We all know the basics: compare home loans, get pre-approval, stick to your budget, get a conveyancer, don't max out your borrowing capacity, prepare for stamp duty. Yada yada yada. I'm not here to write another piece about all that guff.
Working in the world of personal finance, I can rattle off five of the most competitive home loans right now and a bit about that product and lender. I can talk about the benefits of offset accounts and other features until your ears bleed. I've been to upwards of 50 auctions in my home state of Queensland (don't ask why). But in terms of actually 'doing it', some aspects of house hunting left me stumped, skittled, exhausted.
These are some musings of what I went through and what I learned through about two months of searching in Melbourne in winter, and many more months doing cursory research online.
(This article has opened up a new business idea for me - maybe there's a need for a property psychologist.)
The paradox of patience and acting quickly
You need to be patient for the right property to come along and not rush into things, while you also need to show intent to the agent and act decisively. This sounds simple, but both of these can happen simultaneously.
By this I mean, you may plod along to open homes and inspections week in, week out, which can be a lot of fun, but also redundant after a while. There might be a few you quite like, but you feel you don't want to get too keen on them.
However, with four-week auction marketing periods and opaque private treaties, you can't fiddle and fart around for too long. An agent will be able to sniff out your intent level pretty quickly - more on them later.
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Think of it like speed dating, or like a game. You might have a dalliance with one property and agent, while another one is coming close to auction, and you want to bid with confidence.
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You want to be able to flirt with a bunch while getting serious with another property at the same time.
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And this could all evolve with one property taking the captain's chair for a few days before another one comes into play, and it goes around again.
For example, I was looking in West Footscray in Melbourne. Four homes initially tickled my fancy, all for different reasons. One had a quickly forthcoming auction, and I wanted to get my ducks in order while at the same time continuing to liaise with agents on the other three so they didn't go cold on me, and continue to take me seriously.
That auction blew way past our budget, so back on the merry-go-round it was for us!
Property hunting is a bit like modern dating - you don't want to put all your eggs in one basket in case a housing option falls through.
At the same time, you don't want to play the field too much because you might not be taken seriously or you might miss a gem.
There's not much you can do to actually prevent juggling so many balls but just know it's going to happen.
Over-analysis paralysis vs sending it
To quote Super Hans from Peep Show, "You've been thinking thoughts your whole life, and look where that got ya."
Matt King as Super Hans on 'Peep Show'
If you're risk-averse or work in the industry, it can be easy to over-analyse everything. On the other side of that coin, you get the postmen of the world - those who like to send it.
For example, my friend bought a home with an 8% deposit, didn't know what an offset account was or even the lender with which he was applying, and it was my job to review the contract in the backseat of his car while on our way to watch Mortal Kombat.
This is a fine balance. And if you're in the former camp, there comes a time when you just need to lick a stamp. Regardless, you might still feel like vomiting.
Match the marketing period
Auction marketing periods are typically four weeks from the first inspection to the auction day. Private treaties generally like to operate in a similar fashion, but can obviously drag out for longer.
For auctions - which seem to be the standard for Sydney and Melbourne - you'll want to see the place early in the marketing period. It's no use looking at a place on auction day or the week before, because unless you're a real adrenaline junkie, you might like it and you'll need to get your ducks lined up.
It can take a while to get everything sorted - formal loan approval, building and pest and so on - and like a road trip, you always want to budget a little extra time for any speed bumps.
Knowing when to strike
To quote Jeremy from Peep Show, "If it feels good, do it." What is that, Gaddafi's law? Well no, but eventually you might have to overcome your self-doubt and pull the trigger on a property.
If you've done all the checks and balances on a property, you like it, and you know you can afford or finance it - then why the hell not?!
If you're super keen on a property that's going to auction and you've done your due diligence, why not put in a strong offer? The worst they can say is no, and a vendor might be pretty open to a pre-auction offer, especially if the auction day is a few weeks away - otherwise they'll chance their arm on D-Day. And if you bid and the auction passes in - this is when it gets interesting.
It's easy not to pursue a property seriously because a 'better' one might be around the corner, but you need to live somewhere. And you don't want to watch property after property pass you by.
By the way, after your successful purchase, it's probably best just to delete your REA or Domain account altogether and stop looking at what else comes online. Just like you'll want to delete your dating apps after you've found 'the one'.
Jeremy is waiting for you to strike (probably).
A quick word about your lender
Just like you can't get abs in six minutes, be wary of banks and lenders who claim you can get approved in 10 minutes. That 'approval' likely means two-fifths of FA.
