Buying a house

[Guest]

Anybody who has bought an established house in Perth, im looking for advise. We were originally going to build but time frames are just to long right now (been told 12-18months by some).

We have our deposit and mortgage approval im just confused about when we hand over our full deposit or do we put down  small deposit and then the full deposit at a later date. Also whats the general paperwork/paper trail we should follow. We have used a mortgage broker and wondering should we use a buyers agent as we have no clue or us this even a thing.

TIA 

 

 

[Jon the Hat]

HI - I was looking at the house buying process a few days ago, and found this quite useful:

First Home Buyer Guide - Advice For Buying Your First Property | REIWA

 

[Wa7]

Been a while since we went through the process but don’t bother with a buyers agent just get yourself a good settlement agent and they should give you solid advice.

Edited August 2, 2021 by Wa7

[Skani]

There is also useful information here for consumers entering the real estate market:

https://www.commerce.wa.gov.au/consumer-protection/buying-and-selling-home

[newjez]

https://www.perthnow.com.au/business/housing-price-boom-losing-steam-values-climb-at-slower-rate-as-affordability-crisis-deepens-c-3575975

UK market still seems pretty hot.

[Jon the Hat]

6 hours ago, newjez said:

https://www.perthnow.com.au/business/housing-price-boom-losing-steam-values-climb-at-slower-rate-as-affordability-crisis-deepens-c-3575975

UK market still seems pretty hot.

Its certainly eased now the stamp duty cut has gone, but there is a lack of supply.

[RandL]

I bought/sold  quite a few houses in  WA .  I never paid a 10% deposit , more like in the region of 5k-10k.

Definitely  contact  a settlement agent to get some advise on the process ,  not the real-estate agent .

 

The difference to the UK buying/selling process is that you exchange contracts at the beginning of the process and it is binding subject to the clauses you specify on the contract  (finance, building inspection, pest inspection, successful settlement of another property ..... ) once agreed and everybody signed on the contract  you have usually a week to pay the deposit. 

In AU the real estate agent writes out the contract , worse case scenario that person had a 3 week REIWA course to get his license, so they can be a bit hit and miss . Most Real-estate company have a standard set of clauses they include ( as mentioned above) 

You also do a final inspection just before settlement to make sure everything is working if not get them to fix it before settlement .

 

another catch can be stamp duty , as this has to be paid before the settlement to the settlement agent, but that only  could cause an issue if you sell one house to buy another and funds haven't been released in time .

 

 

  

Edited September 15, 2021 by RandL

[Cath.C]

On 15/09/2021 at 17:15, RandL said:

 Definitely  contact  a settlement agent to get some advise on the process ,  not the real-estate agent .

Can you get a good chance at prime property (ie, best value, not highest priced highest amenity houses), without have a buyer's agent with advanced notice of property sales?  ie, do the seller's agents protect the industry by giving buyers with agents first notice and first crack at houses before they are widely advertised?

Edited December 23, 2021 by Cath.C

[RandL]

31 minutes ago, Cath.C said:

Can you get a good chance at prime property (ie, best value, not highest priced highest amenity houses), without have a buyer's agent with advanced notice of property sales?  ie, do the seller's agents protect the industry by giving buyers with agents first notice and first crack at houses before they are widely advertised?

my comment was about where to go about information about the selling process. I've never known anybody using a Buyer's agent to buy a house in WA , at least not in my price range , maybe the situation has change in the last couple of years? Don't think the seller's agent will have an interest in protecting the industry as he most likely would have to share his commission if the other agent acts in a conjunctional arrangement. my 2 cents

[Marisawright]

7 hours ago, Cath.C said:

Can you get a good chance at prime property (ie, best value, not highest priced highest amenity houses), without have a buyer's agent with advanced notice of property sales?  ie, do the seller's agents protect the industry by giving buyers with agents first notice and first crack at houses before they are widely advertised?

Buyer's agents are fairly rare in Australia, used mainly by overseas buyers.   Real estate agents don't give buyer's agents first notice, it would be against their best interests.  They have more chance of conning -- er -- getting a better price from the general public than from buyer's agents, who know the tricks and see through the estate agent's flim-flam.

in your situation, I would definitely use a buyer's agent, if you want to buy on arrival.  Although all properties are listed on the internet these days, it's dangerous to make any decisions based on the online listings because agents shamelessly Photoshop the images.  A buyer's agent can do inspections before you arrive and these days most will use their mobile to give you a tour too. 

