Before you Engage a Buyer's Agent

You're excited and ready for your first or next property purchase and you've decided that a Buyer's Agent is best placed to help you through your journey.  Before you engage a buyer's agent, here are some things you can have in place to make it smooth-sailing:

Consider who you would like to use as your conveyancer / property lawyer.  If you are stuck for ideas, your buyer's agent can suggest conveyancers / property lawyers who can assist.

Ensure that you have pre-approval for a home loan.  A Buyer's Agent can't commence searches until you have pre-approval for a home loan in place.  If you already have pre-approval, ensure that there haven't been any material changes in your circumstances since applying.  Material changes include such things as being made redundant, changing jobs, starting a business, having a baby / becoming pregnant (congratulations!), a pay rise, or a change in the loan type eg from an investment loan to a principal place of residence loan).

Ensure that you have a deposit for the property price bracket that you are considering purchasing.  A deposit is at least 5% of the purchase price, and sometimes 10%. 

Ensure that you have another 4% of the purchase price available to pay as stamp duty.

Ensure that you have some additional funds to pay your buyer's agent.

Consider what you want to buy in terms of purchase price, location, dwelling type and so on.  Your buyer's agent can make suggestions to make this process easier for you.

So there you have it! If you're considering a buyer's agent, contact me now for an obligation-free appointment to discuss your situation - I'd love to help!

Are you Ready to Buy a Property?

Buying a property is an exciting time and there are a few things to do in readiness for your first / next purchase.

The first step is to save for a deposit.  Generally, you can exchange contracts on a property with a deposit that equals 5% of the purchase price.  A 10% deposit is preferred.  In other words, if you're purchasing an $800,000 property, as a minimum, you'll need a $40,000 deposit, but an $80,000 deposit is preferred.  You can borrow from friends / family or obtain a deposit bond if you're short.

In terms of your home loan, preferably, you'll have a 20% deposit, as with anything less than a 20% deposit, you will need to pay Lenders Mortgage Insurance.  A deposit of at least 20% will mean you pay less across the life of your home loan, and save you money in the long run.  That said, you may be best to use a 5% deposit if this is all you have and it means you can enter the property market, rather than waiting to save for a 20% (or even 10%) deposit.  Property in Sydney is going up at at least 6% per annum, so every month that you are out of the market, you are potentially losing money.

You'll need an excellent mortgage broker to assist with your loan.  A mortgage broker has access to all of the various banks and can recommend the best loan for your needs.  You'll need to complete a home loan application and obtain conditional pre-approval for a loan before you start your property search, so that you understand what budget you can work with for your property purchase price.

Once you have a deposit and pre-approval via a mortgage broker, your next step is to engage the services of a property lawyer or conveyancer.  This is a person who can review contracts for sale/purchase and advise on the legal side of your purchase.  You can engage their services and then when a suitable property comes along, request them to review the contract for sale/purchase and provide advice.  Retaining their services in advance means you have an established relationship prior to your actually needing their service. 

With a deposit and conditional pre-approval, you're ready to purchase a property.  Contact Melissa Maimann Buyer's Agent and she can assist with all other aspects of your property purchase from searches and inspections to negotiating the sale with the sales agent.

Strata Laws: Changes Ahead

New strata laws will commence 30th November, 2016.  They laws have been modernised in line with living needs in strata blocks in 2016.  These laws are important for purchasers of homes because more than a quarter of NSW's population lives in, owns or manages a strata property, and strata properties form the bulk of investment property purchases.

Some key changes include:

• Increasing the accountability of strata managers

• Allowing owners to use technology to conduct meetings, vote, communicate and administer their scheme, for example using email to vote and having notices disseminated via email. Social media and teleconference may also be used to hold meetings.

• Changes to the process for the collective sale and renewal of a strata scheme

• A simpler, clearer process for dealing with disputes

• Broadening tenant participation in meetings: currently, tenants cannot participate in body corporate meetings

• A new option to manage unauthorised parking, including the issuance of fines

• Changes to the process to be followed for planned renovations. Only a 50% majority vote will be required (general resolution). A special resolution (75% majority vote) will be required for major changes to the exterior of the property.