Theoretically, a quick approval window might be possible, but your application needs to be perfect and not missing anything (Even little things that your lender's portal just refuses to save for some reason…). It's like Jamie Oliver's 30 Minute Meals show when he's got all the ingredients laid out and he doesn't have to do the washing up.
And if you don't yet have to upload income and bank statements, then the pre-approval is likely as weak as water. The customary pre-approval period is 90 days, but be aware that some banks have shorter periods - sometimes only a month, which isn't very long to find a place. If you're keen on a property and have done your due diligence, you might as well skip the whole 'pre-approval' thing and spend an hour doing the full monty.
Also, be wary of banks promising a fully digital or seamless experience. The entry stages are likely pretty easy, but when it comes time to get serious about your application, their portal might be as clunky as any other - and probably just some white-labelled software system from their parent company, i.e. the one that funds them on the backend.
Go woke or go broker
It is annoying how many default to a broker when, for most basic cases, they might not be totally necessary. In fact, many banks are now opting to skirt around their broker channels entirely and offer sharper rates for customers who go direct.
My significant other was pretty intent on one, as that's all she'd been told to do: engage a broker. "Just get your broker to do it", "Talk to your broker about that", "What?! You don't have a broker?!".
It was an area where I dug my heels in.
Truth is, for basic applications, you might be better off just seeing what's out there comparing your options on a site such as Savings.com.au, Your Mortgage, or InfoChoice. And I'm not just saying that because they cut me a paycheque - truly.
Many of the sharpest rates out there likely aren't offered by brokers anyway. In addition, because of trailing commissions and clawbacks (aka the bank wanting to get their commissions back), if you refinance within a certain number of years, your broker will probably drop you like a hot pie. It's also likely up to you to adjust any particulars of your loan once you've settled.
This was a sentiment echoed by my colleagues Brooke Cooper and Dom Beattie on our recent Savings Tip Jar podcast episode.
"When I went to a broker, I wasn't really super happy with their advice, but it would have been far easier than comparing all of the markets and then going direct," Brooke said.
"This is what I eventually did, and I wouldn't have got the deal that I got now if I went via the broker purely because the bank that I ended up going with that offered me the lowest rate that was available for me at the time wasn't an associate of that broker channel.
"Brokers can only really offer you the mortgages that are on their books at a given time - they can't offer you the whole market.
"I've probably saved a lot of money by going direct, but if I wasn't confident with that, I can see the value in going to a mortgage broker."
Dom shared that view.
"I went direct myself - people think going direct is more complicated than it actually is. You'll find that the lender you're applying with will actually do a lot of the work for you, and try and make it as smooth a process for you as possible," he said.
"Often these guys actually are ex-brokers themselves, so they know the gist of it all; they'll guide you through all the documentation. But then at the same time, it doesn't necessarily hurt to see what a broker can do for you and see which rates they're offering."
Where a broker likely proves their value is they are obliged to act in your best interests. They'll be able to punch in your details and financial position into their portal, and have a back-end view of which lender might be most suitable. This is the type of information not publicly available, or at least hard to glean yourself.
This goes beyond the interest rate; some might lend at different multiples of income; some might be more flexible about your employment scenario; some might be more amenable to the property type or if you have a special scenario such as using a guarantor.
However, if you're a bog-standard borrower with a normal property and can spare the hour of life admin to apply yourself, then you can probably shirk a broker.
Nailing down the search
Search, but don't over-search
It's easy to pass the time by casting your net wide and having a gander online at the properties on offer. I get it; it's fun. While you might want to do this initially, you don't want to do this for too long.
The best way to learn about what you do and don't want is to actually find a bunch in an area, and inspect them. This is especially true if you are buying in an unfamiliar area.
Pick one to three suburbs and go hard.
The early stages will likely be a good learning curve, and may be a case of figuring out more of what you DON'T want than what you DO want.
If your search process is too stretched, then your mind might be as well.
For example, my partner and I were in three minds about what we wanted: A slick townhouse in somewhere trendy like Yarraville or Newport? Or maybe a house with a bit of land in say, Sunshine or Ardeer? Or keep persisting with quaint 1920s workers-type houses in Footscray?
We quickly realised that trying to flirt with all three ideas led to cluttered brains with too many tabs open. We learned that houses in Ardeer still have a ways to go - yes, they have that 50s or 60s retro vibe, but you're still dealing with an area coming out of the heroin dog days of yesteryear.
Workers cottages have their own setbacks, while townhouses in our budget may have been a bit soulless, but basically 'set and forget'.
