Buying Your First Home for Dummies
When you begin to look for a house or unit, you probably already have an idea of what you want. But it is important to work out priorities as it’s unlikely one house will meet all of your needs. Things to consider are:
Price: How much deposit have you saved, how much will you be able to borrow? Can you afford to do any renovations?
Location: Do you need to live in a particular area near work, transport, schools, or relatives?
Type of house: Do you want a detached house or will a home unit suit you better? How many bedrooms do you need? If you are planning a family, will you want to extend it later? Is parking essential? Other considerations include the style of the house, a view you would like, and whether you need a large backyard for children or pets.
Once you begin to look, your list of priorities may change as you develop a clearer idea of what is available and how much it costs. The most effective way to find a house is to arrange to spend every possible moment over a couple of months looking at different houses. Weekdays are particularly good. Get up early and scour the paper. Call in to see every real estate agent in suitable areas and see all likely properties.
POINTS TO CHECK
When you have found an apparently suitable house, you should arrange a number of checks and inspections before you commit yourself. First, you should arrange a complete structural inspection to be carried out by a builder, architect, or structural engineer. The inspection should include:
- the foundations;
- the condition of all structural timbering – floors, joists, rafters;
- all load-bearing walls and members;
- the outer skin of the building;
- roof coverings;
- electrical wiring and plumbing.
You should also obtain a recent survey or have one done to check the boundaries for any encroachments. Check with the local council whether they have been notified of any alterations or additions and if they were approved.
Another important detail is to check the house and area at different times – there could be some noisy activity which may not have been apparent during a daytime or weekend visit.
Also, check with the Department of Main Roads to make sure that no freeways have been planned; this applies to both country and city areas.
Get a pest control firm to carry out a complete check of the buildings on the property, and give you a report.
If renovations are necessary, seek the opinion of a builder or architect, who can give you a clear idea of what is possible in the way of renovation and the likely costs. Remember that tradesmen will be required for drainage, plumbing, and electrical work, as it is illegal for unqualified people to do this.
Your solicitor will probably want a valuation done and will advise on any other detailed inquiries and searches.
When you find a suitable house, your real estate agent will probably ask for a “holding deposit” as a sign of good faith that you are making preliminary purchasing arrangements and that he will not sell the property to anyone else in the interim. BE WARNED: a “holding deposit” is not a legal agreement and there is nothing to prevent the agent from accepting a higher offer. Make sure the deposit is refundable.
FINANCING THE PURCHASE
If you decide to go ahead and purchase the house you will need to arrange finance. Loans are available from savings banks, permanent building societies, terminating building societies, solicitors’ trust funds, credit unions, and finance companies. Eligibility, interest rates, and availability of loans will vary, so check with your solicitor. You will need to have saved a deposit of between five percent and 40 percent of the total price of the house, depending on your source of finance.
REDECORATE, RESTORE OR RENOVATE
When the purchase has been completed and the drama and excitement of moving in have subsided, take a deep breath and look around again.
There are two ways to renovate your house: structurally or visually.
Visual transformation (redecoration) relies on imaginative treatments of walls, ceilings, and floors and clever furnishing ideas. You can achieve amazing results with paint and paper.
If your house is an attractive old style, you may wish to restore it by repairing or replacing original features. A good restoration adds to the house’s value.
With structural renovations, you can open up existing areas, enlarge windows, add or remove doorways as well as increase space by extending out or up. You must have a clear idea of what you need before you start.
Renovations usually add to the value of your house but you must beware of overcapitalizing because the value of your house also depends on the location. If you live in a lower-priced area you may not recover the cost of a luxury kitchen or pool if you sell.
PLANNING THE RENOVATION
Consult an experienced architect, interior designer, or builder for advice, plans, and supervision of the renovations. Even an initial consultation can provide fresh ideas and the charge is very small compared to the money you will be outlaying.
Whether or not you plan to consult anyone, you should work out your needs and list them in order of priority. You will need to have a builder or draftsman draw up plans as a basis for renovation.
Your council and other relevant authorities will have to approve any structural renovations and inspect them after completion. If renovations are not done in accordance with regulations, the council has the right to order the demolition of the structure.
Employ someone to supervise the job or subcontract labor. You should get three or four quotes for each job, remembering that the lowest may not necessarily be the cheapest in the long run. Each specification for quoting should be in writing and should clearly set out what you want the builder to do.
Although you can save money by finishing off renovations with paint, paper, or tiles, leave structural alterations, plumbing, and electrical work to experts.
Check the honesty and capability of the builder by seeking the advice of the Master Builders’ Association and the Housing Industry Association and check with the Builders Licensing Board that the builder is in good standing. Ask to view several of the houses the builder has recently completed and question the owners.
When you have chosen your builder, he should give you a formal letter setting out his total price for materials and the job. A building contract will set out the legal rights and obligations of both parties and the procedures to govern the enforcement of those rights and obligations. Thoroughly read and understand the contract. You should also check that your insurance covers the work in progress and see if it will need to be increased for the new value of your house.
SUPERVISING THE WORK
Before work starts, you should decide who will be liaising with the builder. This person will be in charge and will check on materials arriving and work progress. Before any builders arrive, arrange for access and storage for materials and equipment – and decide where they are going to have their meals and what the toilet and washing arrangements will be. Also, make alternative arrangements for yourself if the bathroom or kitchen facilities will be out of action.
Check on work done each day after the builders have left, then bring up any queries with the foreman the next morning before work begins. Unless a major error has been made, never make any changes after the building has started.
Changing work at this stage is expensive, and throws schedules out.