Even after using mortgage calculators and other tools to help you secure the best deal on a home loan, chances are that buying a house is going to be one of the largest and most risky investments you'll ever make. Nevertheless, this isn't deterring Australians from getting stuck into the property market, with the total value of dwelling financial commitments rising 2.8 per cent (seasonally adjusted) between May and June 2015, according to figures collated by the Australian Bureau of Statistics (ABS).
With so much at stake, you'll naturally want to acquire as much information about a prospective property before signing on the dotted line. Getting a 360 degree perspective of the building in question, as well as the surrounding area and current market conditions, will enable you to make an informed decision and buy with a higher level of certainty.
Of course, there's a wealth of knowledge to be found online, but don't underestimate the assistance a property market professional can provide. A trustworthy real estate agent, for example, can offer valuable insight and help make your decision that much easier. Whether you're a first home buyer or a veteran investor, make sure you ask your real estate agent these 10 questions:
1. How long has the property been on the market?
This is a great question to kick things off with, as it's an effective barometer for identifying whether there's any underlying issues with the house.
Research from Corelogic RP found that the average time it takes for a property to sell in Australia is 80 days. If the house has been on the market for significantly longer than this, there's a high chance it's overpriced, situated in a questionable area or suffers from some construction problem. Whatever it is, you'll want to nail down the exact cause before taking out a mortgage.
2. Why do the owners want to sell?
When it comes to negotiating a property's price, information really is power, and understanding the reason behind the homeowner's decision to sell may help you score a better deal on your dream home.
How? Well, as realestate.com.au pointed out, if the homeowner has already purchased a new property, they'll probably be looking to quickly free up some cash and may be more flexible with their price.
3. Are there any developments in the area planned for the near future?
A property's attractiveness (and its value) is intrinsically linked to the infrastructure that surrounds it. In Brisbane, for example, suburbs situated near a train line boast a median house price 10.9 per cent higher than areas of the city without rail access, according to research from PRDnationwide.
It makes sense. After all, quick access to motorways, and proximity to shopping and entertainment centres are likely to heavily factor into any home buyer's decision. Investigating future developments can help you forecast the house's growth rate, unlock greater return on your investment and minimise the risks involved with taking out a home loan.
4. What's the expected growth rate of the area?
Buyers with one eye on the future will want to have a good idea of the projected growth rate of their prospective home's location, as this is a key indicator of how the property's value will fluctuate in the years to come.
Of all the major urban centres, Melbourne is growing the fastest, with 95,700 people moving to Victoria's capital between 2013-2014, according to the ABS. This data is useful on a national level, but do your homework and ask your estate agent about growth on a local scale, too.
5. What's the potential rental yield?
While this is a particularly important question for investors, savvy owner occupiers will also want to know how the market perceives their property before applying for a home loan.
A good real estate agent will usually provide you with an expected yield, but it may not necessarily be a realistic figure. Corroborate their answer with your own research and look online to find out how much people are paying to rent a similar home in the area. For a more definitive estimate, you may want to consider getting an independent rental appraisal.
6. How much are the rates?
Depending on the region and value of the property, rates can vary quite substantially. The applicable laws, thresholds and exceptions deviate state to state, so make sure you ask your estate agent how much you can expect to pay and factor this into your budget accordingly.
7. How much have other houses in the area sold for recently?
Another great way of establishing the true value of a property is to determine how much similar houses in the area are selling for. Your real estate agent should be able to provide you with these figures and help you identify any trends - both positive and negative - to be aware of and how they may influence your decision.
8. Are there any external factors that may impact the property?
External factors that may influence your decision to purchase a home can change depending on the time of day you visit the property. For example, polite neighbours by day may turn into rowdy party animals by night, while loud traffic and noisy construction works might only be prominent on certain days of the week.
Ask your real estate agent about noise levels, crime rates, employment statistics and other elements that may impact your property.
9. What fittings are sold with the home?
As any good interior decorator will tell you, quality fittings can often make or break a home. With this in mind, ensure that you, the seller and the estate agent have a very clear understanding of what is and isn't included in the purchase.
According to propertyupdate.com.au, anything that's physically attached to the property will typically come with the house. That means, for example, that most fixtures and integrated lighting will be yours, but the new widescreen TV in the living room probably won't. There are no hard and fast rules here, however, so make sure you double check with your real estate agent.
10. Are there any easements on the title?
Essentially, an easement restricts how you, the potential owner of the land, can use your property. It might stipulate, for instance, that you must always provide public walking access across your section, or arrange a permanent parking space for a specific company or individual.
This is not only inconvenient, it can also affect the potential value of your property. The South Australia government pointed out that an easement may limit your building rights, should you wish to expand in the future, and even prevent you from planting certain types of trees.
By asking your real estate agent these 10 questions you'll be in a better position to purchase the home of your dreams without sacrificing your financial security.
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