Five things you must do before buying

Purchasing a property can be a daunting task. The biggest asset purchase of your life will require a lot of hard work with all the associated research, financing and paperwork.

Property Observer has put together the five most important tasks ahead of your property transaction that will simplify the process and minimise your costs. 

1. Check your borrowing limit
   
   It doesn’t matter how much you think you can contribute towards your home loan – it’s what the bank thinks that counts.
   
   If your finances aren’t in order, you could see your loan falling through and the house of your dreams slipping through your fingers. Before attempting to negotiate a purchase, have a good idea of what your borrowing capacity is. A conditional pre-approval from your lender of choice will allow you some time to shop around on the market with an idea of your borrowing capacity.
   
   Some pre-approval forms are very detailed, others are not. Try to fill in as many of your financial details as possible at this stage – it will minimise nasty surprises when you get to securing a formal loan offer. 
   
   After you’ve found a property that you’re interested in, you can get a final formal loan approval from your lender.
   
   
2. Look at comparable properties
   
   Research, research, research. Without knowledge of how your property of choice stacks up against the competition, you’ll have no knowledge of its intrinsic value. Searching for property can sometimes be a case of love at first sight, but there might be a property you’ll love just as much around the corner, for a fraction of the price. 
   
   If you know you’re after a three bedroom apartment in the inner city, take a look at what else is on the market.
   
   Remember that comparisons run two ways – laterally and longitudinally. Don’t just see what else is available now, but consider the historical value of your property. Do property prices in your area seem to go through big seasonal swings? Now might not be the right time to buy, but a wait of six months may be just right. Our suburb data pages offer you a chart of past median values in your suburb of choice, along with any big news in the region that may affect your investment outlook.
   
   Draw on databases such as RP Data; if you don't have access, check your favourite listing websites and head along to other auctions in the area. 
   
   
3. Do a rigorous open home inspection
   
   The beautiful hyper-saturated real estate photos may be what brought you to the property in the first place, but when you get to the open home, you’ll have work to do. Purchasing a dwelling will be one of the biggest financial decisions of your life, so don’t take your opportunities to inspect the asset for granted. 
   
   Set aside your daydreams and check out the important details: noise levels, light levels, neighbourhood conditions, temperature and wear and tear. Come armed with a room by room checklist and any questions for the real estate agent. 
   
   
4. Bring in the inspectors
   
   While you might have a keen eye, chances are that you aren’t an expert where it counts. A pest inspector can tell you if a termite infestation is likely to bring the home undone in a matter of years, while a building contractor can help spot asbestos or any structural problems that will cost you thousands down the track.
   
   Ask the vendors for an inspection report as soon as you know you’re interested in the property to put you ahead of other buyers. If you’re not satisfied with the quality of their report or the standing of their inspectors, contract your own experts to carry out the job.
   
   
5. Speak to the experts
   
   Speaking of experts, having your own team will be vital when it comes to the crunch. If you haven’t transacted in property before, a mortgage broker will be an invaluable asset.
   
   They have an arsenal of knowledge that you may not (and that your lender won’t necessarily tell you about), regarding things like lenders mortgage insurance or how to improve your credit rating. If you don’t have as much time as you’d like to devote to the financial dealings involved in a property purchase, a mortgage broker can help you determine the best loan for you and how to get it.
   
   To handle the paperwork and legal issues involved with purchasing a property, a good conveyancer is a valuable asset. These specialised lawyers can tackle all the legal and statutory processes involved in the transfer process and advise you on the terms of your contract.
   
   If you're planning to purchase your property as a rental investment, speak to a property manager. There may be one who is already engaged with the property, who knows it well and can also give you the inside scoop on any recent works or pending maintenance issues, as well as the tenants. If you'd like to contract a new property manager, make sure you have a reputable one. To choose the best property manager, make sure you get them on the phone, ask for their fees and find out their track record with previous properties. Some will be happy to provide references as well.