How to avoid paying too much for a home
Published by MFAA
Knowing what a property is worth is central to avoiding paying too much for it. It's about doing your homework, knowing what you want, knowing the market and making sensible offers.
Set a benchmark
Comparing nearby properties that have sold recently is the best way to assess an acceptable price for the property you are looking at and provides a valuable bargaining tool when you are negotiating with a seller or agent. Make sure the properties are comparable, with a similar land size and number of bedrooms, for example, so you aren’t measuring apples against oranges.
Keep in mind current market conditions
The property market is always changing, so doing this research once and sitting on it for a few months will offer little help. Going to open homes and auctions regularly will give you insight into the current state of the market and how much certain properties are going for.
Expand your search
Don't limit yourself to a particular area or suburb, take a look around to expand your options. You might find your dream property just a couple of suburbs away that still meets your needs.
Don’t exceed your financial capacity
If you'll be taking out a loan to purchase a property, it's a good idea to seek pre-approval before you start making offers.
Aside from meaning that when you do eventually make an offer it will be taken seriously by the seller or their agent, having finance sorted out means that you can be sure of what your stamp duty and associated costs are, and exactly what price range you can consider.
Remember, even if a lender approves you for a particular loan amount, it doesn’t mean you have to accept it – a higher loan amount means higher interest charges over the life of the loan, increasing the total cost of the property purchase, so only ever commit to a loan that you can afford alongside your current income and real expenditure.
When calculating figures for the price of a home, ensure you also budget for maintenance and repair costs, as well as any other expertise you may require in the purchasing process.
Bring in the experts
Consider using the services of a buyer's agent, they can help you with things like negotiating a price of bidding for you at an auction.
Having an MFAA accredited finance broker onside is key to avoid overpaying for finance – they will search out the best loan for you and make sure it is one that you can afford.