[DIG85]

5 minutes ago, Marisawright said:

Buyer's agents are fairly rare in Australia

They still seem far more common than they are in the UK. I think they are a waste of money myself.

Another thing that is far more common in Australia is the use of an auction to sell your home. This must be one of the worst ways you can sell your home.

[Parley]

28 minutes ago, DIG85 said:

They still seem far more common than they are in the UK. I think they are a waste of money myself.

Another thing that is far more common in Australia is the use of an auction to sell your home. This must be one of the worst ways you can sell your home.

In hot markets it is the best way to sell. Nearly all homes in Melbourne and Sydney seem to go to auction.

As a vendor you just need 2 or people who really want the property and the price can run beyond many expectations.

[Marisawright]

35 minutes ago, DIG85 said:

They still seem far more common than they are in the UK. I think they are a waste of money myself.

Another thing that is far more common in Australia is the use of an auction to sell your home. This must be one of the worst ways you can sell your home.

I would agree, I can't see the point of using a buyer's agent if you are already living in the city where you want to buy.     Different story if you are trying to buy from a distance, because the internet listings are so misleading.

The whole auction system is absolutely disgraceful.  Real estate agents love it, NOT because it gets the best price (which is what they tell you), but because an auctioned property has a short, fixed turnaround time. 

When they put a property up for sale, they might have to do weeks of inspections before the seller accepts an offer, and that's too much work for them.  With an auction, there's a set campaign period and a set auction date, so they know they'll be rid of it quickly.  They don't care how much it sells for - the point is that they can churn through more properties more quickly.     If they can sell six houses a month at a lower commission, that's better than four houses a month at a high commission.

It might appear that auctions are a better way of selling in a rising market, but actually, agents usually have an accurate idea of how much a property is worth.  They massage the figures so it looks like it would've gone for less, just to con everyone into thinking auctions are marvellous.

(this was all explained to me by a retired real estate agent, BTW).

Edited December 23, 2021 by Marisawright

[DIG85]

2 minutes ago, Parley said:

In hot markets it is the best way to sell. Nearly all homes in Melbourne and Sydney seem to go to auction.

As a vendor you just need 2 or people who really want the property and the price can run beyond many expectations.

That's what REAs and auctioneers will tell you, who just want a quick,pretty much guaranteed sale to get their fee. There is certainly a lot of hype about auctions, but only c. 30% of homes in Sydney go to auction, despite the non-stop coverage about them in the papers. 

The major flaw in selling at auction is that the winning bidder need only pay $1 more than the underbidder. A process that allows that can never hope to obtain the best sale price.

This article is useful.

https://www.revolutionaryrealestate.com.au/no-real-estate-agent-will-tell-you-this-about-auctions/

[ramot]

31 minutes ago, Marisawright said:

I would agree, I can't see the point of using a buyer's agent if you are already living in the city where you want to buy.     Different story if you are trying to buy from a distance, because the internet listings are so misleading.

The whole auction system is absolutely disgraceful.  Real estate agents love it, NOT because it gets the best price (which is what they tell you), but because an auctioned property has a short, fixed turnaround time. 

When they put a property up for sale, they might have to do weeks of inspections before the seller accepts an offer, and that's too much work for them.  With an auction, there's a set campaign period and a set auction date, so they know they'll be rid of it quickly.  They don't care how much it sells for - the point is that they can churn through more properties more quickly.     If they can sell six houses a month at a lower commission, that's better than four houses a month at a high commission.

It might appear that auctions are a better way of selling in a rising market, but actually, agents usually have an accurate idea of how much a property is worth.  They massage the figures so it looks like it would've gone for less, just to con everyone into thinking auctions are marvellous.

(this was all explained to me by a retired real estate agent, BTW).

Haven’t seen many if any auctions around where I live on the Sunshine Coast for a long time as houses sell almost as soon as the go on the market. The house close to us only took sealed bids! and I’ve heard of what I think a worrying trend, that estate agents are contacting ‘say 5 interested buyers’ and pitching them against each other to ‘up their offers’ to get the property, much easier than holding an auction.