• Strata committees will replace what was previously known as the executive committee

• Strata buildings will be inspected for defects against the new Australian Standard, which will be introduced as the standard for inspections. There will be mandatory defect inspection reports, and the developer will need to prepare a maintenance schedule. This will increase the accountability of builders and enable defects to be identified and corrected.

• Changes to proxy voting will prevent an individual controlling owners' decisions by obtaining a majority of proxy votes.

• By-laws will be introduced to address smoke drift into units and common property

• By-laws will also make it easier to keep pets (schemes can still decide against this)

• Reforms will allow strata schemes to take action against excessive noise and issue fines

Buyer's agent services

People engage buyer's agents for many reasons. At Melissa Maimann Buyer's Agent, I tailor the service to my individual client's needs.

• Developing a clear but comprehensive brief based on your requirements. The more detail, the better, as it informs the search and inspections and ensures that we pursue only those properties that are of most interest.

• Searching for properties through online databases, sales agents (off-market sales) as well as access to recent listings and networks.

• Inspecting properties on my clients' behalf, saving them time, frustration, cost and emotion. A short-list of inspected properties is presented to the client complete with an inspection report, photos and recommendations.

• I thoroughly research the surrounding area to discover any possible developments that may impact the capital growth of the property in the future, as well as such things as sales and rental data, comparable sales and neighbourhood data.

• I appraise properties of interest so that we can better understand the property’s value and pursue only those properties that are likely to be within my client's budget.

• We arrange building and pest / strata reports to further our due diligence.

• We bid at auction on behalf of our clients in the event that we are not purchasing prior.

Calculating the true cost of an investment property

Investment properties are generally a great investment to have, but there are a few things to be mindful of when calculating the true cost of holding your investment.  Some of the things to look out for are:

1. Levies, and in particular, whether there are any special levies planned related to planned works

2. The state of the building, to gauge whether remedial works will soon be needed

3. The cost of property management, if you are choosing to have your property looked after by a property manager

4. Repairs and maintenance to the property

5. Periods of rental vacancy

6. Cost of stamp duty, buyer's agent fees and other purchasing costs

7. Advertising your property and professional photography

8. Water and council rates

9. Mortgage interest

10. Landlord insurance, building insurance

How can a rental search service help me?

Rental search is not something that many would associate with a buyer's agent service, however it is one that I offer here at Melissa Maimann Buyer's Agent.

How does it work?

Essentially, the service assists tenants to find a great home to live in, without all the hassle of finding their property themselves.  The essentials of the service are:

Sitting down to work on a property brief: this gives me a good understanding of that my client is looking for in their ideal home.  We explore this so really flesh out what's important versus what is "nice to have".

Next, I set about finding a property.  This involves a lot more than merely browsing the internet.  It involves contacting the property managers in the areas of interest to explore other opportunities that have not yet reached the market, and also exploring options via buyer's agents who may have recently purchased investment properties for their clients.

The next step is to inspect the properties for my clients, saving them time and hassle.  No more turning up to inspections to find that the property has been leased; turning up to an open home to see loads of other keen people there and feeling hopeless about the situation; and no more endless inspections of properties that do not look anything like the photos on the internet.  I take all the worry and frustration from my clients by doing the inspections myself.

Once I've found a suitable property, I let my client know, and if they're in town, they come to inspect it as a private viewing.

Once the client has seen - and loves - the property, the next step is assistance to write a great application, and again, I assist with this too, to ensure that the application has a competitive edge to it.

We also review the lease terms to ensure that they are standard, and I negotiate the rent down where possible, saving clients hundreds - if not thousands - of dollars.

So it really is a great service, full of benefits for a time-poor family, busy professionals, people from out of the area, or simply people who value their time and prefer not to spend every Saturday (and week days) inspecting properties and dealing with real estate agents.  Get in touch today - I'd love to help!

Once you've signed an agency agreement with a buyer's agent, what can you expect?

The agency agreement is an important document that clients sign with their buyer's agent at the commencement of the buying process.

An agency agreement is generally a standard form from the Real Estate Institute, or individual buyer's agents may devise their own.  Fair Trading lists the types of inclusions that should be found in any buyer's agent agreement.  If the buyer's agent has devised their own agency agreement, you'll want to be sure that it only contains standard terms and conditions, and that you have the rights and protections that you are entitled to.

