Buyer Resources

Purchasing a home is a big deal, and it can be a bit overwhelming. The last thing you want is to make costly mistakes that can haunt you in the future.

As Buyer’s Agents, it’s our job to help our clients avoid mistakes on their homebuying journey.

Mistakes buyers make when purchasing

Here’s a list of 25 avoidable mistakes that buyers can make:

1. Ignoring the Budget Basics: One big mistake is not setting a budget. If you don't know how much you can spend, you can waste months house-hunting in a price range you can’t actually afford. Getting a fully-assessed pre-approval is the best way to understand your actual borrowing capacity.
2. Skipping Pre-Approval: Before you even start looking at homes, get yourself pre-approved for a mortgage. It’s best to understand what you can afford before you start shopping around for a home. Keep in mind that homes often sell for above their advertised price, and closing costs can add another 5-10% on that figure! Your deposit needs to cover your portion of the purchase price to get the LVR to where you want it to be, but then also is needed to pay 100% of closing costs.
3. Revealing too much to Sales Agents. A Sales Agent (real estate agent) represents the seller, not the buyer. They have a fiduciary duty to obtain the highest possible price from the buyer. Buyers often reveal too much to the Sales Agent, placing them at a disadvantage during negotiation. The agent needs to know you’re interested, but don’t tell them you’ve been looking for 6 months, are in love with the home, and your best friend lives around the corner!
4. Not researching the Neighbourhood: Don't just focus on the house; pay attention to the neighbourhood too. Check out the streetscape, schools, and whether there's a decent coffee shop nearby. Your location can make or break not only your happiness, but the future value of the property. With a suburb, each street can have wildly different values. Train, road and aircraft noise, local traffic congestion and the quality of neighbouring homes all have a dramatic impact on property prices. A large portion of the value of a property is in the land, not the actual house.
5. Not building the right team: Picking the right “purchasing team” is crucial to avoiding unnecessary expenses and disappointment. A buyer typically needs at minimum a mortgage broker and a conveyancer. It’s becoming very common to engage an independent Buyers Agent too. Take advice from educated, recommended and qualified property professionals to avoid making mistakes that can cost you dearly, either now or down the track.
6. Skipping the home inspection: The home and pest inspection report is your backstage pass to see what's really going on with the property. Skipping it or ignoring its findings is like buying a mystery box; you never know what you're getting into. Proper due diligence from a Buyers Agent is also highly recommended, as it investigates totally different things compared to a building and pest report.  
7. Short-Term Thinking: You really do need to think about the long-term! If you're planning to start a family or work from home, a studio apartment might not cut it. Fixed purchase and sale costs mean you’re probably better of renting if you need to sell a property within 5-8 years of owning it. Plan for the future; don't just buy what suits you right now.
8. Rushing the Decision: Buying a home is not like grabbing a candy bar at the grocery store checkout. Don't rush into it. Take your time to explore different properties and weigh the pros and cons. It can often take several months to find a suitable home. Settle in for the journey and take your time with this important decision. When hiring a Buyers Agent, be sure they’re willing to work at your pace.
9. Offering too much and overpaying: It can be difficult to know much how to offer during a private negotiation. Often there is no advertised price, or that price isn’t very accurate of the market demand anyway. It’s best to seek professional advice from a Buyers Agent to understand the likely market price of the property, and have a strategy for how to secure it at Auction or during a private sale. It’s very easy to unknowingly offer $30,000 above the next closest buyer. Over a 30 year mortgage, that’s actually more like $60,000 when you factor in interest. For you to have $60,000 in your pocket, with normal tax rates, you probably need to earn $80,000 before tax. An experienced sales agent can easily draw another $30,000 out of an inexperienced negotiator, and that simple error can cost you $80,000 of earnings when you actually do the sums!
10. Underestimating the Costs: Owning a home is not just about the mortgage. There are taxes, insurance, maintenance, and surprise expenses. Be prepared for the whole shebang, and understand your financial situation before you make big decisions. Ownership is commonly much more expensive than rent.
11. Weak Negotiation Game: If you're not a good negotiator, it's time to learn or hire a Buyers Agent. Negotiating effectively means you have a chance of winning the property and paying a fair price. Poor negotiation means you won’t secure your dream home, or you’ll end up paying well above a fair price. Sales Agents are well-paid, highly experienced negotiators that are legally required by a duty to the seller to extract every single dollar out of a buyer.
