Top tips to get ahead on the home buying journey
Buying a home takes hard work and penny pinching but the rewards can last a lifetime
If you’re part of a couple then go through each other’s spending habits and offer suggestions and make realistic decisions to save a fixed amount per month. Photograph: Fotolia
While Tuesday’s announcements haven’t revealed a giveaway Budget there have been some encouraging developments for home buyers:
The Help to Buy scheme for first-time buyers involves a 5 per cent PAYE rebate of up to €20,000 over four years on new homes worth up to €600,000.
The income ceiling for the rent to room scheme is to be increased by €2,000, meaning applicants can take in €14,000 a year tax free.
The Home Renovation Incentive Scheme is being extended by two years to the end of 2018.
Capital Acquisitions Tax on gifts from parents to children is being increased by €30,000 to €310,000.
All of this should go some way to encouraging buyers. To match that, here are our top ten tips to get ahead on the home buying journey.
1. START SAVING
It may seem blindingly obvious but once you break it down into small bite-size pieces saving becomes a habit, much like going to the gym or healthy eating. Once you start practicing it you will find yourself becoming competitive about it.
But first you need to forensically analyse your outgoings. If you rent make sure you pay by direct debit so that your mortgage advisor can see you have the ability to repay a certain amount on an ongoing basis. Pay all your bills by direct debit, again to show that you can afford to make these outlays regularly. Then you need to take a look at what you spend your money on. Transport costs can be significant. Could you car pool or cycle to work instead of driving or taking public transport? Could you get up earlier and walk instead? And how much would you save by making these adjustments? Cutting out take-away coffees and bringing in your own lunch every day will help slightly. A high fashion habit needs to nixed. By giving up a costly take- away and ready-meal habit you will also save. When you falter remind yourself that these cut-backs are for a limited period with a goal in mind.
If you’re part of a couple or buying a property with a friend or family member then go through each other’s spending habits and offer suggestions and make realistic decisions to save a fixed amount per month. Set up a separate account into which you will both deposit your monthly savings.
Once you’ve started saving go have an informal chat with your bank’s mortgage advisor who will talk you through the documents you need to get mortgage approval. If you’re an employee this will include six months of payslips and bank statements from the last 18 months to two years. If self-employed this will include the last three years of accounts submitted to the Revenue and a tax clearance cert. Getting house hunter approval in principle means that people will take you more seriously – agents see this status as a sign of serious intent rather than someone who is simply browsing the market. You will need copies of household bills and your passport or other photo identification.
2. SUCCESSFUL HOME HUNTING IS HARD WORK
Approach house hunting like a second job and accord it the time you need to research and view as many properties as you can – the more you see the better able you are to understand the types of housing stock in the area you want to buy in, their average sizes and, as you do more research, which properties represent better value for money.
3. GATHER INTEL
You need to spend as much time as possible checking each agent’s reputation and approach. Estate agents take lots of different approaches to their job. Start making notes on all the agents active in the area you want to buy in to determine their style. Before you bid know which type of agent you’re dealing with.
4. AGENT ESPIONAGE
Estate agents are fonts of knowledge. They know why a vendor is selling, what their financial position is and the magic number they’re looking for to seal the deal - so talk to them. If you’ve already sold your house and have all your documentation ready, tell them this important fact. Agents view this as a golden ticket of sorts as there will be no delay on your part to exchange contracts. As a buyer this puts you in a strong position.
If the house is an executor sale there may be some wriggle room in terms of the asking price as it will probably need refurbishment. Some such sales come to market at very optimistic asking prices and may sit for a while.
Houses with realistic asking prices and in walk-in condition will always sell fast. Many buyers, especially people trading up, don’t want to buy a project and are happy to pay a premium for a property where all the dirty work is done. If you fall into this category then you need to move fast when making an offer.