Sometimes people ask me why it is so important to have an agency agreement signed. Like any agreement, it protects the consumer of the service - so that they know what they can expect, how much the service will cost, and what avenues they may pursue if they are not happy - and it protects the provider of the service from accusations that they did not disclose certain matters; were not up-front about fees; or that they do not have the authority to act on behalf of their client.

All licensed agents are required to act in good faith and with reasonable care, and promote your best interests.  Confidentiality must be maintained throughout the process and beyond.

So, although it may seem burdensome, an agency agreement is actually a smart way for clients and agents to do business.  An agency agreement has many built-in clauses that protect the client, ensure that fees are adequately described, accurately sets out the services expected of the agent, the type, location and budget for the new home or investment, and sets out the term of the agreement.  With a signed agency agreement in place, the agent has the authority to search, inspect, negotiate and exchange properties on your behalf.

Buyer Beware: Not all Buyer's Agents are Exclusive Buyer's Agents

An exclusive buyer's agent represents only the buyer.  There are many agents: both selling agents and buyer's agents, who market their services as serving buyers.  What does this really mean?

A selling agent had a fiduciary duty to the seller.  They are bound, by law, to represent the best interests of the seller, and maximise the purchase price.  While the selling agent may assist a buyer with access to the properties on their database, that's about as far as the relationship may extend.

Likewise, there are some buyer's agents who are not exclusive (or independent) buyer's agents.  This means that the buyer's agent is retained by developers or selling agents to use their client databases to sell new developments and existing properties to.  In many cases, the buyer's agent is not paid by the buyer because they receive significant commissions from the selling agent or developer for selling the property/ies to their buyers.  Commissions can be very generous, negating the need for the (non-exclusive / non-independent) buyer's agent to be paid by the buyer.

Although some people believe that a buyer's agent is expensive, the buyer's agents who are paid by the buyer, with no other sources of remuneration, are the ones who are most likely yo be independent / exclusive buyer's agents, 100% representing the needs of the buyer.

How can I be sure that I'm working with a truly exclusive / independent buyer's agent?

• Does your buyer's agent work for or with a selling agent / selling agent's office?

• Does your agent work for or with a team that offers a range of services such as mortgage broking, conveyancing, financial planning?

• Does your buyer's agent only purchase new properties such as development sites, off-the-plan or brand new properties?

If so, the chances are that your buyer's agent is not exclusive / independent.

Melissa Maimann Buyer's Agent is an exclusive and independent buyer's agent.

Things that a buyer's agent will know, that the internet won't

Statistically, nine out of ten home-buyers use the internet during their home search process to research properties.  While websites such as www.domain.com.au and www.realestate.com.au are excellent sources of information, there are certain aspects regarding the buying and selling process that a real estate professional will know that can't be found online.

Appraising a property

Appraising property requires research into the current market value of a property.  While it is possible to get a general idea of the property prices in an area, setting a fair market price requires in-depth, working knowledge of the area and current market conditions. A real estate professional considers several factors when setting a maximum purchase price, such as market trends, suburb demand over time, neighbourhood development, and the latest buyer preferences, to name a few. Although there will be an average price per square metre in a certain area, each and every home is unique and will need to be priced accordingly based on its distinctive offering.  Factors such as aspect, views and proximity to the main road and transport will impact the price.

Offline marketing

Even though online marketing and social media have become a valuable part of the property marketing process, there are many properties that actually never reach the market: they are sold either off-market or pre-market.  Real estate selling agents and buyer's agents know one another well, and buyer's agents are generally the first to know about these pre-market and off-market properties, enabling their clients to be placed ahead of the competition.

Negotiation

Buyers agents are skilled, experienced negotiators, which is valuable when a buyer is trying to trying to reach a fair price for the property they're hoping to buy.  While a website will be able to provide an estimate of how much a home should cost, it won’t be able to evaluate whether that is indeed a good deal or not.  A skilled buyer's agent will be able to access, analyse and interpret a range of information to determine a fair purchase price - and negotiate this with the selling agent.

With fewer properties on the market, is there a need for buyers agents?

It was a great question I was asked recently.  I was speaking with a client who was lamenting that there were so few properties on the market at the moment.  She asked me if this has impacted the demand for buyers agent services, as many people like to do their own online searching, and given that there's not much out there, how can a buyer's agent possibly add value?  It was a great question, and I took some time to explain to her the amazing benefit of using a buyer's agent - especially when there's not a lot on the market.

