It was less than a year ago that Mrs Scot and I first jumped on the property ladder. While many finance bloggers preach that renting a house is far superior to buying – After 11 months of home-ownership I can honestly say that it was the best decision ever! While technically speaking, we don’t fully own the house (the bank does for the next couple of decades) – it is an amazing feeling being able to paint, drill holes and carry-out renovations without seeking permission. Better still, there is no landlord or agency that can turn up for an inspection with 24 hours notice!
If you’re looking at buying a home and want to get your foot on the first rung of the property ladder, you’ve probably already begun viewing properties, investigating mortgage interest rates and maybe even thought about making an offer. At this point, it is important to ensure that you have considered three key things before even looking to buy: Long-Term Plan, Affordability and Exit Plan. Assuming that you have, here are three tips to help you with the next step of the process:
Finding a Property
Simply browsing estate agents’ windows may not find you that dream home; you have to put the effort in. This may involve widening your search and investigating your options online. Consider property comparison sites - and use many of them. Just because the ‘big’ ones don’t list a house, it doesn’t mean that it is not worth considering. While it is advantageous to have your house listed in the main directories when selling, not everyone knows about them – and not all estate agents use the comparison sites. Search the online databases of local estate agents and don’t forget about local newspapers. Consider auctions and foreclosures – more often than not, the hidden gems are the ones that you have to do a bit of looking to find!
Don’t just limit yourself to one specific area either. You may have your ideal location, but it may be worthwhile also considering alternative options at this stage. Work out a ‘zone’ where you would be prepared to commute to work from – investigate public transport links, local schools, shops, services etc. Don’t make the mistake that we did and buy a house that is one street away from a fiber-optic broadband connection!
Putting in an Offer
Once you’ve found a property that’s suitable for your needs, the next step is to put in an offer. Obviously you’ll be aware of the asking price, but always try and leave some room for negotiation when putting forward an initial offer – this will leave you with the possibility of reaching some middle ground with the vendor. Most people don’t know what is the ‘expected’ discount on an offer – the truth of the matter is that there is no standard and you can negotiate until your heart’s content! We put in an offer £10,000 under the asking price (which had already been dropped £7,500). We reached middle ground and saved an additional £4000; with a bunch of appliances and furniture included – (fridge, dishwasher, bookcases, sideboard cupboards).
This is the stage when you can start to think a little tactically. Always be mindful of the circumstances of the seller as this can often create some room for manoeuvre on the price. Often sellers may need to make a quick sale and as a first-time buyer this places you in an extremely advantageous position. As you’re not involved in a chain the sale can go through quickly. Remember this and use it to your advantage when making an offer. A lower price on a quick sale may well be more attractive to the vendor.
It’s also worth bearing in mind that if you are buying property in Scotland, there is a slightly different process to follow when putting in an offer.
Another point to bear in mind is that you will often have to prove your ability to qualify for a mortgage. Pre-approvals can be obtained with a given validity and are an excellent thing to have in advance of making an offer. It will also make you a more favorable party if there are multiple offers on the table.
See it through
This may not be a specific tactic, but it’s still worthwhile advice. Once your offer is accepted, it really pays to be conscientious and see everything through. It’s imperative that you complete everything on time because even though your offer has been accepted you can still be ‘gazumped’. You can’t necessarily stop this happening, but by ensuring you keep up to date with your side of things, you can place yourself in the best position to avoid this. Furthermore, at this stage you have likely already occurred legal fees – being sloppy and not acting quickly can cost you a bit of cash!
If you are buying a property to rent, don’t forget to check out my Top 10 tips for Renovating Investment Property!