5. GET MORTGAGE APPROVAL
Once you’ve started saving and viewing houses you can quickly dismiss what doesn’t interest you and what you can’t afford. Apply for mortgage approval when you feel confident you know the market and what you’re looking for – you can get House Hunter mortgage approval that lasts for six months followed by a formal mortgage Offer Letter that generally allows up to a further six months for the mortgage to be borrowed.
There are two main house selling seasons: one starts in September, the other in February so try to have mortgage approval for the start of either. Homes are sold outside these times but it can be harder to get all parties together to sign a deal during holiday periods – this can work to your advantage if a house has been sitting on the market for a season and hasn’t sold.
6. MAKE NEW PROFESSIONAL FRIENDS
Before you ever make an offer engage a solicitor for your conveyancing needs. Also hire a surveyor. Call several firms to sound them out and remember there’s always room to negotiate on fees.
When house hunting, the best money you might ever spend is to hire a builder to come view some of the properties you are most keen on – they will be able to give you an idea of what’s wrong with them and, if they need work, how much that is going to cost. But don’t discuss any works while viewing the house as other house hunters will be ear wigging in on your conversation.
7. IS IT WORTH IT?
To recognise value when you see it you will need to be able to talk for Ireland on the subject of house prices. The Property Price Register goes some way to giving you a read on what price homes have sold for in the areas you’d like to buy in but some sales are misfiled and in other incidences solicitors drag their feet so it isn’t a comprehensive list. If a property has been sold and you don’t see it on the register within six months then call the selling agent and ask them what it sold for. This will help you paint a more rounded picture of real values.
8. GET ON THE BEAT
In terms of determining value you can do a lot of primary research from the comfort of your own home by signing up to property alerts and trawling MyHome.ie and Daft.ie. But nothings beats old-fashioned detective work: driving and walking around the area in question and getting a feel for what the properties you are interested in actually look like in real life, with their warts and all overhanging wires in the picture (not Photoshopped as they are in estate agents brochures) and unsightly neighbouring homes also in view. You’ll also get a feel for who else lives in the neighbourhood.
Talk to locals to find out first-hand what it’s like to live in the area. If you see a house you really like but don’t know the area, a retired guard recommended to this writer to camp out in your car in the area at night to see if there is any anti-social behaviour or ambient noise that would put you off.
It’s always smart to check the commuting times during both peak and off-peak hours. They rarely match up with the sales pitch.
9. HOW TO MAKE AN OFFER
Before you make an offer check the Property Price Register for recent prices achieved in the area. Then always start off with a bid lower than the asking price - the agent is obliged to inform his client of the offer made.
House prices are on the rise so know your limits before you start to bid. If you can’t afford to go beyond €300,000 then you need to be looking at houses asking between €250,000 and €275,000 price bracket so that you can afford to bid up to a certain amount and still be able to factor in stamp duty and professional fees.
Before you make your opening bid ask if there is an offer already made on the house and what that offer is.
Bidding on a house is like playing a game of poker – you don’t want to reveal your hand too early. Remember that it is in the agent’s job to get as much money as possible, for the property, on behalf of their client.
When the agent comes back to you asking for a counter offer don’t respond immediately. Go through the figures and if the price is too rich for you then say so and stick to your previous offer. If there really is a counter offer the property has become out of your reach. If however there isn’t it shows the agent that you can’t be pushed any further.
Don’t dismiss homes that have been on the market a long time - rather ask what the most recent offer on the property was. It you think it is worth it offer a small amount more.
Don’t presume that once you’ve been outbid that’s the end of the story. Keeping on an agent’s books is vital, particularly if you have been making offers but losing out. Often offers that have beaten you can fall through in the end and it’s important that agents have the contact details of the next bidder in line ready and to hand.
10. DIAL DOWN THE DREAM HOME DREAMS
Dispel the myth of the dream home. It is a myth conjured up by estate agents and interior design magazines. The right home for you is one you can afford in an area that you like that you can make small changes to suit the needs of you and your loved ones. Be pragmatic not romantic about house purchasing and you will enjoy every step of the journey and come away from it all with some choice stories to tell your friends and family.