How to buy a house – Part 2

by Chris Lang on September 26, 2008

In the part one of “How to buy a house” series I covered the first three stages of the process: sniffing around, how to determine your budget and where would you like to live. So coming to the stage four you would have a list of candidate suburbs, one of which should ideally become your home.

At this point it is important that you stop and ask yourself these two questions:

  • 1. Do you like any of the suburbs you can afford?
  • 2. Won’t you be paying too much for the privilege of owning a home?

Let me explain about the second question – if the houses are overpriced at the moment, perhaps you could save up for a couple of years and then buy when the prices will stabilize. Many people believe that real estate market in Australia is racing up all the time, when in fact it had several slowdowns and now is heading for another one.

Stage four: what kind of house should I buy?

Townhouse
Start to think in more details about the house you’ll buy – how many bedrooms you need, how many bathrooms, should it be a unit, a townhouse or a regular house? It’s a good idea to choose such home that will cover your needs for a long term, because buying and selling take time and cost money – and moving home is a nuisance.

Having figured out what kind of home you need (in terms of bedrooms/bathrooms), you can start narrowing down the list of the candidate suburbs. Visit one of the big realestate sites (domain.com.au or realestate.com.au) and check what is the price range for your specific house type there. If you find that its beyond your budget – that suburb is off your list. Too confusing?

Example:

Let’s say you need a 4 bedroom 2 bathroom home and your budget is 350,000$. Do a search in Suburb A from your list for all the recent listings of 4 bedroom/2 bathroom homes. Let’s say the asking prices start from 370K – cross out that suburb because you clearly can’t afford to live there. Then do the same kind of search in Suburb B from your list. If the asking prices are from 320K to 400K, you have a decent chance of finding an affordable home there – so Suburb B stays on your list.

Stage five: what amenities do I need?

Melbourne Central Shopping Centre and Train Station
Now you will be comparing the suburbs on your list by the amenities they offer:

  • How close are they to the CBD (Central Business District)?
  • What kind of transportation is available (train / tram / bus)?
  • What are the closest hospitals, schools?
  • How about shopping centers and entertainment (restaurants, cinemas, fitness clubs, aquatic centers, etc)?
  • What other points of interest are around? This one depends on your hobbies.

The easiest way is to give a suburb one point for each type of service that you need and it has. Keep the ones that scored the highest and cross out the rest.

At this point I have to say that you can’t have too many suburbs on your list – realistically, one or two are all you can handle. If you leave any more than that, looking for a specific house will be too difficult because there will be too many houses to consider. The most time-consuming stage of the house-hunting starts when is you have to actually inspect the houses, and the more you have – the longer it takes to pick “The ONE”.

Stay tuned for “How to buy a house – part two”. To make sure you don’t miss it, subscribe to my feed (click on the link below).

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