12. Ignoring the Fine Print: Reading contracts and loan terms can be about as fun as watching paint dry, but it's essential. You need to understand all the nitty-gritty details; otherwise, you might get caught in a tangled web of obligations or expenses.
13. Emotion-Driven Decisions: Falling in love with a house is fantastic, but don't let those feelings blind you. It's a financial commitment too, so balance the heart with the head.
14. Overlooking the Resale Value: You might not be thinking about selling your new home yet, but you should. Consider how the property's value might change over time. If the home isn’t in a desirable area now, will that change in future? Can fundamental issues be repaired? It’s rare to find a ‘great deal’, or buy ‘under market value’. Does the price seem low? Perhaps there something fundamentally wrong with the house that you’re missing.
15. Inadequate Research: Visit the neighbourhood at different times of day and week to get a true feel for it. Talk to potential neighbours to gather insights. A Buyer’s Agent will provide a comprehensive due diligence report for you that’s completely separate to the Building and Pest Inspection. The more you know, the better.
16. Not Considering Commute Time: The dream home might be far from work, school, or your favourite hangouts. Long commutes are an important factor in your lifestyle.
17. Being Unrealistic: Don't expect to find a perfect home with zero flaws. Be willing to compromise on some aspects, but never compromise on what matters most to you. Small things you don’t like can easily be improved quickly and affordably. Size, number of rooms and good flow to the floor plan is much more critical than floor coverings or paint color.
18. Taking advice from family and friends: Although they mean well, unless they are an active property professional, their advice is likely outdated, misinformed or too unique to their personal experiences. Use professionals such as a Buyer’s Agent to receive educated, factual advice; based on data and current property metrics.
19. Getting too attached to one property: As soon as your dream home comes on the market, hopefully you can secure it quickly and at a reasonable price. However, things might not work that smoothly, so it’s important to enter the property hunt knowing it can be competitive and frustrating. You may miss a few homes, and things might cost more than you first intended.
20. Overlooking age and condition, or undervaluing renovations: Older home usually cost more to maintain, and can have expensive surprise costs appear at any time. The charm and character of these homes is desirable, but it’s important to budget for additional expenses. Additionally, don’t underestimate the value of a completed renovation on a home you’re considering – it likely cost more than you think, and the work is already done for you. If you don’t have to pay for renovations in the future, then you should consider spending more now on a home that’s been recently renovated. If buying a fixer-upper, allow the renovations to cost 20-30% more than you originally estimate, and then compare with a home that’s already renovated.
21. Overconfidence. It’s important to remain humble and level-headed in negotiations. Don’t assume you know more than other people, or overestimate your abilities.
22. Buying before auction. If an agent has suggested you offer before auction, be very careful. Some agents convince buyers to make pre-auction offers when they actually only have a single real buyer. They are in danger of overpaying because there isn’t actually any other competition, but the agent can certainly make it feel like there is!
23. Just offering 5-10% more than the agent's asking price. This approach assumes the agent’s asking price was an accurate and educated opinion on the potential market price of a property. Buyers regularly overpay when they simply take the agents price guide to be gospel, and then offer slightly more. ‘Advertised price’ is tricky in real estate, so it’s best to seek professional guidance from a Buyer’s Agent. Auctions price guides are often underestimated by the Sales Agent to attract more bidders from the market. For Sale advertised prices can be overestimated as a negotiation tactic called Anchoring – you don’t need to offer what the agent is asking. Do you own research, or hire an independent Buyer’s Agent.
24. Fear of missing out. FOMO can set in when you’ve found your dream property, but you start to feel nervous that someone else will take it from you! FOMO causes people to pay more than a fair market price, and Sales Agents are trained professionals at getting the highest possible price from buyers. A Buyer’s Agent is a voice of reason is this situation, and can help you understand a fair price, and how long you might need to wait before another similar property comes to market.
25. Confused by price inconsistencies. Property is all about people. There’s a seller, a buyer and agents – each with their own emotions and price expectations. Add to this, that properties are often difficult to directly compare. It can become complex to estimate a fair market price on a property you love with such dramatic price inconsistencies on previously sold homes. If you’re struggling to understand value, ask for help from a Buyer’s Agent.

