The process of buying your first home, while very exciting, can also be very overwhelming.
If you’re a first time home buyer, you may go into the process thinking it’s as simple as getting a home loan, finding the right place, negotiating a few deals and signing a contract.
If only!
It’s worth learning and spending some time researching the process before you invest so much of your money - it can be a very complicated and long process.
Here are some red flags you should keep an eye out for before signing your name on the dotted line.
1. Unknown real estate agents
Make sure the realtor you’re using is credible and from a known real estate agency. You want to trust the person who’s selling you your new home. Make sure they’re helping you get the best value for your money.
Do your due diligence and ask other home buyers about their experiences with different realtors and whether they’ve had any issues. They may even be able to recommend a reputable realtor that they had a good experience with.
Also, look out for shady agents that don’t want you to read the fine print of the contract, rush you through any questions you might have or leave out vital information that they should be providing.
2. Street cred
When you’re investing in a home, you’re also investing in the road, surrounding parks and the whole suburb you’re in! Whether you are buying for investment purposes or to live in the home yourself, there are some important factors to consider.
Research the demographic, the crime rates, what is on offer in the area such as shops, parks or schools, and whether the neighbourhood is increasing or decreasing in value. Understanding the area’s median price, and future infrastructure development plans are good places to start.
Make sure you consider the distance from the centre of the city and whether there are plenty of public transport options. If you’re planning on commuting to work, having a scout of the bus routes and train lines in your area is a smart idea!
3. Additional costs
Always ask the agent for the full breakdown of costs as there are also financial commitments. These figures are important to account for in your budget as they will be ongoing costs for you and could increase over time. Some of the costs to understand are stamp duty tax, mortgage & building insurance and legal fees.
For apartments or units where your property is on a shared block, this can also extend to costs such as strata levies and sinking funds for building maintenance payments, and quarterly council rates.
4. Defects and new homes
Defects to check for are damp or mould on walls or carpets and make sure you turn on all taps to see how long it takes for hot water to run.
Find out how old the building is, especially for apartments. Make sure you understand the warranty for your building specifically, since warranty rules differ by state.
With new builds, it’s very important to know how long the builder’s warranty lasts as any defects that appear could mean unexpected costs in the future.
5. Bad Sales History
Ask to see the sales history of the house before you buy it. You can also find property history by looking up the address on a search engine.
Some potential red flags include if the house has been sold multiple times within a short period, if it has multiple agents trying to sell it, or if it’s been on the market for a really long time.
6. Problems with the foundation
One problem that you never want with your home is issues with the foundation, as it’s arguably the most important part of any structure. Not only is it one of the most costly repairs to correct, but a poor foundation can also lead to more problems than any other issue. Look out for cracks and structural issues such as slanted walls and door frames that have difficulty closing.
It can be a good idea to get a full building inspection before putting your name on any agreement, it could save you thousands of dollars in the long run if any problems are found.
7. Pests
This one seems obvious but it’s a red flag that should not be overlooked. Ask for the owner to conduct a pest inspection before buying and look at the history of previous pest issues within the house. If the same issues have arisen more than once, the same issue may happen again to you.
8. Poor Drainage
Poor drainage isn’t usually high on the list of priorities when it comes to inspecting a home, but it should be. An obvious sign of poor drainage is pooled water in or out of the home. If the backyard has lots of puddles or has a mini lake situation going on, if the gutters overflow or you find any water stains on the walls, you’re likely seeing signs of poor drainage. This can damage both the exterior and interior of the building.
9. DIY Fixes
Everyone loves a handyman, just not when you’re buying a home. When conducting an inspection, look out for repairs that look unprofessional. Usually, you can tell by the aesthetic as the solutions to any issues stand out as slightly less smooth or somewhat inventive. While the problem may be fixed for the moment, if it wasn’t done professionally you may be paying for it later.
10. Technical Difficulties
You may not prioritise this at the time, but you’ll thank yourself later for checking the cell reception in a home before you buy. Some neighbourhoods have very limited range that expands across the whole area, leaving you to stand against one specific window in your house every time you want to send or receive a text. It’s also worth checking out what landline or internet providers cover the area while you’re at it!
At Professional Super, we want to help you save for the first home. Our friendly team can help you learn how you might save on tax by using the First Home Super Saver Scheme to save for your first home.
