housing lot sizes in major cities have shrunk to the bare minimum, and the growth in apartment living has become a long-term lifestyle choice.

For Those Who Prefer to Live in a House

Many home seekers have already decided that an apartment is not for them. They may have an aversion to living too close to neighbours or have possessions that need space to display and store. Perhaps they already have a menagerie of pets, or they want a yard and garden to get outdoors and enjoy leisure time. Now their only decision is whether to rent or to buy.

Pros and Cons of Renting

Renting is an excellent option for those who struggle to save a house deposit. Once tenants pay their bond and the first couple of weeks rent, they can move in and, provided they pay their rent on time, the property is theirs to live in and enjoy, with just the occasional pre-arranged property inspections to manage.

Another benefit of renting is that, apart from keeping the property tidy and well-managed as required by the tenancy agreement, the landlord pays the repair and maintenance expenses. It is also easier for tenants to move to another area at the end of their tenancy if they wish. However, this can be a negative if they want to stay but the owner does not want to extend the tenancy.

Our sales and property managers at Bunbury Real Estate see both sides of this conundrum every day. They use their market knowledge and professional expertise to assist clients to find the accommodation solution that suits their individual circumstances and lifestyle choice.

Pros and Cons of Buying

Just like renting, buying also has its positives and negatives. Those with a deposit and a housing loan can either buy an existing property or build a new home. People who buy rather than rent usually want stability and to become a permanent part of a community. They know they must pay for repairs, but they also have the freedom to decorate to their own taste.

On the downside, emergency circumstances can see homeowners desperate to sell their property for quick cash. This leaves them vulnerable to losses through market fluctuations. However, as owners, they can, instead, raise cash using the equity in their home rather than sell. The biggest benefit to buying rather than renting is that eventually, they will own a substantial unencumbered asset.

Can’t Decide Whether to Rent or Buy? Try the Rational Approach

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redhouse with paper and pen

Are you looking for long-term accommodation but cannot decide if you should rent or buy? If you favour an apartment over other dwelling types you have already made the first decision, so all that remains is choosing between buying and renting.

Look at Both Sides of the Issue

Like every major life decision, there are pros and cons for both, but sometimes, people prefer to rent because they are not ready to commit to home ownership. It is helpful, therefore, to take a rational approach to the issue of renting vs. buying by examining both sides.

Pros of Renting – Flexibility

Apartment living for renters offers flexibility as tenants can move around to different locations whenever their lease expires. This is a great option if you have moved into a building where there are problem neighbours, or you are not ready to put down roots.

Fewer Upfront and Ongoing Costs

Renting is cheaper than buying with no large deposit required; it is just the standard bond and rent in advance. This enables tenants to choose a rental close to inner city locations to take advantage of the employment and lifestyle opportunities on offer. Also, there is no maintenance or ownership costs as these are paid by the landlord.

Cons of Renting – Uncertainty and Lack of Privacy

The biggest disadvantage to renting is uncertainty. Good tenants often have to leave locations that tick all their liveability boxes when their tenancy agreement expires and may have to settle for less suitable apartments.

They must allow their property manager or landlord access, by mutual arrangement, to their apartment several times a year for inspections. While there are laws that protect the rights of renters, the fact is they are not the owners and will always be paying rent without accumulating an asset.

Pros of Buying – Ownership and Stability

One of the pros of buying an apartment is that, although the entry costs are much higher than renting, and provided the mortgage payments are made, the home loan will eventually be paid off. This will leave the owner with an asset of substantial value.

Owners have the stability that renters do not and only leave their chosen location if they decide to sell or rent out the property. If they sell, they can buy elsewhere, or if they become landlords, they have an additional income stream.

Cons of Buying – Up Front and Ongoing Costs

Buying an apartment involves saving the required deposit and taking on a mortgage that must be paid regardless of life circumstances, such as losing your job. Home buyers are also responsible for ongoing costs such as insurance, rates, utilities and maintenance.

At Bunbury Real Estate we believe there are no right or wrong answers and both options are equally suitable depending on circumstances. Either way, we have the experience, market knowledge and professional staff to help people find their perfect home.