You see, what's on the market - online via www.realestate.com.au and www.domain.com.au, is really only the tip of the iceberg.  In parts of Sydney, especially the eastern suburbs, many properties actually sell off-market.  Many agents encourage their vendors to try to sell off-market, before putting the property online, to potentially provide a faster sale process without the advertising costs associated with an online campaign.

A buyer's agent leverages off their relationships with real estate selling agents to the point that the buyer's agents are the first to know what is about to come to market - and what is going to remain off market.  It is during times of reduced stock on the market that a buyer's agent is actually essential, so that you as a buyer, have access to the full suite of online / off-market / pre-market opportunities.

5 Ways a Buyer's Agent Helps you Secure your Property

Many people ask me why they ought to use a buyer's agent when they can do it themselves.  It's a fair question, and each person needs to see the value for themselves before they can make that call.  Here are my thoughts on why it's a great idea to use a buyer's agent:

Access to more properties

A buyer's agent has access to off-market properties.  In the eastern suburbs of Sydney, around 30% properties are sold off market.  This means that the average person looking to buy a home or investment property would not even know about those properties.  There are many agents in the eastern suburbs: both buyer's agents and selling agents, and with this comes a strong incentive for sellers to sell their properties off-market, while buyer's agents are available to soak up that supply.

Skilled negotiator and advocate

A buyer's agent works with real estate agents all the time.  They know real estate agents and what makes them tick.  When it comes to negotiation, you have a skilled, dedicated person on your team, advocating for your needs.

Trusted recommendations to other necessary services

A buyer's agent will have a list of recommended services to refer you to: conveyancers, handymen, painters, electricians, sales agents, property stylists, removalists, mortgage brokers, financial planners, accountants and so on.

The purchase process is managed directly and swiftly when it is negotiated agent-agent

Sales agents love to deal with buyer's agents.  We speak the same language and are able to cut to the chase.  For both parties, this is a relief.  For the buyer's agent's client, it means more direct and honest communication.

Accurately appraise the property to ensure it is within your budget

How many people go after properties that ultimately sell for much more than the stated price?  Sound familiar?  A buyer's agent is able to appraise the property you're interested in,  to ensure that your precious time and resources are not spent on a property that will ultimately never be yours.

So there you have it: my top five ways a buyer's agent helps you to secure your property.

Finding the perfect rental property

Today, I want to focus on some of the challenges faced by people who are looking for a home to rent, and offer some solutions.

In winter, we typically see more properties coming on the market.  This can be excellent for tenants who are looking for a new rental property, however the increase in rental supply does not necessarily equate to market rent being offered and suitable properties being available.

Competition for rental properties remains strong, particularly in the eastern suburbs of Sydney.  It's fairly common for people to search for many weeks, never really finding a property that is close to suitable; or finding a property that is suitable, albeit with numerous applications on.  Oftentimes, finding the right home can feel like looking for a needle in a haystack: the good (and well-priced) homes get snapped up before you’ve even had a chance to see them, while the over-priced, less-than-suitable homes remain on the market for weeks.

How I can help

Working on behalf of tenants and representing their needs, I assist with presentation and preparation of your application to ensure that the landlord / property manager knows that you are a great tenant.  This puts you way ahead of your competition. 

Understanding the rental market well, I am able to accurately assess rental values so that you know when you're potentially going to be paying too much - and providing an avenue for the rent to be successfully negotiated down.  This in itself saves you hundreds, if not thousands of dollars.

I am also able to review the residential tenancy agreement to ensure that the terms are suitable for your needs.

Work with me

The first consultation is offered free of charge and without obligation to you. 

1. I take a detailed brief of your property need

2. I search for properties for you, both online and off-market, ensuring you're placed ahead of the competition

3. I assist with preparation of your application

4. I am able to inspect properties for you, delivering a short-list of properties that will be suitable for your needs. For every property that I inspect for you, I will provide a detailed and thorough report, along with photos: ones that accurately depict the home.