[Parley]

34 minutes ago, DIG85 said:

That's what REAs and auctioneers will tell you, who just want a quick,pretty much guaranteed sale to get their fee. There is certainly a lot of hype about auctions, but only c. 30% of homes in Sydney go to auction, despite the non-stop coverage about them in the papers. 

The major flaw in selling at auction is that the winning bidder need only pay $1 more than the underbidder. A process that allows that can never hope to obtain the best sale price.

This article is useful.

https://www.revolutionaryrealestate.com.au/no-real-estate-agent-will-tell-you-this-about-auctions/

The vendor sets the reserve and doesn't sell if his price isn't met.

If the property is passed in then the highest bidder has forst right to negotiate directly with the vendor.

I know how they work and attend quite a lot around my neighborhood.

[Parley]

3 minutes ago, ramot said:

Haven’t seen many if any auctions around where I live on the Sunshine Coast for a long time as houses sell almost as soon as the go on the market. The house close to us only took sealed bids! and I’ve heard of what I think a worrying trend, that estate agents are contacting ‘say 5 interested buyers’ and pitching them against each other to ‘up their offers’ to get the property, much easier than holding an auction.

A sure sign it is a high demand market and probably sold too cheaply.

A competitive auction would get a far higher result.

[DIG85]

6 minutes ago, Parley said:

The vendor sets the reserve and doesn't sell if his price isn't met.

If the property is passed in then the highest bidder has forst right to negotiate directly with the vendor.

I know how they work and attend quite a lot around my neighborhood.

But the key focus for any sale process should not be the minimum amount that the vendor is willing to sell for. It should be to extract the maximum amount that the buyer is willing to pay. A system which allows the winning bidder to pay only $1 more than the underbidder is not going to do that. That is because an auction is a comparative process, not a competitive process. The buyer is at a huge advantage - they can see exactly what everybody is bidding. 

Too much focus is paid on the reserve. You see stories in the press such as "home sells for $1m above reserve" and I think "so what? Did the winning bidder pay the maximum he was willing to pay?" The reserve generally means jack.

 

Edited December 23, 2021 by DIG85

[ramot]

11 minutes ago, Parley said:

A sure sign it is a high demand market and probably sold too cheaply.

A competitive auction would get a far higher result.

The price they bought the house for was the highest a house has ever sold locally, An eye watering amount, so I have a feeling, not based on any information that the potential sealed bid applicants were perhaps contacted, to bid against each other, Otherwise someone wanted the house very badly. Lots of people seem desperate to buy on the Sunshine Coast from Sydney and Melbourne 

Edited December 23, 2021 by ramot

[Cath.C]

So, if you don't use a buyer's agent, are the online sites like Realestate.com or Domain.com complete enough to get comparable sold prices from?  If they only show the asking price for homes not sold at auction, it's not a complete capture of the market.  How does a buyer get the comps?  (I do think that most buyers agents are far overpaid in the markets in which they have a near monopoly, so I'd be happy to avoid them).

 

[rammygirl]

2 hours ago, Cath.C said:

So, if you don't use a buyer's agent, are the online sites like Realestate.com or Domain.com complete enough to get comparable sold prices from?  If they only show the asking price for homes not sold at auction, it's not a complete capture of the market.  How does a buyer get the comps?  (I do think that most buyers agents are far overpaid in the markets in which they have a near monopoly, so I'd be happy to avoid them).

 

You can search for sold prices on those sites too.  If you are interested in an area you can follow it and get updates on for sake and sold prices. Also you can talk to agents who operate in the area and register your interest as a motivated and ready to go buyer.  Keep asking. Some houses are sold off market.

[Marisawright]

5 hours ago, Parley said:

The vendor sets the reserve and doesn't sell if his price isn't met.

True, BUT the reserve is not set until 5 minutes before the auction starts.   The vendor is conditioned over the auction period to accept a low reserve.

There's a Youtube video somewhere of a training lecture for a large real estate agent in Sydney (I forget which one), which sets out the strategy.  Here's how it works:

You decide to sell your house.  The agent inspects the place.  The price is discussed and he agrees with your estimate or even suggests you can get more.  