In my opinion, the most sound course of action is to buy the best property in the best area you can afford. Holding costs such as stamp duty, especially in the case of Victoria, are extortionate, so you want to avoid the sting as much as possible.
And in the case of most properties, especially older houses, budget extra for repairs, maintenance, and renovations.
Ignore the price guide
Underquoting has been a big topic of conversation in Sydney and Melbourne recently. And at least in Victoria, to qualify as underquoting, it's not simply a matter of the sale price being higher than the price guide - though that's a symptom.
Instead of the price guide, which is mandatory to list in Victoria, but means next to nothing, it's worthwhile heading straight to the Statement of Information, which lists comparable properties sold. This should be listed on most real estate listings.
From there, you'll get a better indication of what the agent is thinking if they're dreamin', if they're listing the property for way under, or if they're comparing apples with oranges.
When they say don't get emotional or get FOMO
Easier said than done. Buyers agents and most people will tell you not to get emotional. But homes are an emotional purchase. That's why, despite expectations of a housing crash and eye-watering prices, the house of cards hasn't yet collapsed. Doomsayers only look at the numbers and not the emotions.
Emotions can manifest in unexpected ways. Most people know not to get too attached to a property or get too happy in front of an agent. But there can be anger - anger at an agent for giving you the run-around. Envy for seeing what other people your age have got/can afford. More envy over those people everyone called dummies for buying a home with a 5% deposit 10 years ago.
Bitterness for having lost at auction. Despair for seeing places sell for much higher than their price guide. Elation when you've finally settled in a new place.
All these other emotions can lead to FOMO (fear of missing out). You just want to get in the nightclub door; you don't care what the cover charge costs! But take a deep breath, do some Wim Hof, and soldier on - if you have a north star of principles, a budget, and a core checklist for a property, let those take over.
You're probably going to feel these emotions whether you like it or not - just have a plan for when you feel them. Except the last one - bring out the champagne.
And in the words of Dory, just keep swimming.
Prepare for the peanut gallery and to feel exhausted
Prepare to have 10 different versions of the same conversation - about your needs, wants, experiences, and thoughts - with yourself, your partner, friends, family, and the dog. And all of them have opinions… maybe not the dog.
You might have a conversation about the three houses you saw on Saturday with your partner. Then you might, in the afternoon, see their family - same conversation. The next day, you might hang out with friends - same conversation. On Monday, work colleagues - same conversation. The agent on a Tuesday follow-up call - same conversation.
Prepare for homebuying over a certain period to consume your life. Searching, getting your ducks in a row, the conversations. It can get overwhelming.
It gets to a point where the opinions from others aren't really helpful. You're going to get a lot of them. No, we don't want to buy in Caroline Springs. No, this conversation with the father-in-law's friend's parakeet won't help.
They're well-meaning, but can crowd out your own thoughts and clarity. Remember the 60 tabs open that I mentioned earlier? You don't want more. You want to go clear.
At some stage, you have to shut up and develop a 'small circle' mindset - discuss the machinations of your property hunt with your partner and maybe one or two other trusted confidants who you know won't spew BS. That's it.
And if it all feels overwhelming, don't be afraid to take a day to step back and unwind. Have a wine and talk about anything other than property.
Agents are people too, but also be wary of their games
Most people know that real estate agents are one of the least-trusted professionals out there. And for some, that reputation is earned, with their greasy hair, sockless blue suits from Politix and entry-level C Class Mercedes.
But they're not quite used car salesmen - most are people, too. And most don't really respond well if you get your back up straight away with a defensive attitude.
That said, if you've travelled to any remotely dicey country before, you'll know to 'respect but suspect' and 'no dar papaya' with the locals, which translates to don't give papaya, i.e. don't show all your cards, don't show the bling. The same mantra goes for agents.
When dealing with agents, don't show all your cards, don't show the bling.
Talk the talk
Agents are pretty good at knowing right away who's worth pursuing and who's not after an open home inspection. If you're remotely keen on a property, it doesn't hurt to have a five-minute conversation with them to establish your intent.
You don't need to be overly explicit about your budget, but tell them where you're at in your homebuying journey, and you can expect a follow-up call to gauge your interest.
Hit the keywords: Home loan approval; contracts and settlement days; pre-auction offers; and so on.
Don't be overly doe-eyed on a property, but don't just pooh-pooh it for the sake of it, either.
Pound the pavement
Just by virtue of being in the throes of a property hunt you'll get to know the agencies and the agents that crop up in your area - the gems and the duds, the straight shooters and the game players.
You'll probably just end up following a few around to different open homes - but don't ask them for a lift. That's weird.
