Mr Mortgage Home-buying guide. What you need to know about buying and selling Real Estate.
Access everything you need to know when buying a home - from choosing a real estate property to home inspections and mortgages.
When buying a home—whether it's your first, second or an investment property you'll need much information about the home finding and buying process.
Buying a home soon? You'll need a mortgage pre-approval. Its free! Get yours here now.
Using a Buyers Agent
Most real estate buyers in Australia don't use a "buyers agent". When they go to see a real agent, they assume that the Real Estate agent who handles the property is "on their side". This is not true. The real estate agent works for his or her principal. They have a fiduciary duty" to protect the best interest of the principal.
The principal is always the person who pays the real estate agent his or her commission.
In Australia this is usually the vendor [seller]. So the real agent is working for the seller. You can elect to use a Buyers Agent, by signing a contract and agreeing to pay your agent a commission on settlement. Then the real estate agent is working for you, the buyer.
You would
not select the same agent as is working the seller for obvious reasons.
Most people actually do this because they are either ignorant of this vital point,
or they think they can do a better job in handling the negotiation than a real
estate professional could.
Real Estate Agents and their sales people are obliged to inform the buyer of this, but some may not.
In the end its your decision to pay for a buyers agent or negotiate yourself. But know who the agent is working for before you enter into discussions about property.
Seller's Agent - A real estate professional becomes a Seller's Agent by entering into a listing agreement to represent the seller's interests.
A buyer should not disclose anything to the Seller's Agent they do not want the
seller to know.
Buyer's Agent - A real estate professional becomes the Buyer's Agent by entering
into an agreement to represent the buyer. A Buyer's Agent can assist the seller,
but does not represent the seller.
The Buyer's Agent must place the interests of the buyer first.
A seller should not tell the Buyer's Agent anything they would not want the
buyer to know, because the Buyer's Agent must disclose any pertinent information
to the buyer.
Many home buyers "spill their guts" to real estate agents working for the seller. This plays into the hand of the vendor. Don't tell anything to the seller or his agent that weakens your negotiations or you will be paying more than you need have for the property.
If you are buying a home through a buyers agent, the real estate professionals
you interview should cover the following:
Agency relationships
Many real estate professionals who primarily represent buyers have been
specially trained to do so.
How much home you can afford
The difference between being "pre-qualified" for a mortgage and being "pre-approved" for a mortgage.
Key features you "must have" in your new home vs. those you would like to have
- How to evaluate and compare the homes you see
- An overview of the local standard Contract For Sale along with typical addenda and give you a copy for review
- The types of inspections you will want to have done on the property you select
- The basic laws of supply and demand greatly impact what a real estate buyer is willing to pay for property and the amount financial institutions or lenders are willing to finance.
- Fair market value is defined as the likely price a ready, willing, and able buyer is willing to pay for a property when:
- The property is offered for sale on the open market.
- The property is marketed for a reasonable period of time.
- The buyer has a complete understanding and knowledge of the property.
- Neither the buyer nor seller is under abnormal pressure.
Determining Property Value
The Market–The market approach is based on the premise that a prudent person will pay no more for a property than it would cost to purchase a comparable substitute.
- Competitive Listing and Sale Prices–To form an opinion of value, a Real Estate Professional will analyse current listings and sale prices of similar homes in your area. He or she will consider properties that have recently sold, are currently for sale, or were offered for sale but did not sell. Although none of these properties is identical to yours, only those that have a high degree of similarity are noted in this report.
- Comparative Evaluation–A Real Estate Professional can prepare a detailed description of your property and an estimate of the selling price range in today's market. This is known as the comparative or competitive market value of property.
Staying Current with Market Value–Once your property has been listed.
A Real Estate Professional will continually collect and review updated information to monitor the offering price. Their observations may include:
- Professional opinions
- Industry (broker) response
- Buyer reaction
- Current market conditions
- Competing properties
- Availability of financing
- Number of showings
- Length of time on the market
- Interest rates
- Condition of the property
- Seller motivation
Factors that Do Not Affect a Property's Value
- What the owners paid when they built or bought the property
- Some of the improvements and upgrades the owners have made to the property
- The cash proceeds the owners want or need from the transaction
- What friends, neighbours, or relatives say a property is worth.
Factors that Do Affect a Property's Value
- Style, condition, age, decor
- Location
- Time of year
- Property and community
- How quickly seller needs to sell