House buying process

[EmNew]

Hi everyone , 

 

We're about to seriously embark on the house hunt and can do with some experienced insight please.

 

For some reason I find the local system of auctions being the norm totally daunting.

One option we're considering is appointing a buyers advocate to assist with the process and attend auctions on our behalf.

 

I would love to hear from any forumites that used a buyers advocate , and from those that went it alone. I think that I may be overthinking the whole auction process and that it's not as cut throught and daunting as it sometimes appears, or is it ?

 

We do receive the auction results weekly , and used Domains price estimator , and find that those just compound the confusion. There seems to be no consistent way of knowing a house's value , as similar properties in the same street, same school zone, can be up to $150k apart in sales price !!! 

 

The above makes me lean towards a buyers advocate .......

 

 

 

Edited October 7, 2016 by EmNew

[Shellfish]

Buying property anywhere can be daunting but Melbourne/Sydney take the cake.

www.onthehouse.com.au is a fairly reliable source for getting a property's estimate but when the market is hot, properties can sell for well over the reserve. My experience has been that if a property is good for development (block size/zoning laws etc) or appeals to the Asian market then there seems to be no limit to what it can go for. 

 

We've never used an advocate before - we've bought and sold twice so I can't really advise on that. 

Sorry, I'm not much help.

All the best with your venture. 

 

 

[Mara]

Shellfish, I like the site that you offered, very interesting.

Emnew, sorry I cannot offer any advice, as we have never bought a house in Australia,  we have built both our homes.

[AFreshStart]

 

@EmNew,

 

The best advice I can give is to be prepared as you can be. Work out what you can afford to service (assuming you need a loan) and get pre-approval. This allowed us to skip the auction process on our home as were able to put in an offer that the seller accepted and called off the auction because they needed the cash and we had the liquidity. The unit opposite us, with the same floor plan, but reversed and sold for more than $12,000 over 2-weeks later at auction over a year and a half ago. Property is nuts here in general (Sydney), a few months later a similar unit sold for $27,000 more, then within 6-months another more than $65,000 and last month a unit went for more than $97,000 we paid a year and a half ago.

 

I spent MONTHS researching looked at over 7 suburbs, 100 properties, narrowed it to 30, inspected 10, lost out on 2 (at auctions) before buying ours. It's hard work, but worth the efforts and rewards.

 

All the best with finding your home!

 

Cheers

 

Matt

[EmNew]

Thanks for some feedback - really appreciate it. @Shellfish, that site is great ! Much  nicer to see all properties on the map, rather than entering addresses individually as you have to do on the Domain estimator.

[rozellem]

Em, dont forget to Google the stamp duty guide in your state. Makes for scary reading. People seem to be so focused on saving up for their deposit, that they forget all about stamp duty. 

 

Ps. We bought 3 years ago, in Sydney. My area is on fire, from my research and talking to agents (even if we did no improvements to the 54year old ugly duckling), its worth 500k more than we paid. Just crazy.

[Guest]

Cant give any advise on this Em. Just wanted to wish you all the best. It will be so lovely when you have your own place to call home ? Happy house hunting.

[Sunnyskies]

Hi,

 

We have bought twice, the first time with a buyers advocate and the second time without.

 

The benefit of a buyers advocate is that they give you very realistic feedback on the true selling price of a house, irrespective of the pricing guide.  We worked out that the pricing guide is usually about 25% below the price the house will sell for.  How can this be when estate agent's have to quote within 10% of the expected price you ask?  Simple, the estate agent puts down a range on the house, so for example a house gets a valuation range from that estate agent of $1,000,000 to $1,250,000.  The agent then markets the house for $900,000, being 10% below the bottom end of the range.  The house then goes to auction and sells for $1,250,000 and you are left scratching your head.

