When you have decided on what you want to buy and know your why, it’s time to start looking at properties.

At times you will notice in the market that a property sells for less than the market value; that someone got a good buy.

Maybe that someone could be you.

Your aim as a first homebuyer is to buy the property you want for as little as possible because you want to pay it off as quickly as possible.

The more money you have to borrow, the longer it takes to pay off. Know your limit for how much you want to borrow and try to buy a property for as little as possible.

Sometimes there may be a house that nobody wants; that you can get at a cheaper price. This is all well and good if you are happy there. Keep in mind that buying a property that nobody wants to buy also means it will be harder to sell if you did want to sell it later.

On the flip side, sometimes the competition is so high that properties sell for well above the market value and it is not possible to get a good buy.

In any circumstance, there are things that you can do to try to get value in a property. Here are 3 tips to get you started:

Tip 1. Find out the estimated property value before you buy

Before you make an offer, search for the property on the internet and look for an estimated property value. This is not always available, but most of the time you can figure it out or find information somewhere about it. Sometimes there is a similar house next door and if it is similar enough you can get an indication of the estimated property price range. Look at the history of a property to find out if it has sold many times or has been rented out frequently (again, this is not always available).

Don’t be afraid to add your email to real estate agent newsletter subscriptions (or ask to be put onto their databases); sometimes homes are sold ‘off market’ or are available to see ‘pre-market’ and this makes it easier to search for the history of a property and how much it could be expected to sell for.

Tip 2. Scope out the competition

Now, you don’t have to do detective work or act weird at an open home; what I mean by scope out the competition is to look at:

• How many people are at the open home?
• How many people are asking the real estate agent questions?
• If you overhear conversations with the real estate agent, what are people asking?
• Are people asking for a copy of the contract?

When people chat with a real estate agent, this shows they are potentially interested in the property. It doesn’t mean they will necessarily buy it, but they may be interested.

If you are legitimately interested, ask for a copy of the contract to be emailed to you. This is usually given immediately and you may not even need to ask. When you receive the contract, have a look and if you are still interested send it to your solicitor to review. Note that you will have to pay your solicitor a fee to review the contract. Or  put down an offer and make this conditional on the review of the contract by your solicitor and an inspection. When your offer is accepted you can engage your solicitor to review the contract.

If you’re in luck and there are no other buyers, aim low and stay low with your offer. If you really want the property and they won’t budge on the price then you may need to consider increasing your offer. How much you pay in the end is up to you and what you think the property is worth and how much you are willing to pay.

If there are other keen buyers, you may need to negotiate the price to get the property you want. Be careful not to go over your own spending limit or lose sight of your home loan goals during this process. If you go over your buying budget, make sure you are fully aware of what you are committing to. Run the calculations.

Tip 3. Think about the time at which you are buying

Some people suggest that you should buy when the market is down, but this can be difficult if the market never seems to really be down!

In any case, there is a general rule of thumb that the market tends to be lower at Christmas and in winter (watch out though because pre-Christmas and pre-winter are high real estate sales times as people want to move in before Christmas, and before winter settles in).

Since entering the property market, we have seen a dip in the market twice (once during COVID-19 which lasted only about four months and once where the dip lasted about a year or two and then just crept its way right back up again!). If you can, buy in the downturn; but don’t hold off buying for that time as you may be waiting 7 years, and then the house prices are so much higher again that it might not pay off for you. If you can predict a downturn and you want to wait for that time to buy, then you may choose to do that; but it does not always pay to wait for a downturn.

This book is about paying your home loan off faster. For more tips and information about how to negotiate a good price or knowing when to buy, search the web ; there are many resources out there. Research for yourself and decide what you feel comfortable doing.

What happens when your offer is accepted?

Paying a holding deposit and signing the Contract of Sale

Once your offer is accepted you need to pay a holding deposit to take the property off the market. This is usually around a quarter of a percent—0.25%—of the purchase price. For example, if your purchase price is $500,000, the holding deposit will be $1,250; if your purchase price is $1,000,000 then the holding deposit will be $2,500.

When you pay the holding deposit, this is also when you sign the Contract of Sale. Make sure your solicitor has reviewed the Contract of Sale before you sign it.

You should also read over it too, making sure that:

• the purchase price matches the one you agreed
• you are happy with the conditions
• you understand the conditions
• you understand your responsibility
• you understand your responsibility in upholding the conditions (e.g., what are the fees for late settlement?).

Take a copy of everything you sign (the real estate agent should offer this to you).

You don’t want to be in for any nasty surprises after signing the contract so do make sure you check everything first.

The cooling off period

Signing the Contract of Sale and paying the holding deposit takes the property off the market and you enter the cooling off period. This usually lasts for one week. During this cooling off period you can conduct any last inspections if you haven’t already or change your mind about the purchase.

If you decide within that week that you no longer want to purchase the property, you may lose your holding deposit, so be sure you want to buy the property before putting any money down or signing any documentation.

During this period get in touch with your solicitor and lender (if you haven’t already) to let them know your offer has been accepted and you have entered the cooling off period. Your lender will also then conduct an independent valuation of the property to determine how much they can lend you (remember earlier in ‘Step 3: Borrow’ where I mentioned the surprise of a lower valuation on our first property; this is that time!).

Make sure you can still borrow enough money to pay for the property even if the valuation is lower than you expect. Your lender will only give you 80% (or another percentage you agree on) of the ‘value’ of the property, not how much you pay for the property.

The settlement period

After the cooling off period ends, you enter the settlement period when you commit to making the purchase by handing over a second deposit (this is usually 10% of the purchase price); so make sure you are ready with any bank cheques (if this is required) when this happens.

Visit the bank or speak with your lender days before to get all this organised. There could be consequences for making a late payment so make sure you are ready to go.

Then you enter the settlement period, which usually lasts somewhere between 30 and 90 days and you receive confirmation of your settlement date. Now is when the real work begins.

After this, get everything organised and keep on top of what’s happening so that you are ready to pay the rest of the property price on your settlement date.

If there is one key tip to settling on your property, this is it, coming right up in the next blog post.