How To Save Money Buying Property
- Written by Mark Ribarsky
With sky-rocketing house prices it’s wise to look at how you can save money when buying a home. We look at the top 5 tips on how to sharpen your property hunting skills and buy the right property at the right price.
Tip 1. Stamp duty savings:
If you’re spending around $1M dollars on a property in Melbourne, the stamp duty fees / government taxes work out to around $55,000. And that’s only if it’s your principle place of residence. A homebuyer cannot claim this tax as a deduction and it must be paid within weeks of a property settling.
Stamp duty can be reduced buy 20% to 30% if you purchase a property off-the-plan or purchase a vacant block of land. For more information on this check out the State Revenue Office website.
Tip 2: Use a buyer’s agent:
Buying a house requires a buyer to understand many aspects that require a lot of skill and experience. Most likely, a buyer will never grasp each part of the buying process comprehensively, hence make costly mistakes along the way.
A buyer’s agent is a real estate agent that represses the best interest of the property buyer. They are skilled in all aspects of the property purchase from:
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* Picking a house that will get you a higher rate of capital growth than a common house in an area.
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* Evaluating a property, setting limits on how much you should pay for a property.
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* Save money with professional negotiations via a private treaty or auction method of sale.
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* Shorten time on the market, securing a property in a matter of weeks.
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* Buyer’s agents are a great source of off market listings, these are properties without public marketing campaigns. The benefit is that there is less buyer competition.
Tip 3: Do your homework.
An unconfident property buyer is about as effective as a blunt axe. When it comes to buying property, market knowledge is everything. Become a property guru before you start the buying process. This will help shorten your time on market and minimise how much you will pay for a property.
Focus on:
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Attending open for inspections and auctions.
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Learn about the suburb (schools, transport, shops etc.) and what it is offering as this will help identify buying hot spots.
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Know what has sold recently, the size of land, number of bed / bathrooms and car spots and the price it went for. Know how long a property has spent on market.
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Make friends with real estate agents, they are a wealth of knowledge when it comes to an area. They can also let you in on off market properties.
Tip 4. Phone a friend:
The saying ‘two heads are better then one’ is wise when it comes to successful completion of an activity that requires research.
When buying a property, the task at hand can feel overwhelming and cause information overload. So a friend can add a level of value or clarity when buying. This could range from an obvious flaw in a property’s location, a property fault or the wheeling and dealings with a real estate agent.
Useful friends can be people with trade experience, a real estate agent friend or a property investor.
Tip 5: Reduce your mortgage by selling your backyard.
Many property buyers are now focused on land that has the ability to add on a second dwelling.
Property that has this option gives its owners long-term financial benefits, consider:
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Dual dwellings and creating a rental income.
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Reduce your mortgage by selling one of the properties.
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Gain a second property that you don’t pay stamp duty for.
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Unlock the equity of a second property in the future without having to pay additional overheads like service charges, rates or taxes in the present.
About The Author. Mark Ribarsky, a Bachelor of Business, is the founder of Wise Real Estate Advice (http://wiserealestateadvice.com.au/) and Property Managers Melb (https://www.propertymanagersmelb.com.au/). He is an experienced residential property developer, a fully licensed real estate agent, a buyer’s agent and property manager.