 

We saw this a few times when we first started looking at houses in Melbourne and we were left quite disenchanted and confused.  We then hired an advocate as we found ourselves going to auctions where the opening bid was our max.  The advocate stepped through how pricing works, how they work out the true value of the property (not that hard once you spend enough time researching the selling prices of houses) and then give you a range that the house should sell for.  We found them pretty spot on with the houses we seriously looked at, but we were also buying in a rising market, so they were adjusting prices on a weekly basis.  We literally saw the market move away from us while we stood on the sidelines.

 

The advocate was a bit expensive, but they knew how to play the market, and how to bid.  The other benefit was that they asked for our absolute max before each auction, and then if were out bid they walked away.  So the risk of emotionally overbidding was avoided.

 

We started looking at houses at least a year before we bought - we had a few failures once we got serious about 9 months before we bought, and bought a house 8 weeks after hiring the advocate.

 

The second time we bought was in Queensland.  A very different market.  I did my market research for about 4 months before we bought, and I had a very clear idea of what the house was worth (including having the bank's valuation on the house) and what I was prepared to pay.  The auction ran quite differently to Melbourne as there was not the same feeding frenzy and we finally purchased below our max.  I applied some of the same rules as we had done with the advocate and I think they paid off.

[EmNew]

Thanks for all the great insight and personal experiences shared .

 

We decided to initially give it a shot on our own . Didn't work out so well at the first auction we bid at last Saturday , but we tried and I don't think we could have been more prepared than we were . It passed in and we were pitted against another bidder for a tense round of negotiations with the vendor . Other bidder had deeper pockets .... 

We are very disciplined in terms of limit -  budget and preapproval in place so that side is covered and we were not tempted to make emotional decisions .So forging forward , we will give it a go again by ourselves , and if after a month we're still way out in our expectations vs our limit , we'll be knocking on a buyers advocate's door ....

[PauletJacques]

There's always the option of buying off-plan.

 

Plus sides - no crazy auctions, just a small race to pick a unit with a handful of other people contending. You only need 10% deposit to secure and the likelihood of your property being worth another 10% by the time it's ready to avoid mortgage lending insurance is pretty good.

 

The downsides - Not many people can imagine what a place looks like off-plan and need to walk through it. It may 6-24 months for the place to be built.

 

Watch out for dodgy developers, but if you do your research you should be fine

 

Just to a Domain search for new developments in your area.

[EmNew]

Happy update :

 

After another passing in at auction yesterday, enduring ( and failing ) a second round of negotiations that are worse than the auction ( in my opinion ), we stumbled across a private sale in the adjacent area. In fact a better area - better location for walking distance to public transport, shops, access to freeway etc etc.

 

We had other inspections to attend for future auction dates, so we honoured those, and then deliberated about the private sale property, which we had good vibes about from moment we stepped into it at the inspection. A bit of research later, some time spend trawling the surrounding streets of the property in question, we put in an offer late yesterday afternoon, and it was accepted!

 

So we are now shareholders in a property along with the mortgage provider  

 

If I can offer any advice from our experience - be firm in your limit/affordability when you attend an auction. We are highly disciplined people - we knew our upper limit, we had pre-approved finance, and we knew what our potential monthly repayments were at various prices leading up to our cut-off limit. It gets a lot more emotional than I anticipated. The agents are masters at making you want the property, making you realise how close you are to owning it, especially if you are the highest bidder at a property that passes in at auction. They push and they push . And they lie...... Hubby has dubbed them " smiling estate agent devil-people. "

 

We are so grateful that we found a private sale in the general area we were looking at - so much more transparent, and there is more protection for us the buyer too, whereas auction contracts have no 'get out of jail free' clauses

 

[Pell]

We had similarly irritating experiences in Sydney with our house hunting last year. We attended in excess of 10 auctions, and every time, we were outbid by Asian buyers who offered whopping amounts above what the auction price was at that point. It was insane, stressful and in the end we decided to find a piece of land and build our own house, which we did, and we're very happy with the decision. We're within walking distance to a train line and the area around us is booming, with old houses being torn down or renovated literally everywhere.