So there you have it, a comprehensive guide to avoiding the most common mistakes when buying a home. Remember, it's a journey, not a sprint. Take your time, do your homework, and you'll be on your way to home sweet home!

Thinking of Buying at Auction?

Auction is a method of selling a property where interested buyers gather at a specified time and place to openly bid on the property. During an auction, a licensed auctioneer oversees the proceedings and facilitates the bidding process. The property is advertised in advance, and potential buyers are provided with relevant information, such as property details and necessary documentation. The auction itself can take place on-site at the property or in a designated auction venue, and is subject to specific terms and conditions set by the seller.

Bidders in a real estate auction make increasingly higher offers until the highest bid is reached, so long as it exceeds a predetermined reserve price. The highest bidder is then legally obligated to purchase the property, and required to sign a contract of sale and provide a deposit. Once a bid is beyond the reserve price, the seller must proceed with the sale.

Real estate auctions are known for their transparency and can result in a fair market price as buyers openly compete to secure the property. However, they also involve certain risks to buyers.

Why are they so common? 

Auctions are a popular method for selling property in Australia for several reasons. Both sellers and the Sales Agent might prefer an auction because:

• The overall sales process can be faster and simpler
• The sale is unconditional, so buyers can’t exit the deal
• The seller is protected by a reserve price, which does not need to be disclosed
• Price is determined by competitive bidding, which can go well above the seller or Sales Agent expectations. The free-market determines the final selling price
• The Sales Agent can operate a fair and transparent sales process, and avoid complex “back and forth” with multiple buyers
• Buyers can get competitive and emotional at auctions, so the seller can achieve an above-market price

Pros of an Auction for Buyers

Fair and transparent

The bidding process is straight forward, and the property is sold to the highest bidder. You see what everyone else is bidding and there's no negotiations happening privately behind closed doors.

The market is there, and a new market value is set for everyone to see.

When you’re negotiating privately with an agent for a non-auction property, you never quite know if there are other buyers, how much they’ve actually offered and what their offer is subject to. All buyers are ‘flying blind’, and the agent isn’t able to tell them much.

No risk of being gazumped

Gazumping occurs when a seller accepts an offer on the property from one potential buyer, but then accepts a different offer from someone else before the contract is signed.

Auctions are legally binding on the seller, so once the hammer falls, if you’re the highest bidder the place is yours. It does not matter if the Sales Agent finds someone else willing to pay more the next day.

In a Private Treaty sale, unless you have a signed contract of sale, you can be gazumped anytime.

Fast

Auctions are substantially quicker than a long-drawn negotiation process that usually takes weeks.

You’re not nervously waiting for the agent to tell you if the seller has accepted your offer.

Market-determined price

Buying at auction gives you comfort for the future that you paid fair market value and weren't ripped off. At auction, the highest bidder pays just above the second highest bidder to secure the property. 

Buyers' remorse can occur when you offered a record-breaking high price when negotiating privately with the Sales Agent because you’re not sure what the second highest offer was.

At auction, the market tells the seller the price, instead of the Sales Agent setting an arbitrary price during a ‘for sale’ campaign. The seller is protected by the reserve price, however the Sales Agent will manage the sellers expectation to ensure the reserve price is relatively reflective of market sentiment.

Negotiation continues if Auction is ‘held over’

If the reserve price is not met, the Auction is either ‘held over’, or ‘passed in’.

Sales Agents may or may not decide to continue further negotiations with potential buyers. If the auction is ‘held over’ and a deal is reached before midnight the same day as the auction, the contract is the same as if you bought it during the auction – ‘under auction conditions’.

You might get a reasonable deal

Since many buyers are hesitant to bid at auction, there can sometimes be fewer active buyers. When you’re up against less people, the final price of the property can be lower.

The seller is protected by the reserve price they choose, but if it’s not reached during the auction, immediately afterwards, and even until midnight that day, buyers can enter into negotiations with the Sales Agent, under auction conditions. Sales Agents will use the low market demand, and relisting marketing costs to suggest the seller lowers their price, which might result in a reasonable deal for you.

Cons of an Auction for Buyers:

No Cooling-Off period

With a regular non-auction property sale (Private Treaty etc), as a standard consumer protection in South Australia, the buyer has a 2-business day cooling off period.

