The Amato Property Blog
home buyers biggest mistake and how to avoid it
Purchasing property is a fantastic experience, but there are also lots of complexities and it can get a bit tricky at times for buyers.
Added to this, the real estate agents most owners use to sell their properties receive ongoing sales training to help them be as effective and persuasive as possible.
As you can see, the odds are certainly stacked against the typical buyer.
But this isn’t the biggest mistake I see buyers making. The biggest mistake I see is that buyers don’t truly understand what they can afford with their budget.
So why is this the case? And how do you overcome this problem?
The reason…Underquoting.
It’s easy to be confused about what you can afford as it’s quite common in the Newcastle marketplace for real estate agents to provide price guides to homes that are hundreds of thousands of dollars below what the home is worth and the vendor would even accept.
Like a recent sale in Merewether where the price guide was set at $2,500,000 and the property eventually sold for $2,850,000.
This can be extremely frustrating for buyers, but it doesn’t appear to be something that will be changing anytime soon, so it’s best to understand that it occurs and prepare yourself to deal with it.
So if you are a home buyer who uses the advertised price guide to create a picture of the ideal property in your price range, this can cause some serious problems.
Most likely you will be looking at properties you simply can’t afford. And unfortunately, I’ve seen many buyers who are stilling trying to buy properties 6-12 months later because the selling price keeps going above the price guide.
It’s worth remembering that if you are still looking 6-12 months later, you have also paid an additional 6-12 months in rent, the market may have increased and your borrowing capacity may have decreased leaving you in a worse position and potentially costing you tens of thousands of dollars.
So how do you avoid this scenario and buy the best property you can afford sooner!
Step 1: Speak with a Mortgage Broker and Get a Pre-Approval
Why It’s Important: Before you even start looking at properties, you need to know how much you can spend. This is where a mortgage broker comes in. They’ll look at your finances and give you a clear idea of your borrowing capacity.
What to Do: Find a reputable mortgage broker. They’ll help you gather all the necessary documents (like proof of income, expenses, debts, etc.) and guide you through the pre-approval process. This pre-approval will give you a realistic budget for your property search.
Step 2: Open realestate.com and Search in Your Preferred Suburbs
The Process: Head over to realestate.com or a similar real estate listing website. This site is a goldmine for recent sales data and current listings.
Action Steps: Type in the suburbs you’re interested in living in. Once you’ve got those in, switch over to the ‘Sold’ tab. This will show you properties that have recently been sold in those areas, giving you a realistic sense of the market.
Step 3: Utilise Filters for a Tailored Search
Fine-Tuning Your Search: Now it’s time to get specific. The ‘Filters’ feature is your best friend here.
How to Do It: Click on ‘Filters’ and input your non-negotiables – the things you absolutely need in your future home (like the number of bedrooms, bathrooms, or a garage). Set your maximum budget limit. This is crucial to keep your search realistic. Then, select the option to view properties sold in the last 6 months. This gives you a current snapshot of the market.
Step 4: Map View for a Better Perspective
Understanding the Layout: A map view can give you a much better sense of where properties are located in relation to important amenities and your preferred locations.
What You Should Do: Once you’ve got your filtered results, switch to the ‘Map’ view. This allows you to visually explore the areas you’re interested in and see exactly where recent sales have occurred. Look at all the locations you’d consider living in and take note of the properties that have been sold recently. This helps you understand the geographic distribution of properties within your budget and criteria.
Final Thoughts
Now, based on the your pre-approved budget, the properties that have sold in the last 6 months, within your desired suburbs, you can create your property brief.
Look online for properties that are similar to those that have sold in the last 6 months within your budget and try to ignore those quoted within your price range that are scheduled to go to auction.
This can save a lot of heartache and potentially wipe months off your purchasing journey.
Property Spotlight!
21 Hillcrest Road, Merewether, NSW 2291
6 Bedroom family home on 2223m2 only 5 minutes walk from Merewether Baths.
Stunning ocean views, classic elegance and modern amenities on a private half-acre makes this property one of the area’s most magnificent and desirable homes
Price Guide: $8,000,000
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Disclaimer
Amato Property, together with their directors, officers, employees and agents have used their best endeavours to ensure the information passed on in this document is accurate. However, you must make your own enquiries in relation to the information contained in this document and seek advice from your financial advisor, broker or accountant to ascertain its application to your circumstances.
Tony Amato
Tony purchased his first investment property in the early 90's in an inner city suburb of Sydney. He enjoyed a successful career in sales and marketing within the pharmaceutical industry where he was able to grow as a communicator and negotiator. His passion for property is matched by his wife, Sarah's, and together they have spent the last two decades buying, renovating and selling properties. His passion for property and serving others culminated in the founding of Amato Property, a buyers agency that treats its clients like family. With a history in real estate, sales, negotiating and small business, Tony has been able to apply his experience to deliver a truly unique buyers experience.
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