By now you have your budget and you are ready to start buying a property. Everyone has their own priorities.
You need to consider what yours are.
This blog will hopefully bring to the forefront of your mind some issues that we commonly encounter and purchasers commonly overlook.
What to look for when buying a home
First you need to ask yourself, are you buying an investment or your main house/unit (often called your “principal place of residence”)?
If you are buying an investment property, you will want to consider:
- Do you want to maximise your rental income or maximise the increase in value of the property?
- Are you planning on holding it for a long or short time?
If you are buying a principal place of residence, you will want to consider:
- Do you need a large or small house?
- Do you need a large or small yard?
- What will your needs be in the future?
- Will you need rooms and space for kids?
- Will you be downsizing because your kids have flown the nest?
The answer to these questions will determine what kind of property you are looking for, so you MUST know the answers before you look to purchase.
Inspecting a property
There is a rule when purchasing property that the purchaser must be satisfied with the state and condition of the property as well as the state and condition of the fixtures and fittings (ie everything included) in the property. If there is any damage to the property in existence on the day that the contracts are exchanged and dated you will inherit those problems.
You will very likely order a pest and building report after your offer has been accepted by the vendor, but before you make your offer you should have a good look at the house to see what work you will need to undertake in the short, medium and long term. You also need to remember that a pest and building inspector may be limited by only making a visual inspection of areas of the property which they can get access to. They may not be able to get into the manhole or crawl under the house for workplace health and safety reasons.
Your offer to the vendor should reflect any repairs needed. For example, you might consider a house to be worth $700,000 in value, but the kitchen needs to be replaced. You could get a quote for a new kitchen which might be $10,000 and then you could probably allow $5,000 on top of that for incidental expenses and a bit of money off for the trouble of actually doing the work (ie what litigators call “pain and suffering”). So your offer to buy the house would then be $685,000.
Go through the house carefully to see what needs to be done and make a budget for the cost of doing that work. If you don’t know what the cost will be, you should call tradespeople to get an estimate from them. If you need to, and if possible, you should move any furniture restricting your view. There is always the chance that a wardrobe has been placed in a particular location to hide a hole in the wall or some other problem. Remember, buyer beware.
Common traps and pitfalls
Here is a checklist that may be useful to help you identify and budget for common issues:
(a) Check the water pressure in all the taps, check for any leaks and check that the water drains away satisfactorily.
(b) Have a look at the hot water system. Make sure it is big enough for your needs. Check for signs of rust and age. Hot water systems are expensive to replace. If your hot water system goes you really can’t delay replacing it.
(c) If you can, have a peek through the manhole into the roof. Is there insulation? Are there any signs of water pooling? Water pooling is a bad thing. Replacing or repairing roofs can be expensive.
(d) Are there any signs of cracks on the slab or the piers/footings of the house? There is often a degree of normal settlement cracking after a house is built while it settles on the land but there is a limit to what constitutes normal cracking. You should be suspicious of any crack you can fit a credit card into because one day your credit card may need to fill that crack.
(e) Be extra careful of a freshly painted house. Painting a house can mask problems like water leakage.
(f) You should check for damp by feeling the walls and looking for signs of peeling or bubbling paint. Watermarks and mould are a good indication that there may be significant issues with dampness. Your nose can also be a good investigative tool – is there a musky smell in any room? Fixing damp can be super expensive. Bathrooms are a common source of dampness and mould issues. Fixing a mould problem in a bathroom may require replacing walls, ceilings and floors as well as installing better ventilation.
(g) Check all the windows, especially timber framed windows. Are they easy to slide/operate? Is the wood cracking? This may be a sign of wood rot. Do the windows have key locks? Are keys available for all of the windows? It may be expensive to replace all the window locks if keys are not available.
(h) Press any wooden surfaces, especially wooden surfaces which are exposed to the elements. This may indicate to you whether wood rot will be an issue.
(i) Does the house have enough room for storage of both your interior items, like towels and linen, as well as your outside items, like gardening equipment?
(j) Are the rooms a good size and shape for your needs? It can be difficult to furnish and use rooms which are unusually shaped or unusually large or small.
(k) Is there a phone line? Does it work?
(l) Is the area well serviced by mobile phone networks?
(m) Are there sufficient power points? Are they conveniently located? You may want to get an electrician to check that the wiring is done correctly and that no circuit (especially circuits in living or kitchen areas) is overloaded. Are the power points old-fashioned? If so this could be an indicator of old wiring.
(n) Check that there is a bathroom on each floor. If not for convenience, then for re-sale value. Putting in extra bathrooms is a very expensive job.
(o) Where are the bedrooms located? Parents will probably want to be close enough to the children’s rooms to be able to get to their children quickly but not too close so that noise will be an issue.
(p) If possible, inspect the property on a rainy day and check for leaks.
(q) Check the bathrooms, tiled areas and kitchen for loose tiles and missing or crumbling grout. Again, to fix or replace these can cost a fair bit.
(r) It seems silly but check for insect screens. These can be expensive and if you don’t have them you will be kicking yourself in summer.
(s) If you plan on renovating, check under the house to see what is underneath. If you can’t do that, then try to find out what is under the carpets. It is good to know what you are dealing with so you can budget for your renovation.
(t) Have a good look through the kitchen. Do all the drawers work well? Do the stove, dishwasher and oven work well? The kitchen and the bathroom are often the most expensive rooms to fix.
(u) Measure the kitchen and laundry to check that your appliances will fit in the appropriate spaces. A bloke who bought my last house had to get a cabinet maker to re-fit the kitchen because his new whiz-bang fridge that he bought didn’t fit in the space.
(v) Does the property have air conditioning? Does the air conditioning work and is there a functioning remote?
(w) Is there a remote to the garage door? Does it work?
(x) Are there keys to all locks? Is there an alarm system and does it work?
(y) Is the water mains tap turned on for the house? If it is not you should turn it on and see what happens. The vendor may be hiding some serious leakage issue.
Ryan & Ryan Lawyers
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The above is not intended as legal advice. You should obtain legal advice in relation to your own specific circumstances.