Choosing the Right Property – Emotions Vs Practicalities

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aerial view of neighborhood

The current health pandemic is causing disruption nationwide across most parts of the economy and the real estate sector is no exception. However, there are still buyers in the market in encouraging numbers. Their first key decisions are the preferred location of the new dwelling and whether to buy a house or an apartment.

Houses vs. Apartments – Pros and Cons

Traditionally, Australians preferred houses with generous yards, but as housing costs outstripped wages and the workforce tired of the long, daily commute to the suburbs, apartments came into favour, especially in inner city areas. There are pros and cons for both, and the proliferation of apartment blocks has given buyers more scope for choice than they had in the past.

Does a House Suit a Larger Household?

As a buyer trying to make this decision, there are a few things to consider. The size and composition of your household is one of the most important. If you have an extended family living with you, as well as pets and all the usual trappings of a group, a house is most likely your best option. Space in these situations is at a premium, so your own block of land to accommodate vehicles, hobbies and room for everyone helps to create harmony.

Apartments are Low Maintenance

While a small household with minimal possessions may also buy a house to accommodate future family expansion, they are equally likely to prefer an apartment. Many come with access to off-street parking and storage facilities, and the body corporate usually maintains the common areas. Apartments with at least one balcony also give owners the option to have a small vertical garden for those with green thumbs.

Our sales staff at Bunbury Real Estate can accommodate both types of buyers. We have the local knowledge and professionalism to listen to the needs of our buyers and find them the right property for their situation. Communication with our clients is our strength, so we don’t waste their time taking them to inspect properties that are not what they have requested.

Two More Issues – How close are Services and Lifestyle Preference?

There are two other issues important to both types of buyers. One is the proximity of their desired property to work and essential services. The second is about how the household lives in the dwelling. Do they like getting outside in their own space to unwind or prefer to draw the walls of their dwelling around them?

Emotions often get in the way of good judgement when buying a home. Buyers may have to choose between a house or an apartment, based on factual issues such as proximity to services and lifestyle preferences. Which one is more practical for your situation?

New Home Building Does Not Need To Be Wasteful

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By the beginning of this century, building trends, consumer demand and an abundant supply of land saw the size of the average Australian family home balloon to among the largest in the world. With the threat of climate change now closer than previously thought, home owners are looking to reduce their footprint on the planet and to embrace sustainability when designing and building new homes.

Can Traditional House Plans Deliver a Sustainable Dwelling?

With all the best of intentions, just how does someone without the funds to engage an architect go about designing a sustainable dwelling? There are several relatively simple ways to do that while still working with traditional house plans, resulting in an energy-efficient home built around renewable resource principles such as passive design.

How Does Passive Design Work?

In this model, the building utilises local climate and site conditions to keep the home at a comfortable temperature, reducing the need for artificial heating and cooling. The placement and orientation of the home on the block of land is critical. For example, a house design utilising the northern aspect harnesses the power of the sun, with shading and overhangs to limit sun exposure in summer, while allowing for the sun to flood into the rooms during winter.

Here at Bunbury Real Estate, we are seeing many examples in new housing estates of this type of thought and care now being taken. With home buyers looking to buy existing houses, we get regular enquiries regarding features such as rainwater tanks and the possibility of using grey water for lawns and gardens.

Solar Power Still a Favourite

Renewable energy is the next obvious choice for a sustainable dwelling. Solar power is the most widely consumed renewable energy source in Australia and with the cost of storage batteries falling rapidly, it will soon be affordable for the excess solar energy to be stored in household batteries. Even without batteries, householders are already selling their surplus power back to the grid reducing their energy costs.

Don’t Waste – Recycle

For an even more sustainable home, some builders are using recycled building materials in new home construction. Materials such as aluminium use large amounts of energy to create but can be recycled time after time and fit well with modern décor. Home owners are also requesting that only plantation timber be used in their dwellings, keeping old growth forests intact.

Getting Used to Smaller Homes

There are many more techniques being used, but the most interesting one for Australians is the trend to building smaller houses. Not only are these more affordable, but they consume less building materials, are less expensive to run in terms of energy costs, and with clever design, can still give us the lifestyle to which we have become accustomed.