by Jade Harrison It’s daunting buying your first home, but MPP is here to help, with this first-timers guide to jumping on the property ladder.

SHOW ME THE MONEY

Before you start inspecting properties to buy, be sure to get your finances in place first. There is nothing more heartbreaking than finding the property of your dreams only to discover that you cannot afford it, or worse yet, have the contract fall over because you can’t get the finance. At the moment, lending is very fickle, with banks and lending institutions competitively adjusting their rates, yet the process of getting a loan approved is still rather stringent, to say the least.

You can either consult a mortgage broker (a person who doesn’t work for one particular bank and will shop around on your behalf to find a good deal) or go directly to the lending department at any bank. When it comes to paperwork, the banks will all have slightly different requirements, but you will definitely need to have your tax returns up to date along with all the relevant bank statements and identification criteria. Generally, a bank can give you a verbal pre-approval up to a certain amount based on your assets, liabilities and income. Once you have been given the thumbs up and your budget is set, it’s time to start looking for your first property.

Any serious offer must be put in writing and presented to the owner. This means if you want to make a genuine offer, you will be asked to sign a contract

GET RESEARCHING

Searching for a property to buy can be an overwhelming experience, as there are a lot of homes on the market at the moment. Before you embark on inspections, set a price limit before working out  what your key property prerequisites are – for example, it might be imperative that you buy a home within a certain school zone, or that you have multiple living areas, or side access to park the caravan and trailer. This will help you create a shortlist.

Once you’ve done that, it’s important to do your own research. The web and publications such as MPP are great places to start and excellent research tools. Be sure to look at what the statistical median house prices are for the neighbourhoods you are interested in and keep an eye on how much properties are selling for in the area (RP Data and MPP’s weekly market tracker section are excellent tools for this). Attend regular open for inspections (OFIs) and don’t be afraid to talk to other buyers who are currently in the market and your local real estate agent.

WHO’S WHO IN THE ZOO

As a novice property investor, the real estate industry can be a daunting one to immerse yourself in, and you’ll be dealing with real estate agents on a regular basis. It’s a good idea to have an understanding of what real estate agents do and how they operate. It’s also good to brush up on any etiquette that you as a potential buyer should adopt.

Generally, a property is listed for sale by a real estate agent who will have a contractual agreement (known as a PAMD Form 22a) with the owners to present the house to the market for a period of time, usually for 60 days. The agent will generally conduct weekend OFIs on the property and once a contract is negotiated and settled, the agent gets paid a standard commission based on the sale price. It is wise to remember that agents work for the vendors, and their goal is to get the highest possible price for the property in the shortest amount of time.

When making an inquiry to real estate agents about one of their listings, it is common courtesy to disclose your details such as your name, so they can register you as an inquirer. It’s also good etiquette to sign the register when you inspect an open home on the weekend and to make yourself known to the agent. This register, and any comments you may have about the property, is given as feedback to the property owner and is a very useful step in the selling process.  

HOW IT ALL WORKS

There are many different types of ways an agent will sell a home – from open listings to auctions and expressions of interest – and it can be hard to keep up with the jargon. Generally, an agent will have an exclusive listing on a property for a period of time. This means that a particular agent (unless he or she agrees to conjunct with another agent) has the exclusive right to sell the property and receive 100 per cent of the commission. This ensures the agent’s hard work is rewarded and the commission is guaranteed if the property sells in that time frame. Most properties will have a listed price, which will appear on its advertising, however, some properties give a buying range which acts as an indicator and suggests the owners may be negotiable on price.

Expressions of interest and tenders generally have a closing date, which means you need to submit your price by a certain day, while auctions mean the property will undergo sale by auction method either on site or at a function room on a certain date. To bid at an auction you must register with the agent before the commencement of the auction and remember – unless negotiated prior – a sale under auction conditions does not allow the provisions for any contractual conditions or clauses such as a finance or pest and building inspections, so be sure to have those in place if you’re very interested in the property.

It’s a good idea to have an understanding of what real estate agents do and how they operate

GETTING SERIOUS

Once you’ve found a property you like, had multiple inspections, done your research and decided you want to buy it, you then need to tell the agent you’d like to make an offer. Any serious offer that is made on a property must be put in writing and presented to the owner. This means if you want to make the owner a genuine offer, you will be asked to sign a legally binding contract.

You will need to employ the services of a conveyancing clerk or solicitor who will oversee the contract on your behalf once it’s all signed and agreed upon. The conveyancing clerk or solicitor can also assist in including any clauses you may need on the contract, and do all of the relevant title searches on your behalf (for example, to check that there are no major easements on the property that will impact on your enjoyment of it). The agent will usually have the contract typed up with your details and offer on it ready for your signature, and will then present it to the owner. Once the owner signs that contract, it is legally binding and instantly dated. The owner may also negotiate the price simply by striking through the price on the contract, entering another price and initialling it. This can happen a number of times before a price is agreed on by both parties.

SETTLE DOWN

Once a price is negotiated and agreed upon and the contract is signed, it is dated and settlement starts approaching. Settlement is the official date in which the property is handed over and your solicitor will generally be at the exchange on settlement day. Remember, there are plenty of terms and conditions of a contract, so you should read through it thoroughly. However, as a buyer making an offer you are responsible for that property from the day the contract is signed and dated. This means if the property you’ve signed a contract on should burn to the ground three days from settlement, you’re responsible to have it insured – not the owner. There aren’t many complicated terms on a standard contract but your solicitor should point out terms such as this one to ensure you’re totally covered.

This information is to be used as a guide only. Please consult a solicitor or the Real Estate Institute of Queensland for further information regarding contracts of sale.