The cost of buying property is undoubtedly a factor in the length of time that it takes to buy, but organizational skills may have something to do with it as well.
It is essential that home buyers need to be organized and clarify what they’re looking for before jumping onto the property ladder. Many buyers do not have a strategy in place when starting their search. Buyers that are looking to purchase over a shorter term than 10+ years will need to consider not only their buying strategy but also their exit strategy and consider how ‘saleable’ the property is.
Set your goals, ensure they are realistic, decide on a target date, formulate a schedule, employ a strategy and stick to the plan.
Be mindful, you’re spending hundreds of thousands of dollars, so you need to do your homework to get the job done correctly and thoroughly.
To help you get started we have outlined some steps:
1. Evaluate your financial situation
You’re probably wondering how much you can borrow from the bank. Good question! The answer is determined by a multitude of factors. A mortgage is a massive financial responsibility and to get a good idea of where you stand it’s best to have an honest conversation with and independent advisor to figure out your budget. Knowing this will help when you start searching for a property.
An independent advisor will be connected to all banks instead of just one so they will be able to make you a much better offer. Especially if you are a skilled migrant.
2. The cost of buying a property
It really pays to seek advice from an independent financial advisor to truly get the scope of the full costs associated with buying a home.
Below the outline of the cost involved when you purchase a home of € 350.000 k.k.
The k.k. is short for Kosten Koper (All additional cost, mentioned below, for the buyer)
Cost of purchase agent – If you have engaged an agent the payment is due upon settlement at the notary’s office. This fee is not deductible from tax.
Validated valuation report – All properties need a validated valuation report as you can only mortgage 100% of the actual value of a property. On average these reports cost € 600, this is tax deductible.
Technical inspection – In some cases a building inspection may be a wise decision. Think of an older style property. The average cost is € 450, this cost is not tax deductible.
Transfer tax – Transfer tax is always 2% of the purchase price, so in our example this would be € 7.000. payable at the notary’s office upon transfer of title.
Notary cost – On average the cost of a notary is € 550. The notary will list the transfer of title in the kadaster and this cost is tax deductible.
Besides the kosten koper you will need to budget on maintenance. Think of flooring and paintwork and moving cost.
4. Do you need a purchase agent?
Reach out to local real estate agents for information about what’s for sale, tips for buying a house in the area, what the area is like and how the property market is performing, along with any other general queries. Appointing a purchase agent is great as they know the area like their back pocket, but they can also work to find suitable properties for you, negotiate with the seller, and complete background checks on the property – eliminating some of the stress in a stressful time!
5. Choosing the suburb and type of property
When riding the emotional rollercoaster of buying a home, it’s important to have a clear sense of what you are looking for. The list of priorities will vary for investors, singles and those looking to purchase a family home. Consider making a checklist of all your non-negotiable, “must have” requirements. Here is a list for wannabe homeowners to work from:
- Location – close to work, schools, family and friends
- Access to public transport, services and shops
- Is there established infrastructure or plans to develop the area?
- Suburb character – is there a good vibe and friendly community?
To find out where you can afford to buy, you can research property prices, and there is plenty of existing property market data to help you quickly find the median price of an area you are interested in.
Figuring out what type of property is right for you: Family home, apartment, studio, acreage? The practicalities – how many bedrooms, bathrooms and parking spots?
6. Property inspections
As soon as you enter the home you are considering buying, you will get an immediate emotional response – negative or positive. While it’s easy to walk away when you get a negative vibe off a property, it’s much harder to do when the feeling is positive. A positive emotional response is very guiding, but don’t get too invested before making important structural checks, investigating the utilities and sussing out the new neighborhood!
Things to watch for:
- Pay careful attention to areas with fresh paint touch ups.
- Sagging ceilings or buckling walls.
- Double or single glass. Upgrading can be costly but will also mean a higher energy level.
- Check the age of the central heating system. Upgrading to a newer system means a higher energy level.
- Meter and fuse box.
- Roof, guttering and drains.
- Exterior walls – check for cracks.
- Outside paintwork, is the woodworks rotten?
- Inspect the neighborhood and get a feel for whether it suits your lifestyle and requirements
If you are sure you want to go ahead with purchasing the property, get a qualified building inspector to make an assessment. They will look for structural defects, pest infestations, faulty wiring, plumbing and drain issues, asbestos, lead paint, and more.
Finally, you are ready to make an offer! Don’t low-ball here less than 10% of the asking price, otherwise you may miss out when higher offers stream in. When you’ve decided on a figure, reach out to the agent and let them know how much you’re willing to pay and your deposit amount.
Ask the agent what the procedure is. If it is a sign up procedure with a closing date you may be able to put an offer in before the closing date. This offer should include if you need a mortgage, acceptance date and any particularities.
8. Your offer was successful
You will receive an invite from the vendor to sign a provisional deed to legally bind you to the agreement.
If you’ve bought through private treaty you will have a cooling off period. This is not available when you purchase as a business. During this period you can cancel the sale if you change your mind. The cooling off period is 3 business days, the weekend counts as 1 day.
Now you need to contact your independent mortgage advisor to start the application of your mortgage. On average this takes 6 weeks.
The bank that is supplying your mortgage will pay the deposit that is due to the vendor.
You will need to appoint a notary.
9. Settlement and transfer of title
Your notary will invite you and the vendor on the settlement date to sign the official deed. As soon as all cost of the (k.k.) purchase are paid, think of transfer tax, notary cost, you will receive your keys. The notary will transfer the title at the kadaster and will ensure the transfer of your money to the seller and the property is ready for you to occupy!
10. Moving into your new home
You are almost ready to move into your home! Now you will need to sort out utility accounts, pack your belongings, and employ the help of a removalist and possibly a cleaner! Don’t forget to transfer the address on all your accounts and organize for mail redirection.