You should also have a good rapport with your advisers: find someone
who speaks your language and doesn’t use a lot of jargon, and whom you
believe will act in your best interests. Sounds logical and simple enough right? But trust me, in the heat of desperation or mixed emotions, we can forget little things like that which will pay off in the long run.
Accountant: What experience do you have with setting up structures within which to buy property?
It is critical that you work out in whose or what name the property
should be held before you finalise the purchase contract. The easiest
option is to buy in your personal name, but this may not be the best
option for your circumstances. Rounds 14 and 15 have more information
about structures.
Make sure you consult an accountant who understands
property and will be able to give you guidance in this area.
Banker: What are the interest rate, the upfront, ongoing and exit fees of the most appropriate loan for my circumstances?
It’s relatively easy to determine the interest rate of a loan, but
what can be more difficult to find out are some of the hidden fees. (When
I say hidden, I mean that they are somewhere in the contract but they
are often specified in the small print or somewhere among the volume of
pages that makes up the loan contract.
Typical upfront fees include application, establishment and valuation
fees)
Many loans have regular ongoing fees that are generally charged
monthly. Banks can also charge hefty exit fees if you pay off the loan
too early or want to terminate a fixed rate loan before the end of the
period interest rate if the fees and charges are very high.
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| THIS COULD BE YOURS!! |
Building or pest inspector: Can you please provide me with a written report and an estimation of the repairs that are required on this property?
A verbal report is not worth the paper
that it is not written on!
A written report provides a permanent record
of the inspection carried out. It can be very useful to show the
selling agent to try to discount the asking price by factoring in repair
costs. It could also be critical at some time in the future if a
building fault is discovered that should have been apparent to the
inspector at the time of the inspection.
Conveyancer or lawyer — Is there anything out of the ordinary in this contract?
Contracts that deal with land are legal documents and they can be difficult to read and understand.
A conveyancer or property lawyer should be able to read through the
contract and determine if your property or contract is typical or
whether there is something that should be noted.
For example, it might be heritage listed or there might be an
easement (a section of land you cannot build upon) on an unusual part of
the land.
Mortgage broker: Do you charge for your services?
Mortgage brokers should not charge you for their services. They are
paid by the lender with whom you decide to take out the loan.
Mortgage broker: What is the best and most appropriate loan for my circumstances?
One of the great advantages of speaking with a mortgage broker is
that they have access to the loans offered by many banks, whereas when
you speak to someone at your own bank they can only offer you loans from
their own institution.
Your mortgage broker should have around 20 or
more lenders on their panel from which they can select the right loan
for you.
This means that they will have hundreds of loans that you can choose from.
Real estate salesperson or agent: Why is the vendor selling the property?
If you can find out why a vendor is selling a property, this can
greatly enhance your bargaining position. A vendor may need to sell for a
number of reasons: they may have already bought another property;
separation or divorce may cause a sale; or following a death, the estate
just wants to sell off the property.
Some vendors may want to sell, but don’t need to sell. They may just
be trying out the market and if they get the price they want, they will
sell. You must remember that the salesperson or agent is working for the
vendor, so they shouldn’t tell you, the prospective purchaser, anything
that will disadvantage their client.
They don’t have to tell you why the vendor is selling.
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| Check out this book!!! |
Valuer: What is the market value of this property?
Just because an owner puts a price on a property, doesn’t mean that
it is worth that much. The price specified might be the price that they
hope for or need to sell at to buy their next property.
If you are
unfamiliar with property or don’t have any idea about the worth of a
particular property, you should ask a valuer to value the property you
are considering.
If you are borrowing money to buy the property, the
lender will probably have the property valued, but this may not be the
market value of the property.
The bank’s valuation will probably be based on a worst-case scenario
where it wants to know what it could sell the property for if you
default on the loan and it has to sell in a hurry — in other words, a
fire sale price.