One agency in my area somehow has a knack for extracting the most juice for their sorry stock of properties as possible. Another's properties always seem to sell within their price band or just above.
Some agents play the game, get you hot and bothered when they want, and then leave you ice cold, not responding for a day or two.
This is annoying, but you'll quickly work out who's who in the zoo. If they're a dud or a sleaze, it doesn't mean you shouldn't buy a property through them, but just know how to shield yourself from their antics, and maybe gravitate towards the goodies.
Your phone (and email) is going to get spammed
It seems innocent enough handing over your phone and email to the agent signing you in to look at a property. However, if I had my time over, I would have used an old phone, put another SIM card with a different number and used that as my phone for agents - and also use a new email address.
If you're looking for a home, now's also not the time to clam up over incoming phone calls from unknown numbers, as is the stereotype with Millennials and Gen Z.
However, what will rightfully give you the shits is that you'll suspiciously field a whole host of spam calls and texts about pyramid schemes and phony job offers. Funny how this coincides with giving your number away willy-nilly to agents. Privacy Act, anyone?
Hot Tip: You'll likely get added to an 'off market' email list by some agents. Think critically about what 'off-market' means - they're likely spamming that email to 500 others. These properties can be alluring or seem like a good deal, but they're probably 'off market' for a reason.
Prepare to feel over- and underwhelmed at the same time
How people do this multiple times across multiple investment properties is astounding. When we finally got a house - i.e. our offer was successful - we felt underwhelmed. You're the successful offer! Wow… I thought Oprah would come out of nowhere and give me a hug.
And I also felt overwhelmed, both from what had just happened and what was to come next.
How to make an offer
Don't do what I did and make an offer before your conveyancer has looked at the contract. Nothing bad happened, thankfully, it just made the agent really annoying, and placed some pressure on the conveyancer.
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If it's a private treaty, there's no harm in emailing through an offer subject to whatever you want, e.g. building and pest (note that it likely only gets you out of jail free if there are major defects), finance, and a settlement period of your choice.
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Auctions are typically unconditional, so you'll want to do your due diligence beforehand. While you can put in a pre-auction offer with conditions, the vendor may just want to see it go to auction unless your offer is really strong.
This is a time when it really pays to have a responsive conveyancer.
Everyone's got their hand out
You'll realise that Australia's economy is predicated on rent-seeking behaviour. Like when you mention a wedding at a cake shop, the price automatically doubles. Similar story for property.
Stamp duty is a major expense, and is worse among various states, cough, cough, Victoria. It amounted to around an additional 5% of our purchase price, so budget for that accordingly.
And not only that, but the government has its hand out for 'mortgage registration' - as if your tens of thousands of stamp duty wasn't enough to stamp a document and register your mortgage.
You'll also need to think of the bank's solicitor fees, which the bank often covers, but might not. And trust this solicitor to be really painful to deal with.
You'll pay for a conveyancer, but that's an easier equation because it directly translates to a service.
You'll also pay a nominal sum for PEXA - the property settlement exchange - basically an online portal where conveyancers, lawyers and your bank get together to work on your settlement.
And that's just a few of the fees applicable before settlement. Then comes the really fun stuff - insurance, rates, water and more!
You'll get to know your significant other better
For better, and hopefully not worse. If you're reading this, you've probably never bought a home before. And if you're single, you'll probably get to know yourself better, but god help you in this property market.
You'll know their strengths - whether that's council approvals and heritage overlays, or their eye for chic throw blankets. Maybe they'll pick you up when you're dragging your heels, or maybe you're the one fielding the calls from agents.
Maybe they'll know a wicked place for an almond croissant if you're getting hangry on a Saturday series of open homes.
You'll know what part of the process frustrates them, and when they can be a great asset. And if you don't already know, you'll probably learn their exact salary and hopefully not the fact that they're spending $100 a month on OnlyFans or something.
If you're buying a property with someone, you probably want to be on the same page with most things, and at least know they're a good operator in the budgeting department.
But hey, I'm not a love doctor. Colleagues call me Dr Interest.
You'll probably only learn by doing
And if all of this made no sense to you, then don't worry. If you haven't begun the property search yet, you might find out your experience is totally different. And that's okay. The best way to learn is through doing it. Don't let some geezer like myself tell you what to watch out for.
In the end, you'll probably have things you wish you did differently or better. There are going to be things you don't like about the property, and that's not all bad.
With that said, if any of this was at all helpful or at least entertaining, let me know.
Happy hunting!
Header image supplied, Super Hans and Jeremy images courtesy of Peep Show on YouTube, additional images from Freepik
