10 secrets to buying a home successfully
Published 14/09/2016 | 15:11
Home hunting has always been a hugely stressful exercise, full of dashed hopes, steely negotiations and many obstacles to overcome.
But at the moment, in a time of acute short supply, that obstacle course has gotten so much tougher.
It helps to know what you’re about, and if you can avoid some of the common mistakes made by Irish home hunters, you have a better chance of nailing down a deal on that dream home you’ve found — and if you’re very sharp, you might just save yourself a few thousand euros.
Here, we’ve compiled 10 top tips for buying a home...
1) Have Your Own House in Order
There’s no point in home hunting if you’re not ready to do business there and then. Far too many people go home hunting when they still have a house to sell or they don’t have all their ducks in a row regarding finance. Your number one priority is to have clear mortgage approval from your bank and know what your upper price limit is. If you already have it, beware of the expiry (usually six months). You need to have a solicitor appointed and a surveyor lined up and ready to inspect the homes you are interested in. Most of all, if you have to dispose of a property, ensure that this process is out of the way and the money is in the bank. Sales regularly fall through because the buyer believed they had sold their former property, when the previous deal had not truly closed.
2) Exploit the Estate Agent
The vendor’s agent is there to be grilled for data. Ask are the owners ready to transact straight away, or do they have to buy a house first? Ask about the highest bidder — do they need to sell before buying this house? Assess the status of the estate agent. The peculiarly Irish practice of vendors appointing agents on the basis of being a friend or family member, rather than a local expert, means you’ll often find an estate agent who is completely outside their turf and comfort zone. There’s a better chance of getting a property at a value price. At the same time, don’t give too much away, especially regarding your upper spending limit. The sales agent will be trying to establish this, how badly you want the house, and to take you to that limit as soon as possible.
3) Be Semi-Detached
The home-hunting trail will leave you drained and punch drunk if you emotionally attach yourself to one property after another. It might be the home you really want, but it’s not actually yours until the sale has been processed and both names are on the contract. Don’t think about what curtains, which kitchen and where to put your dining table until you’ve landed your fish. Try to maintain a detached business-like mindset until you close the deal.
4) Be Aware of Different Tactics
First, remember that the asking price means nothing — it is merely the opening gambit in a bidding process. Buying and selling a house is a game of poker in which different parties utilise different tactics to play. Some estate agencies give a low asking price in order to build up momentum on the bidding and get the price up to where they want it, while others start deliberately high to ‘chance their arm’, with the expectation of coming towards what they believe the house is worth. Watch the different agencies’ ‘forms’ on other properties and you’ll soon establish their style. Further complicating matters is that in times of a stock shortage (like now), some agents are accused of offering their clients an unrealistically high-value estimate so they’ll beat off the opposition and land the instructions to sell a property with the assumption that they can manage these expectations down again later.
Agents value bids as stepping stones to a target price. So if an agent is keen to get you to offer €280,000 on a home selling for €290,000, it doesn’t mean they’ll sell at that level. You can’t get to €290,000 without first having a bid of €280,000, and then another of €285,000. In a rising market, don’t keep chasing houses asking your upper limit or close to it. If you have €300,000 to spend, look at houses priced from €270,000 to €280,000 — otherwise bidding will pass you by for every property you go for.
5) No House Is Perfect
No home out there will tick all the boxes on your wish list. Be practical. Like picking a life partner — if you’re far too fussy about what you want, you’ll be left on the shelf. Curtains and carpets can be changed; north-facing gardens can’t be. Estate agents will tell you that superficial issues, like dirt and grime, will put some buyers off, when a few hundred euros to a contract cleaning company can sort it.
6) Bid Fast, Bid Low
A professional property buyer I know advised that if you are genuinely interested in a house which has just come to market, you should get your bid in first, but significantly below (albeit not ridiculously below) the asking price. This helps you to stamp your own precedent on bidding from the offset. The agent will have to tell other interested parties that a bid is in and at what level. If it is €10,000 below the asking price, this automatically makes other interested parties reluctant to move over the asking price.
The agent’s nightmare is to have a bid below the asking price which kills the campaign’s momentum. Bidders usually believe others know better and copy or react.
In contrast, if you go straight in above the asking price on a house which is likely to sell well, you’ll stir up the opposition and make them believe the house is worth more. However, in the case of an agent whose tactic is to understate the asking price to generate interest (checking the property register and other similar homes online will make this apparent) then it might be wise to go ‘all in’ immediately to completely shake off the opposition.
7) It’s Not All About The Highest Offer
Homes aren’t always sold to the highest bidder. Vendor’s estate agents are constantly monitoring the overall ‘package’ presented by a potential buyer and homes can be sold for prices which are significantly below the asking price because the successful bidder is more likely to close the deal without issue. So if you are ready to move quickly without a house to sell and are buying with cash, remind the vendors agent of that fact constantly.
Gazumping happens. Buyers like you, who have ‘sale agreed’ a house, are sometimes discarded weeks later in favour of a vendor with a higher offer. Home hunters should know that ‘sale agreed’ means diddly-squat other than that the house in question appears to have a serious ‘suitor’. If you are ‘sale agreed’ on a house you have bid for, then it’s a bit like getting engaged. If a better suitor comes along, the engagement could be broken and your ring (down payment) returned to you.
No legally binding process has taken place until both your signature and that of the vendor’s are on the contract.
Gazumping is not decent practice. But it’s also not illegal, so it happens. Crucially, from your own perspective, realise that just because your bank has approved an upper limit for a loan, it doesn’t mean they’re going to cough up the cash. If the officials in charge consider your purchase price to be too high, they will refuse the loan and kill the deal. Banks have erred on the conservative side since the property crash.
8) Hang About If You’re Not Successful
Which means it’s always worthwhile checking back on a house you wanted but lost. Sales fall through regularly so always, always make sure your name is down on the underbidders’ list.
Make a point of ringing back three weeks later and again three weeks after that to ensure that you get in there in the event of a deal unravelling. Don’t rely on the estate agent to contact you if the deal falls through.
When a vendor is truly fed up, they will often not want to go back to a lengthy campaign again and the agent will often want to provide them with a ready buyer if there’s a risk of losing the vendor to the opposition.
9) Close it Fast
Once you’ve made your best and final offer, bear in mind that it sometimes suits a vendor and their estate agent to stretch out a close in order to attract subsequent higher offers.
You should also realise that if you have already sold your previous home and prices are rising in your target area, that the home-hunting process is costing you money by the day through inflation. One to two weeks is long enough for vendors to get their act together and their solicitor organised to exchange contracts.
Let them know from the offset that this is your conditional time frame. Hear any reasonable excuses at this point. Otherwise, be prepared for endless tales of vendors on holidays, solicitors wrapped up in court cases, and missing door keys.
10) Live with your decision
When the dust has died down and the fevered impetus of the bidding process clears away, it is too easy to have regrets. You begin to notice the faults in the property you didn’t see, you unearth that woodworm and the leaky pipes you missed. Other homes in the area sell for less and you might feel you overpaid. Every buyer has some regrets and you’ll be no exception.
Look to the positives and enjoy your new home. Apart from recent glitch periods, few Irish people have ever regretted buying their own property, and even those stung in the boom are coming around to appreciating a bought roof over their heads in times when rents cost more than their mortgage payments.