The property is advertised.  After each "open for inspection",  the agent rings you to tell you what people have said, and every week there will be negative feedback (real or made-up).  The agent acts surprised and disappointed that the property isn't being as well-received as he expected - which means the price won't be what he expected, either.  This is known in the trade as "softening up".  It's designed to put doubts in the vendor's mind.

The auction time approaches.  The agent asks you what your reserve is.  If you name the price you originally thought of, the agent will say, "well , madam, but you have to consider..."and then he'll reel off all the negative feedback he gave you over the preceding weeks.   

Some vendors won't bend at that point, but not to worry.  The reserve price is set at the original figure and the auction goes ahead.  Then the auction gets stuck below the reserve price.  Now the agent goes in and repeats all the negative feedback.  The agent will usually have a team working between the vendor and the highest bidder, running back and forth to squeeze an extra concession out on either side.  They whip up anxiety in the vendor until they start to worry the whole thing will fall through, and then the vendor caves and agrees to put it on the market. 

 

Like I said, I've seen a video about it somewhere.  There's also a couple of books written by Neil Jenman that explain it all, not sure if they're still in print.  And as a seller, I've experienced exactly those tactics. 

[Marisawright]

5 hours ago, Cath.C said:

So, if you don't use a buyer's agent, are the online sites like Realestate.com or Domain.com complete enough to get comparable sold prices from?  If they only show the asking price for homes not sold at auction, it's not a complete capture of the market.  

That is true. You can search for sold prices BUT agents are not obliged to reveal what a house sold for, so it is incomplete.

The big difficulty, like I said, is that it's almost impossible to make fair comparisons, because you can't trust the photos.

I remember being stunned when I saw the photos of our little townhouse when we sold it.  I hardly recognised it!   They brought in huge lights so our (rather dark) south-facing lounge seemed flooded with sunlight.  They used a fisheye lens which made all the rooms look twice as big, and they arranged the furniture so the distortion wasn't obvious to anyone who hadn't seen the actual room.   And so on.   

When we were house-hunting, I remember looking at one house and wondering why they'd taken the bedroom photo with the blind closed.  When we went to inspect it, we found that the window looked directly into the window of the units next door.  There was another one which was nicely presented except that all the carpets and the lounge suite were very badly stained (the owner had a squillion cats). The agent had simply avoided including the suite and the carpets in the photos. 

So you see, while you'll be able to make a list of 3-bedroom houses and their prices, you can't be sure what condition each house is in, so it doesn't tell you much unless you are able to do a physical inspection.   If you're willing to wait until you arrive, that's easy - but bear in mind it will take you a few weeks to find the right property, then 6 to 8 weeks to settlement.  If you don't want to be stuck in temp accommodation that long, getting someone else (either a buyer's agent or a trusted friend) to view the properties is really essential.

 

Edited December 24, 2021 by Marisawright

[Parley]

Those issues could happen equally if selling privately too. It is impossible to know if you could have got more selling a different way.

Most sellers are selling because they are committed to buying another property. They have limited time to act as the need the funds within a couple of months to purchase the new place.

I have not sold at auction. But bought my house at auction and i have seen bidding wars where 2 people don't want to give in. Really you have no way of knowing what the maximum is that someone is prepared to pay.

[Cath.C]

4 hours ago, Marisawright said:

That is true. You can search for sold prices BUT agents are not obliged to reveal what a house sold for, so it is incomplete.

The big difficulty, like I said, is that it's almost impossible to make fair comparisons, because you can't trust the photos.

 

But when appraisers or evaluators or real estate agents come in to value the house, they use recent comparable sold values.  So if an individual doesn't have access to the sold prices, they are at a disadvantage compared to the agents.  Is there a publicly accessible database of actual sold, not asking, prices?

I'm not concerned about making fair comparisons based on photos, of course I know many of the tricks, like taking ultrawide angle photos and digitally imposing furniture without distortion.  Ultrawide angle distortion to make a walkway look like a yard.  Overexposing walls to hide flaws.  Closeup of plants to distract from mildew between the tiles.  I'm concerned about finding out how much houses in given neighborhoods in varying states of renovation or upkeep are selling for.  But a couple of months of looking at the progression of houses for sale does provide some education.  Identifying signs of rising damp on the walls, panels likely to be asbestos especially if the laundry rooms have never been remodeled, evidence of roof damage, etc, etc, etc.  All of that can be assessed during home inspections.