Buying Property For Dummies®, 2nd Edition
Table of Contents
Introduction
About This Book
How to Use This Book
Foolish Assumptions
How This Book Is Organised
Part I: The Great Australian Dream
Part II: Finding Your Dream Home
Part III: Borrowing For, Buying and Protecting Your Home
Part IV: The Part of Tens
Icons Used in This Book
Where to Go from Here
Part I: The Great Australian Dream
Chapter 1: Assessing the Dream: Buying Property
Looking at Whether You’re Ready to Buy a Home
Renting versus Buying
Liking the advantages of renting
Disliking the disadvantages of renting
Understanding How Your Home Is an Investment
Owning Your Home Is Tax-Friendly
The Government’s Leg-Up — the First Home Owner Grant
Getting Ready to Scrimp and Save
Agonising Over the Time to Buy
Searching for Your Ideal Home
Smartening Up Your Home
Chapter 2: Squeezing Your Foot onto the Property Ladder
The Costs of Buying a Home
Drumming up the deposit
Begging to borrow
Government slugs and sweeteners
Paying off the lawyers
Counting every last bit and bob
Calculating Your Monthly Outgoings
Home maintenance costs
Rates, fees and insurance
Regular living costs
Plans for the future
Looking at Funding Strategies
First Home Savers Accounts
Staying with the parents
Doing it solo
Getting together with friends
Asking the parents to help out
Investing in shares and managed funds
Chapter 3: The Position or the Property
Dreaming Up Your Perfect Home
Must Haves, Like to Haves and Mustn’t Haves
Trading Off Location against the Perfect Home
Spotting up-and-coming suburbs
Moving to the fringes
Escaping to the country
Going high rise
Chapter 4: Dealing with Property Professionals
Working with Real Estate Agents
Understanding a real estate agent’s motivation
Getting to the truth on property value
Getting a real estate agent to help you find a property
Putting In an Offer
Dealing with Buyers’ Agents
Finding a competent buyers’ agent — avoiding the pitfalls
Counting the costs of using a buyers’ agent
Negotiating a purchase on your behalf
Understanding What (Selling or Buyers’) Agents Can and Can’t Do
Part II: Finding Your Dream Home
Chapter 5: The Search Is On
Setting Up Your Search Strategy
Keeping track of all the information
Doing the research
Narrowing Down the Search
Paring down the properties
Understanding real-estate speak
Doing the drive-by
Checking out trains, trams and buses
Strolling to the corner shops
Assessing the Properties on the Short List
Attending an Open for Inspection
Working out a schedule of visits
What to look for during an inspection
Taking a Critical Look at a Property
Getting a Pre-Purchase Building Inspection Done
Chapter 6: Buying a Piece of History
The Pros and Cons of Buying a Period Home
Impressive pros
Not-so-impressive cons
Living with the idiosyncrasies of a period home
Dealing with Heritage Restrictions
Renovating your period home
Restoring original features
Architectural Periods and Styles
Colonial style: 1788–1830s
Georgian period: 1810s–1840s
Victorian styles
Federation or Edwardian style: 1901–16
Queenslander: 1880s–1940
Californian bungalow: 1916–1940s
Early modern: 1915–1940s
Modernist: 1945–70
Chapter 7: Renovator’s Dream (or Nightmare)
Tackling a Renovator’s Delight
Making the place livable
Progressing from livable to lovable
Planning the Job
Obtaining the necessary permits
Getting the work done
Doing It Yourself
Deciding whether you’re up to the job
Becoming an owner–builder
Taking out home warranty insurance
Calling in qualified tradespeople
Acting as project manager
Hiring Designers and Project Managers
Resolving complex renovation situations
Handing over the project management
Hiring a Builder
Getting a quote
Signing the contract
Living Through the Building Process
Moving out until the dust settles
Staying put during renovations
Funding Your Renovation
Chapter 8: Nice and New
Buying Into a Housing Estate
Checking out an estate
Studying the developer
The House First or the Land?
Getting the land first, then the house
Taking the package
Looking Behind the Facade of the Display Home
Knowing about inclusions
Deciding on some optional extras
Upgrading to a better model
Getting finance through the developer
Your Dream Home: From Plans to Completion
Project Building
Buying ‘Off the Plan’
Imagining your home from a glossy brochure
Finding out everything you can
Chapter 9: Building from Scratch
Starting with a Block of Land
Assessing a block of land
Working with a less-than-great block of land
Designing Your Dream Home
Finding someone to turn your vision into reality
Harnessing an architect’s vision
Deciding on a building designer
Getting a draftsperson to draw your design
Choosing an architect or building designer
Moving from Concept to Contract
Drawing up the concept plans
Developing the design
Finalising the plans
Signing contracts and project managing
Building a Home of Your Own
The responsibilities of the owner–builder
Looking at your options
Taking a course for owner–builders
Getting council approval
Getting on with tradespeople
Part III: Borrowing For, Buying and Protecting Your Home
Chapter 10: Climbing Aboard the Mortgage Merry-Go-Round
Understanding How a Mortgage Works
Qualifying for a Loan
Lending criteria
Providing documents to your lender
Choosing the Home Loan That Suits You and Your Hip Pocket
To fix or not to fix
Splitting the difference
Introductory illusions
No-frills variable
Standard variable vanilla
Line of credit loans
Going professional
Shopping Around for Your Lender
Stand-alone mortgage
The mortgage as the core of your finances
Who’s who of mortgage lenders
Choosing the right mortgage broker for you
Deciding to change your mortgage lender
When You’re Not the Standard Mould
Accessing no-doc and low-doc loans
Looking around when your credit is impaired
Understanding Your Credit File and What to Do about a Bad One
Bypassing the Banks Altogether
Chapter 11: Going, Going, Gone: Buying at Auction
Assessing the Pros and Cons of Auctions
Estimated Selling Prices and Other Half Truths
Understanding Auction Day
Introducing the property
The bidding war
Vendor bids
Bidding rules and regulations
On the market
Passed in
Tactics to beat the auctioneers at their own game
You make the winning bid — now what?