5. I negotiate the rent on your behalf.

The rental search service really saves time, frustration and money for tenants.  It saves time in terms of searches and inspections.  It saves frustration: turning up at rental properties to find they've just been leased; are not as they appeared in the photos; or are otherwise unsuitable.  Finally, it saves you money by successfully negotiating the rent down when excessive rents have been advertised.

Choosing an investment property

What are some of the things I look out for when recommending an investment property to a client?

What makes some homes "investment grade", while others are not considered in this way? 

Here are some criteria that I use:

1. Preferably a home that has parking. Parking is not essential, because there will always be tenants without a car who prefer to live where they want to live but without the extra expense for parking. If the property does not have parking, there should be easy street parking, and it should have a bus stop within a couple of minutes' walk, or a train station within 10 a minute walk.

2. Preferably not on a main road. Properties on a main road tend to be cheaper, both to purchase and to rent. As above, there'll always be tenants who prefer to pay a but less rent to live where they want to live. A main road is not a deal-breaker, but those properties that are off the main road may be slightly more popular over time.

3. A dwelling type that is typical for the area: if units are the predominant property in the area, buy a unit.

4. An area with a very low rental vacancy rate: I prefer a 2% rental vacancy rate.

5. An area with a proven track record for growth in property prices

6. An area within 20km of the CBD

7. An area with good transport

8. An area close to cafes, shops, schools, entertainment and medical facilities: these are the things that will ensure your investment property continues to be in demand.

9. An area with established properties

10. If a unit, levies that are not too high

So there you have it: my top tips for buying an investment property.  If you need a hand, I am only too happy to help. 

Self-managing your Investment Property

Self-managing your investment property can be a great idea, but there are some things you'll need to do - and do well - to succeed.  Here's a few considerations.

Selecting the right tenant for your property

The best way to select the right tenant is to interview the prospective tenant.  This can be done informally during open home inspections.  It's a good idea to consider ahead of time who you think the best tenant would be for your property, given the property's characteristics, for example if it has a garden, it may be suitable for people with pets; if it is on the top floor without a lift, it might be best for people who do not have any mobility limitations; if it has 2 bedrooms, i is best for no more than four people and so on. 

Tenants need to complete a tenancy application after they inspect the property.  It is up to you to check references, ensure your prospective tenant is not listed on a tenancy database, check ID and so on.

Insurance

Landlord insurance is a must when you're self-managing.  Tenants can abscond; damage can occur (accidental, malicious, deliberate); there may be legal expenses; there can be rental arrears.  Landlord insurance covers all of these situations.  In addition, you may need building insurance for a house.

How high to set the rent

The best way to set the rent is to have a good look at what other comparable properties are out there.  A comparable property is one that is within 1km of your property, on the market at the same time as yours, and is as similar as possible to yours.  Then set your rent 5% below the other properties that are the most similar to yours.  If your property has not rented within 2 weeks in a low rental vacancy area, you may consider dropping the rent by between $10 and $50 per week, depending on the starting rent.

Documents

There are many documents involved in property leasing:

1. Tenancy application

2. Residential Tenancy Agreement (lease)

3. Condition Report

4. Bond Lodgment Form (this may be done electronically)

Success

The path to successful self-management lies with selecting the right tenant, completing the appropriate documents (for your protection and the tenant's protection), being extra careful with Landlord insurance and ensuring along the way that the rent is always paid on time - and following-up promptly if it is not - and then regular property inspections to ensure that your investment is being cared for.

Client Story

Jo (not her real name) was in a real pickle.  She lived with her elderly parents in a home that was no longer suitable for them due to recent surgery.  Working full-time, it was hard for Jo to get out to view properties during the week.  Saturdays were spent at open homes that were full of other buyers, with properties close to exchange almost as soon as they went on the market.  After almost a year of looking without success, Jo became desperate.  Her parents' health was declining: recent falls, more surgery planned - and they really did need to move now.

With very specific property requirements and a fairly tight budget, Jo knew it would be tricky.  The market had moved since she started looking, however her budget had not.

Jo came to me in tears.  We talked a lot and worked through some options and possibilities for the new home that she would share with her parents. 

Within three months, I had presented several properties to Jo that were close to her needs.  Those properties were sourced, inspected, reported on, we even did due diligence on a few and negotiated with agents - alas, none was perfect.  We kept looking.  I am always keen for my clients to purchase the best home for their needs, rather than settling for something that may need to be sold again soon - as buying and selling property is expensive.

