It’s no secret that buying a house is a real challenge in 2022.
For me, saving the deposit may have been the least stressful step in the whole process – although it obviously took plenty of time.
My hometown of Scone, in the beautiful Hunter Valley, New South Wales, hasn’t escaped the property boom taking hold in regional Australia.
So, as a 24-year-old who’d lived independently for five or more years, I moved back into my childhood bedroom for about five months as I went on a house hunt at the market’s all-time high.
‘I’ve been what?’
“This is it,” I told the support network of Mum, boyfriend, sister and grandmother when I first saw a house I fell in love with.
They all came back: “Don’t get too excited.”
It had lovely big bedrooms, timber floors, a fireplace, walk-in pantry, and a massive backyard the dog would love. So I jumped and put an offer in that afternoon, knowing competition would be fierce.
Next morning, offer accepted!
I was blown away, on cloud nine, beside myself – all the clichés, because I couldn’t string any original words together amid all the excitement.
That afternoon I got another call: “I’m sorry there’s been a higher bid.”
I didn’t understand. ‘Offer accepted’ means the deal is all but done right?
“You’ve been gazumped,” good old granny enlightened me.
“I’ve been what?”
She explained that up until a contract is signed, an accepted offer means almost nothing, especially in the current market. In this case, a cash-ready coastal couple made a counter-offer of only $ 1,000 more.
That hurt. But it didn’t stop the house hunt.
Finding the one – after swapping banks
There were a few more inspections after that, but very little on the market.
Anything that did pop up for the next few weeks had little downfalls I just couldn’t look past, including one house I later learned was in a flood zone.
Until this little mint colored marvel popped up.
“The agent can meet you on Monday after work,” Mum said, giving her near-instant approval after a weekend walk-through on my behalf.
There was some back and forward, and eventually I just put my best offer in, telling myself that while prices were high, interest rates were not.
I did try to get a spot in the Federal Government’s elusive First Home Loan Deposit Scheme (FHLDS)putting my application in on July 1, as soon as the new places opened up.
The big drawcard of that is the government essentially covers your Lenders Mortgage Insurance (LMI) if you’re not putting up the 20 percent deposit most banks ask for.
But after the gazumping incident and a few months, waiting for a spot with the FHLDS didn’t get me anywhere.
So I swapped banks, got a greater borrowing capacity, took LMI on the chin and made it happen.
Well, the agent, lender and fate made it happen.
Pest and building inspections came next, and a fast-paced solicitor sorted the conveyancing.
Advice for other first home buyers
Real estate agent Meredith Munro says having all your ducks in a row can help you avoid gazumping, and to be “first across the line”.
This can include knowing your borrowing capacity, having the deposit ready, and having people like conveyancers, solicitors, and pest and building experts on speed dial.
Financial educator Lacey Filipich says getting into the property market is not unachievable, but it’s getting harder.
Here are some things Lacey Fillipich and Meredith Munro recommend.
Look for rebate schemes
There are plenty of state and federal rebates and schemes that can help, you just need to see which one you tick all the boxes for.
Consider different bank alternatives
While interest rates are at a historic lowLacey says you may need to shop around to avoid being stuck with a “loyalty tax”.
“If you just stick with the bank you know, and they think you’re super comfortable, unfortunately they’re not necessarily going to do the best thing by you,” she says.
And not all lenders can offer all government schemes and programs.
Consider whether you need a broker
While the broker may make things move faster – because unlike first home buyers, they do this day-in-day out – Lacey says you don’t necessarily need one.
“To think of it from the bank’s point of view, they’re probably going to get you a good interest rate whether you’re negotiating for yourself or through a mortgage broker,” she says.
If a broker does become involved, Lacey says the bank often has to pay them not only and up-front commission, but a trailing commission.
“And of course, the bank doesn’t want to give them that money,” she says.
Negotiating without a broker
When you’re trading without a broker, Lacey considers saying things like: “I’m not really happy with that offer, it doesn’t sound as good as one that I saw on the internet.” Or, “That got dropped in my letterbox or that my friend got, so I am thinking about going through a broker.”
That’s a very quick way to get the best deal you possibly can, and it’s in your interest and in the bank’s interest to make you happy.
Have a good team around you
Ms Munro says to ask the right questions and know where you stand money-wise.
“The question you need to ask your broker is: ‘When will I be in a position to pay a deposit and sign a contract?'” She says.
“Because that’s very different to being pre-approved. “
Remember the process can take time
If the state of play is leaving you sidelined for now, don’t lose hope, just keep saving, Ms Munro says. “It will change again, the market will plateau at some point.”
This is general information only. If you need personal advice, please seek out a professional.
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