Making an Offer after a Property Is Passed In
Making a Pre-Auction Offer
Signing (After Reading) the Contract
Chapter 12: Making an Offer: Buying Through a Private Treaty Sale
Checking Out a Private Treaty Sale
Negotiating a price
Beating down the price
Making an offer
Putting conditions on your offer
Understanding what happens after the vendor agrees to your offer
Avoiding being ‘gazumped’
Looking at Other Selling Methods
Set sales
Expressions of interest
Chapter 13: Sold to the Highest Bidder! Now What?
Signing on the Dotted Line
Knowing what to look for in a contract of sale
Making special conditions on the contract
Exchanging contracts and handing over the deposit
Waiving your cooling-off period
Securing Your Final Loan Approval
Getting a Valuation Done
Settling on Your Property
Insuring Your Biggest Asset
Insuring the building
Calculating the costs of rebuilding your home
Insuring your possessions
Calculating the value of your possessions
Part IV: The Part of Tens
Chapter 14: Ten Things to Remember as a First Home Buyer
Buy When You’re Ready to Buy
Think Outside the Square
Look at Your First Purchase as a Springboard
Borrow No More Than You Can Afford
Another Property Is Always around the Corner
Don’t Pay Too Much for a Property
Keep Your Emotions in Check When Looking at a Home
Be Sceptical of Selling Agents
Renovating Can Wait
The Mortgage Does Go Down — Eventually
Chapter 15: Ten Areas (Almost!) to Check at Open Homes
Kitchen
Bathroom
Lounge
Dining Room
Bedrooms
Laundry
Garage
Backyard or Balcony
Street Appeal
Buying Property For Dummies®, 2nd Edition
by Karin Derkley
THE INFORMATION IN THIS REFERENCE IS INTENDED TO OFFER GENERAL INFORMATION ON THE TOPIC OF BUYING, SELLING AND INVESTING IN REAL ESTATE. ALTHOUGH THE GENERAL INFORMATION ON BUYING, SELLING AND INVESTING IN REAL ESTATE CONTAINED IN THIS BOOK HAS BEEN REVIEWED BY SOURCES BELIEVED TO BE RELIABLE, SOME MATERIAL MAY NOT BE SUITED FOR EVERY READER OR THEIR INDIVIDUAL CIRCUMSTANCES. READERS ARE STRONGLY ENCOURAGED TO CONSULT WITH APPROPRIATELY QUALIFIED PROFESSIONAL ADVISERS BEFORE ACTING ON ANY ADVICE CONTAINED IN THIS REFERENCE.
Buying Property For Dummies®, 2nd Edition
Published by
Wiley Publishing Australia Pty Ltd
42 McDougall Street
Milton, Qld 4064
www.dummies.com
Copyright © 2011 Wiley Publishing Australia Pty Ltd
The moral rights of the author have been asserted.
National Library of Australia Cataloguing-in-Publication data:
Author: Derkley, Karin
Title: Buying Property For Dummies / Karin Derkley
Edition: 2nd Australian ed.
ISBN: 978 0 7303 7556 2 (pbk.)
Series: For Dummies
Notes: Includes index
Subjects: House buying — Australia
Real estate business — Australia
Dewey Number: 643.120994
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About the Author
Karin Derkley began as a journalist in 1992 writing up the property listings for local paper The Melbourne Times. She went on to write for various sections of The Age, The Sunday Age and several other magazines. For five years she worked as a senior writer and then as deputy editor at Personal Investor magazine. She is now a regular contributor to the ‘Domain’ section of The Age, and writes on property investment for AFR Smart Investor magazine. Karin writes extensively about the ups and downs of the property market; about the art of unearthing the perfect home; about negotiating through the mortgage maze; about the ordeal — and occasional delights — of renovating; and about how to present your house to sell in a difficult market. Living through the experience of purchasing and renovating her own home, and being regularly solicited for advice by friends and family on the purchase and sale of their pro
perties, she is all too familiar with the pitfalls and pleasures of home ownership and investing.
Dedication
To my friend Lisa who has been a constant personal and professional support.
Author’s Acknowledgements
Thanks first to acquisition editors Lesley Beaumont and Anthony Stone who drummed up my enthusiasm for the project in the first place. Also, to Charlotte Duff who carried out the perhaps more difficult task of sustaining that enthusiasm right to the very end. My biggest thanks must go to my editor Robi van Nooten who tirelessly and cheerfully worked with me to turn my prose into a style worthy of a For Dummies book.
I must also acknowledge the assistance of Mal James of James Buyer Advocates, who was always happy to help with his insights into the real estate industry. Shane Oliver, chief economist of AMP Capital Investors, assisted greatly with his timely responses to requests for data. And thanks to Alison Verhoeven from REIA, for supplying helpful data.
The input and support of many friends has been invaluable, both in volunteering their own experiences and in providing encouragement throughout the process. Special thanks to Jan and Julien, through whose first-home-buying eyes I have been able to relive the excitement and anxiety of buying one’s first property; to Shannon who shared her experience of becoming the owner of a house-and-land package; and to Jenny M who so generously volunteered her insights into the selling process. I also acknowledge the many people I have interviewed in my years as a property writer, who have given me their personal perspectives on buying, selling or investing in property.