This right is forfeited for auctions, and the highest bidder when the hammer falls must proceed with the purchase.

There is no ability to change your mind, and there is significant legal complexity if you can’t proceed with the purchase for some reason.

Unconditional: no contract termination clauses or rights

At auction, you can access to the contract of sale and Form 1 before the Auction day. Clauses or terms that buyers might often include can’t usually be added, such as:

• Subject to finance
• Subject to building and pest inspection

Effectively, you are buying the property ‘as is’, and if you win the auction, there is no ability to terminate the contract if you’re subsequently unable to obtain finance.

If there are any issues you’re unsatisfied with, after auction there’s nothing you can do. It’s critical you work closely with your Buyer’s Agent, building inspector and conveyancer prior to auction in order to:

• Review the contract of sale and other documentation
• Complete very thorough due diligence
• Properly inspect the property
• Understand the value of the property to ensure finance won’t be an issue

Some Auctions can attract competitive bidding

In the ‘heat of the moment’, the following types of buyers can get carried away at auctions and pay unusually high prices:

• Inexperienced buyers that don’t understand the market value and will overpay
• Frustrated buyers who have been looking for 6+ months and just want to end the property hunt
• Emotional buyers that are in love with that specific home
• Buyers with deep pockets that become competitive in auction conditions

It’s important to attend an auction with a walk-away price, which is determined by data from a real estate professional, and grounded in your personal financial capacity.

The Auctioneer and Sales Agent might employ high-pressure tactics

The entire purpose of an auction is to draw out the highest possible price from the market. Auctioneers and Sales Agents work for the seller, not for the buyer, and its their job and fiduciary responsibility to get the best price from you.

Always stick to your pre-determined walk-away price.

Your finance has to be dependable

When the hammer comes down at Auction, if you’re the highest bidder, you’ve bought the property and there’s no backing out.

If you are borrowing money to pay for the property, it’s critical that before you go to Auction, you’ve worked very closely with your mortgage broker or lender to be prepared. Ideally, you have a fully assessed pre-approval.

People buying at auction that rely on finance need to be particular careful if:

• They don’t have a fully assessed pre-approval
• They have a low deposit (under 20%)
• They are unusual visa status, or working arrangements
• They don’t have access to extra cash if the lender valuation comes in low

Learn more in our article about Pre-Approval.

You may pay for Building and Pest Inspections a few times

When you’re bidding at Auction, there’s certainly no guarantee you will be the highest bidder. However, you should be prepared to be the winning bidder, which means paying for a Building and Pest inspection prior to Auction. At $500-$800 per property, this can potentially cost you thousands before you win at an Auction.

The property can sell prior to Auction

You might have fully prepared for the Auction, having paid for a Building and Pest Inspection and spent hours evaluating the property. The agent then informs you the property has sold before Auction, just days prior to the scheduled time. This can be highly frustrating and does happen occasionally. It’s important you’re communicating with the Sales Agent regularly.

The deposit must be paid on auction day

If you win the auction, you must transfer the deposit stated in the contract of sale the day of the auction. You need access and facility to transfer that full amount in a single day.

Conclusion

Auctions can seem overwhelming and complex, but with the right team supporting you, Auctions are actually a transparent method of purchasing your next property. You’ll need to be more researched and prepared than submitting conditional offers during a Private Treaty negotiation, but you might actually face less competition at Auction, since they can scare off some buyers.

Embarking on the journey of purchasing a property can be an exciting yet complex endeavour, often accompanied by a myriad of industry-specific terms that might seem like a language of its own.

To demystify the real estate experience and empower property buyers with knowledge, we've compiled a comprehensive glossary of terms. Whether you're a first-time homebuyer or a seasoned investor, understanding the nuances of property-related lingo is crucial for making informed decisions throughout the buying process.

Real Estate Terms Glossary

Agent: A licensed professional authorized to facilitate property sales or purchases. Otherwise known as, Sales Agent or Property Consultants.

Appraisal: An appointment or discussion with a Sales Agent to assess the value and sales process of a residential property. During an appraisal, agents may suggest strategies to enhance property value, such as updates or renovations.

Auction: A public sale conducted by an auctioneer, typically (but not always) at the property, where the highest bidder acquires the property once it reaches the reserve.

Auctioneer: A licensed professional conducting an auction. The auctioneer may be the listing agent or a separate licenced agent.

