With 13 interest rate rises over a 19-month period causing some panic for first-home buyers to get into the market at a time when headwinds are so fierce, it can be easy to make some mishaps or wrong moves along the way.
And some of these mistakes can be costly and time-consuming.
But by hearing some of the common experiences of first-home buyers, it’s possible to learn from their mistakes.
Here are 14 things that many first-home buyers wish they knew before buying their first property.
1. You need to focus on your finances first
From saving a deposit to understanding your expenses and working out how much you can borrow.
The first stage of buying a property for first-time buyers should always be to focus on your finances.
There is no point in going shopping for a property, falling in love with one and then trying to get your budget to match.
Work out how much you have or can save, get a good understanding of how much you spend outside of rent costs and calculate what you can borrow… and what price bracket the combination puts you in.
Get your finance pre-approval before you start your property search, so you can confidently make an offer.
2. You should use a broker rather than shop around for a lender
It’s so important to get the right finance when buying your first home, and having a great mortgage broker can really help.
They will steer you through the maze of lenders and different products and as they are paid by the lender, they do not cost you any money.
If you decide to do it alone, make sure you shop around for the best lender to suit your needs rather than just settling on the first one you come across.
Interest rates and borrowing levels differ vastly, and many lenders have different rules and requirements they apply to their loans - make sure you understand what you’re getting approval for and how it compares to others in the market.
3. You need to decide a budget and stick to it
Once you’ve gone through the process above, sorted your finances and secured your pre-approval you’ll know what budget to stick to.
Many buyers, especially first-time ones, get over excited and let FOMO (fear of missing out) take over, sometimes putting in a bid or offer that is outside their budget.
4. You need to make sure you know your market
Research is the key to understanding the market you want to buy in, and therefore what you can expect to pay.
Don’t jump in with two feet blindly, make sure you’ve backed your decision with enough research to know you’re paying what a property is worth (or under it).
The problem is it takes years to get the right perspective to interpret the research.
That’s why more and more first-home buyers are turning to the home buyer’s agents at Metropole to help them in their property hunt.
5. Buyer’s agents aren’t just for the rich
Many first-time buyers mistakenly think that buyer’s agents are just for those with cash to splash and millions to spend.
But buyer’s agents can actually help no matter what your budget.
They’re an invaluable and surprisingly accessible resource for all buyers and can provide anything from an end-to-end service to just negotiation, bidding or closing the deal.
The fact that buyer’s agents also have in-depth knowledge of their local market also helps to put you at an advantage, as is the potential to access off-market and exclusive properties.
6. Never fall in love with a property
Buying a first home is different from buying an investment property, and it’s easy to fall head over heels.
But it's a risky game when emotions get involved, and it could easily lead to you paying more than the property is really worth.
As important as it is to find the right property, it’s also important to ensure your head is making decisions, not your heart, and that you’re able to identify real value and walk away when it no longer aligns with what you want or need.
Because it’s easy to get caught up in superficial things and not look deeper, especially when a property is staged for sale to make it look attractive.
7. The perfect property doesn’t exist
When it comes to finding a property, there will always be some type of trade-off.
You might have your list of requirements and boxes to tick but the reality is you’re very unlikely to find a property that ticks every single one… AND is in your budget.
Understanding from the outset that there will be some sacrifices will help you down the track.
It would help to list your needs and wants in order of importance and focus on ticking the top most important ones off.
Anything else is then a bonus.
8. Never believe everything a selling agent tells you
Selling agents work for the seller, and in the seller's best interest.
Never get swept up into thinking they are there to help you as a buyer - your best interests are not their priority.
Their job (and their moral obligation) is to get the best price for the property to fulfil their contract.
I’ll say this again because it’s vitally important: a real estate agent’s ultimate interest and loyalty lies with the seller because they have been contracted to sell the property for that owner.
Once an agent has secured the listing to sell a property, they must make every attempt to sell it for the best price they possibly can.
Don’t take everything they’re telling you at face value.
Verify any information they give you, especially if it's verbal to make sure you don’t get caught out.
Get independent advice, do your due diligence and get a buyer's agent on your side representing you and levelling the playing field.
9. Due diligence is vital - never skip it
Never scrimp on building and pest inspections – a few hundred dollars saved now could cost you a fortune down the track in nasty hidden surprises.
Building and pest inspections are critical, for example, as they offer invaluable insight into the condition of the property by reporting on any structural, drainage, plumbing, termite, or roof issues.
10. Everything is open to negotiation
Another thing many first-home buyers wish they knew before buying is that everything is open to negotiation.
It’s not just the price that you can put up for an offer, you can also negotiate on the terms in the contract to sweeten the deal.
For example, if the seller has bought another house and is pushed for time you could use a shorter settlement period as a sweetener to close on a lower price.
Or equally, as a renter with limited time pressures, you’re in the position to offer a longer settlement period than others if the seller wants or needs it.
11. Your first offer or bid probably won’t be successful
Many first-home buyers become disappointed when their offer isn’t accepted and start questioning if they did enough.
The reality is, with competition rife as it is in the market right now, the odds are not that you probably won’t secure a property on your first try.
It’s possible but it’s not likely.
Take the process as a learning experience and don’t become too disheartened.
12. You need to factor in unexpected costs
The cost of the property, stamp duty and legal fees is one thing to bear in mind, but also make sure you have a buffer for emergencies, such as the hot water system blowing up the week after you exchange contracts.
Yes, that did actually happen to someone I know.
You’ll also need to think about utility bills, removals and if you’re currently renting, professional cleaning costs.
13. You need to budget for the ‘in-between’ period
It’s not just the unexpected costs that many first-home buyers forget to factor in, but also the costs of the ‘in-between’ period.
It’s unlikely that you’ll be able to marry up your settlement date with your final day in your rental property so you’ll need to factor in costs of paying rent and the mortgage for that period.
14. Buying a property takes longer than you think
There isn’t a hard and fast rule for how long buying your first home will take.
It’s a bit like the question: “How long is a piece of string.”
It could take just weeks, it could take months or even over a year - everyone’s journey is different.
Don’t rush the process, stick to your budget and be ready to jump when the time (and property) is right.
This is the most important thing…
You’ll almost certainly find problems in every property – even experienced buyers and investors do – but if you have the right people around you and do your due diligence, you’ll have most bases covered.
Just as there’s no such thing as a perfect property, there’s also never a perfect time to buy.
My advice is not to try to time the market.
Get your own personal ducks in a row (meaning your finances, your debt, and your savings) and get yourself in a position where you can buy when you’re ready, and on your own terms.
This will set you up for a lifetime of smart property decisions that move your wealth forward, rather than rushed purchases and rash mistakes that set your finances back.