We reviewed the property brief and talked through some other options, and we refined the property brief as needs changed.

My search consisted of on-market, off-market and pre-market opportunities.  What does this mean?  On-market is the sorts of properties you see advertised on www.realestate.com.au and www.domain.com .au.  Pre-market are those properties that are going to appear on the internet soon - but are not there yet.  This situation presents a unique opportunity for a buyer's agent to purchase a property before it even reaches the market.  And finally, there are off-market properties.  These are properties that are never planned to be placed on www.realestate.com.au and www.domain.com .au.  They are properties where the vendor prefers to sell off-market - perhaps to maintain privacy, perhaps to save on advertising and property styling, or perhaps - more likely - because the selling agent has a long list of buyer's agents who they can contact - and sell the property quickly without ever needing to go to market.

This was the situation for the property that I purchased for Jo.  The perfect property was actually sourced off-market.  I had maintained very close contact with local real estate agents - they all knew Jo's requirements - and as soon as the right property came up, I was the first to know about it.  One quick call and I inspected the property and advised Jo of it potentially being " the one" - and it was.

The process for Jo was smooth and efficient.  She regained her Saturdays, and did not need to feel guilt for being unable to view properties during the week due to work commitments.  We shortened her search time and located the perfect property through a channel that was not open to Jo. 

Following some minor renovations (painting and new carpet), they moved in and are very happy.

If you know someone looking to buy a home, investment, or commercial property in Sydney, I'd love to assist.  And until June 30, 2016, I am offering 50% off buyer's agent services.

Are there any cons to using a buyer's agent?

And how to get around them!

The fees for a buyer's agent can be prohibitive to some, especially if the client needs the full service.  My fee structure and service encourages my clients to choose - and pay for - only the services that they need.  We identify where they need the most help and go from there.  Of course, a client's needs change over time and so the service is flexible.

Some buyers who use a buyer's agent feel that they may miss out on having an emotional connection with their home.  The home may tick all the boxes, but lack that homely feel that is so important. I ensure that buyers personally inspect the property that they plan to call home, and I advise against buying any home that doesn't "feel" right.  It's in a client's best interests to minimise the number of sales in their lifetime - selling property is costly - and I encourage clients to buy a home that can be their home for the foreseeable future.

Some buyer's agents structure their fees on a commission basis.  This means that the client pays more for their buyer's agent as the purchase price increases, and so the buyer’s agent may be incentivised to have their client a higher price for the property.  To my way of thinking, this is counter-intuitive.  A buyer's agent should be helping their client to pay the lowest possible price, and so the buyer's agent's remuneration should not reflect otherwise.  My fee structure is flat, with set fees for services provided.  My clients know ahead of time exactly what they will spend on my service, and they have the flexibility to pick and choose according to their needs.  I am not incentivised by a commission structure to have my clients pay more - rather, I am incentivised to provide excellent service so that my clients purchase more services :)

Some buyer’s agents "double dip", receiving payment both from their client AND from the real estate sales agent.  This is illegal.  A licensed, independent / exclusive buyer's agent only receives fees from one person (the buyer) and discloses any other fees and commissions earned to the client ahead of time in the Agency Agreement.

Sometimes clients are initially unsure of their needs and how to identify the types of properties or areas that are going to best meet their needs.  A buyer's agent can't identify the right properties if the client isn't sure or can't communicate their needs, however, a good buyer's agent will sit with the client and provide information so that the client can better identify their needs. 

Upfront payment can seem harsh to a client, however it ensures lower fees across the board for clients.  Fixed fees that are known and paid ahead of time guarantee that the client will always know what their spend will be, with service expectations and standards discussed and agreed before any fees are paid.  Upfront payment generally guarantees a lower spend - and this is best for clients.

Inspecting a Property

If you're considering buying a property, it is a good idea to personally inspect it - or better still, inspect it with a buyer's agent.  I am always available to inspect properties with my clients - even as a stand-alone service.  If there's a property you're really keen on, invite me along - I can give you a full property inspection report and show you some tips and pointers to make your next property inspections top notch.

What to check for?

• Check for dampness and mould on walls, skirting boards and ceilings.Use your nose as well as your eyes.