Auction conditions: This generic terms generally refers to there being no cooling off period for buyers when purchasing at auction. Other conditions, such as subject to finance, are also not present in auction sale contracts.

Bidder registration: A buyer or their proxy (representative bidding on their behalf) must be registered with the sales agent to legally submit bids at Auction.

Building Inspection: An examination by an independent party to investigate the property condition and check compliance and safety. Usually done within the 48-hour cooling-off period or before an auction.

Buyer’s Agent: A licensed professional engaged by and paid for by a buyer to represent them in negotiations with a vendor or their agent.

Buyers’ Market: A market trend where prices are lower, primarily due to abundant property availability, benefiting buyers.

Buyer Manager: A role within some agencies managing a database of active buyers, matching them with properties. This service, not paid for by the buyer, lacks a legal relationship and is not comparable to the services of a Buyer’s Agent.

Capital Gain: The increase in the value of a capital asset upon sale, occurring when the selling price surpasses the original purchase price.

Capital Gains Tax: Tax payable on capital gains from the sale of an investment property. Refer to current Australian Taxation Office (ATO) requirements.

Caveat: The instrument by which a person who claims an equitable estate or interest in land may prevent the registration of any dealing with the land or a registered interest in the land - eg a caveat may be lodged against the registered proprietor of land, or the mortgagee of a registered mortgage, or the lessee of a registered lease.

Conditional offer: Submitting an offer that requires the contract of sale be written with conditions that must be met, in order for the sale to proceed. Conditions requested by the buyer are often ‘subject to finance’ or ‘subject to building inspection’.

Commission: A fee paid to an agent for services, typically a percentage of the contract amount as specified in the sales agency agreement. Buyers Agents can also charge a commission fee structure instead of flat-fee.

Community Title: A community title is evidence of ownership of a lot in a community plan. There are two types of community titles depending on the nature of the scheme, which can be a Community Scheme or a Community Strata Scheme. Community Scheme lot boundaries are determined by surveyed land (the physical boundary of the land, for example the fence). In a Community Strata Scheme the lot boundaries must be defined by reference to parts of the building, similar to a strata title. For example, the edge of the building wall for a block of units. Both types of schemes must have an area of common property for which the Corporation is responsible.

Contract Of Sale: A legal agreement formalizing the terms and conditions of property sale.

Conveyancer: A registered conveyancer is a licensed person qualified to advise and prepare documentation pertaining to property transactions.

Cooling Off Period: A short statutory period after a contract is made, allowing the buyer to terminate the agreement within 2 clear business days for any reason, except in the case of auctions.

Counteroffer: A new offer made in response to a prior offer that was not accepted, proposing different price or terms.

Deposit: A monetary commitment by the buyer, usually a percentage of the total sales price, potentially paid in installments at the end of the cooling-off period or per the auction contract.

Development Approval: Approval from the relevant planning authority to alter or construct a property.

Due Diligence: Investigation before a real estate transaction, encompassing legal, financial, and physical assessments. This includes reviewing property titles, conducting financial analyses, and inspecting the property's physical condition. The process aims to identify potential risks, ensure legal compliance, and provide the buyer with comprehensive information for informed decision-making.

Easement: The right to use another's land or prevent the owner from using it in a specific manner.

Encumbrance: Frequently, an encumbrance will contain restrictive covenants aimed at controlling the future use or development of the land. In the generic sense, a claim, lien or liability attached to the land, including a mortgage, lease and warrant of sale.

Emergency services levy: (ESL) a charge imposed on property owners to fund essential emergency services such as fire and ambulance services, collected annually by local councils.

Equity: The interest or value an owner holds in an asset beyond the debt against it.

Expressions of Interest: a method of sale where potential buyers are invited to submit written offers or expressions of their interest in purchasing a property. Unlike traditional methods with an advertised price or auction, EOI allows buyers to propose the price and terms they are willing to pay. The seller then reviews the received expressions of interest and may negotiate with prospective buyers to finalise a sale.

Form 1: A required document disclosing property particulars and cooling-off rights, usually prepared by the conveyancer and provided to buyers.

Form 3: A document waiving cooling-off rights, signed in front of a solicitor.

Form R3: A buyer education document created by the government and supplied by Sales Agents to inform buyers of things they should investigate prior to purchasing a property. 

Form R4: A buyer education document created by the government and supplied by Sales Agents to all registered bidders at Auction, educating the buyer on Auction process and requirements.

Form R5: A buyer education document created by the government and supplied by Sales Agents to all registered bidders at Auction, educating the buyer on Collusive Practices at Auction. 

Holding Over: At auction, if the highest bid has not met the reserve price, an Auctioneer may ‘hold over’ a property over, which means the auction is effectively paused. If the seller and buyer can agree to a price before midnight on the auction day, then the property can still be sold under auction conditions.

Land Agent: The licencing term for a registered real estate professional.

Land Tax: An annual tax paid to the state government based on property value. Exemptions apply that reduce this cost for many households.

Land Services SA: An Australian company that manages the Property Title Registry and Valuation Roll, appointed by the SA State Government with respect to land services.

Listing: An agent’s instruction to sell or lease real estate.

Market Price: The actual price paid for an asset, agreed upon in a contract.

Market Value: An estimate of a property's value on the date of valuation.

Mortgage: Documentation of a property loan.

Mortgagee: Financier or bank lending money against property as security.

Mortgagee Sale: A property sale due to default in mortgage payments.

Offer: Consideration offered to purchase a property.

Off-market: Property available for purchase without public advertising. Not to be confused with a pre-market property.

Open Inspection: scheduled period during which a property that is available for sale is open to the public for viewing. It allows potential buyers or tenants to visit the property, explore its features, and assess its suitability.

Passed-In: At an auction, if the highest bid falls short of the reserve price, the property can be 'passed-in,' indicating that it hasn't been successfully sold during the auction, and the auction has ended. The parties can still continue to negotiate.

Pre-approval: A lender's agreement to loan a particular amount, pending final approval. There are many different levels of pre-approval, some being automatically completed by computer, others being fully assessed by a loan officer.

Pre-market: A property available for sale, that hasn’t yet been widely advertised, but is intended for public advertisement.

Principal: A licensed estate agent overseeing an agency’s legislative compliance.

Private sale: Vendor sells property without an agent.

Private Treaty Sale: A sale negotiated directly between parties or their agents.

Public Auction Terms: A legal document outlining the terms and conditions that apply to purchasing a property at Auction.

Rates: Periodic property taxes levied by local governments. May also refer to ‘water rates’, which are fees levied by SA Water for provision of sewer and water supply or use.

Reserve: The minimum price a vendor agrees to accept at an auction.

Seller’s Market: A market trend where prices are high due to limited property availability, benefiting sellers.

Settlement: The final stage of a sale when a buyer completes payment to the vendor, titles change, and the buyer takes legal possession.

Sole Agency Agreement: An agreement appointing a single agent to sell a property, entitling the agent to commission even if another agent or the vendor makes the sale.

Stamp Duty: State government tax on sales contracts.

STCC (Subject to council consent): A disclaimer indicating potential property changes requiring council approval, such as renovations, extensions, building or subdivision.

Strata: Legal ownership handling of a portion of a building or land. Since 1 June 2009, it has not been possible to deposit new strata plans under the Strata Titles Act 1988 (SA). New divisions now use the Community Titles Act 1996 (SA). Strata corporations existing at 1 June 2009 were not affected by the change and are still regulated under the Strata Titles Act.

Subdivision: The legal process of changing the land allotment, generally by dividing it into more parcels of land that have their own, new title.

Torrens Title: Ownership of land and building solely, registered with the Titles Office.

Trust Account: Legislatively required account holding monies for or on behalf of another person. Buyers will transfer a purchase deposit into the sales agency trust account.

Unconditional offer: An offer without any other conditions. For example, if the offer is subject to finance, or a building inspection, then it is not unconditional.

Under contract: When both parties agree to a contract but conditions are not met yet.

Valuation: An estimate of an asset's value, often part of the loan approval process.

Valuer: A licensed professional conducting property valuations. Note, this is different to an Appraisal, which is a market estimate.

Variation: An alteration to a contract or its conditions.

Vendor: Legal owners of a property for sale in real estate transactions, otherwise known as the sellers.

Zone: designated land-use category within a specific area, as defined by planning regulations, to categorise land for different purposes, such as residential, commercial and industrial, influencing the type of structures that can be built and the activities allowed on the property.