• Check for sagging ceilings, buckling walls and ceilings, walls and floors that are not straight.

• Turn on and off all of the taps: check water pressure and ensure that there's a flow of hot water. Check what sort of hot water system the home has, and how old it is.

• Flush the toilet to check for a running cistern.

• Try the light switches

• Inspect the interior and exterior walls for cracks and other defects.

• While in different parts of the property, listen out to gauge noise levels. If possible, inspect the property at different times of the day to ascertain noise levels. A drive by on a Saturday night may reveal if noisy neighbours may become a problem.

• Ensure that the fixtures that you see in the property are included in the contract for sale - if they aren't, ask the agent to clarify.

5 signs that this is not the property for you

You've found your dream home!  But what are some signs that maybe your dream is about to become a nightmare?  Read on ...

1. The property valuation is significantly lower than what the vendor is asking for, and the vendor will not reconsider their asking price. Purchase at the higher price, and you run the risk of finance not being approved at all, or for the full amount.

2. If you purchased the home, you'd stretch your finances beyond your means, and that's without taking into account increases in interest rates that will almost certainly occur along the life of your home loan.

3. The building and pest reports / strata reports signal extensive damage - particularly to the foundations, or very large (and potentially ongoing) special levies (for a unit) have been signaled.

4. There are nearby developments planned that will obstruct the view: the value of which has been incorporated into the asking price of the property, and the vendor is not willing to drop their asking price.

5. You discover there is a problem with the Title of the property, such as easements or caveats.

Some of these issues can be worked through and perhaps signal downwards negotiation of the price, however, potentially the current buyer will be faced with the same (selling) dilemma from the next buyer when it comes time to sell.  Within the Sydney market, with so many properties to choose from, my advice would be ... next!

A word of caution: to a novice buyer, some of the more typical Issues found in building and pest or strata reports can deter buyers unnecessarily.  Most issues are more minor and can be worked through, typically with negotiation of the purchase price, the vendor's willingness to repair / replace whatever is broken / damaged, or a meeting with the Strata Committee / Strata Manager. A Buyer's Agent can help you to determine what is truly serious - a big red flag - versus the less serious matters that can- and ought to be - worked through.

Property valuations vs agent's appraisals: how are they different?

When you're buying a property, the real estate sales agent will provide you with a price guide to help you get a sense of what the property may sell for.  As a buyer, what steps can you take to be certain that the price you may end up paying is a fair price for that particular property?

One way would be to get an agent's appraisal of the property.  Both selling agents and buyer's agents are able to provide property appraisals.  However, if you want a very accurate and precise figure, a formal property valuation is required.

Typically, a buyer's agent’s appraisal provides an indication of the property's value based on opinion.  This opinion is formed by many measures, such as rental return, comparable sales of similar properties in the same area over the past 6 months and so on. 

A property valuation, on the other hand, is carried out by an independent and qualified professional valuer with tertiary qualifications in property.  They provide an exact $ value, rather than an estimated range.  For example, a buyer's agent's appraisal may place the property at $610,000 - $650,000, whereas a valuer will say that the property is worth exactly $635,000. 

A valuer's valuation may be used in court proceedings, by banks, and by other Statutory Bodies.

Do we need a tax depreciation schedule for our investment property?

In short, yes, it is a great idea!  Read on to find out why.

Depreciation is an accounting term that describes wear and tear of an asset which occurs over the time that you own it. Typically, a building and all that it contains depreciates in value over time, while the land upon which the building sits, appreciates.  The government allows investors to claim depreciation on some property assets and the building itself.  The Australian Taxation Office has a schedule of effective lives of the various parts of the build, the building structure and the fixtures and fittings within the building. 

Investors may claim things such as blinds, a dishwasher, carpets, buildings that are less than 40 years old, air conditioning units, stoves, hot water systems, kitchens, bathrooms, lights - basically anything that is within the unit and is rented with the unit - including furnishings - may be claimed. 

I refer my investor clients to skilled and professional quantity surveyors who can attend the investment property and complete and prepare a tax depreciation schedule for your use.  An experienced quantity surveyor has extensive knowledge of construction and the allowable deductions that accord with the ATO's requirements.  In doing so, you are able to legally minimise your tax.