Buying your dream home (Ep.139)

Listen and subscribe

Apple        Android

 

In this week’s episode, Dave, Cate and Pete take you through:

  1. The starting point – how viable is your plan? The trio discuss the two key elements for determining whether your dream is feasible and how to work through these two elements: budget and tenure. If feasibility is an issue, then be prepared with a Plan B, which could require getting clear on compromises or purchasing a stepping-stone home.
  2. How frequently does your dream-home come up for sale? The trio discuss how to find out if your dream home is a needle in a haystack or a more frequently listed proposition. Understanding this is critical, as it will determine your purchasing and negotiation strategy and how quickly, (and strongly) you will need to act if your dream home has just come on the market.
  3. Sometimes you don’t know what your dream home is until you walk into it. If you have so many intricate things that determine up your dream home, then just build it. You will get exactly what you want, as opposed to searching for a product in a moving market that doesn’t exist. We note, however that this is not our advice for investment.
  4. How fussy is too fussy? If you have a long wish list of intricate things that make up your dream home, then you need to ask yourself how viable and realistic your search actually is. However, when considering buying an established property, you may be chasing a mirage if you can’t see any similar properties that have been sold in the last 6 months.
  5. The risks of chasing a lofty or infrequent dream. The trio discuss the risks of searching for a unique property and the implication of delayed decisions. It’s important to remember that properties are like people, they are never perfect, but you should be able to find one that scores high on your wish list.
  6. What is it ok to compromise on and what isn’t? Compromise, that ugly word! The reality is that you’re unlikely to find a home that ticks every single box, so what are you willing to compromise on and is your significant other on the same page? Pete shares a valuable tip on the element that he never suggests compromising on…. Location.
  7. How do you start documenting your wish list and action plan? Determining your must haves and nice to haves is a great place to start. Removing all properties from your search that don’t include your must haves will stop you from wasting precious time. If after searching for comparable sales you find that your brief is not feasible, it may be time to revisit your compromises.
  8. How do you future-proof a purchase? The trio discuss the critical considerations for ensuring that you live happily for a long time in your home, as the costs of purchasing and selling a property can significantly eat into your wealth over your lifetime.

 

Resources

Show notes

  • How viable is your plan? 
  • Budget – financial position. Wonderful dream, but if it doesn’t match the budget, you can chase your tail for a long time 
  • Tenure – is it future proofed, trailing a long commute or farm life. You find out that you don’t like living there or the job wasn’t right.  
  • You can overshoot the runway and going for the family home when you aren’t even married. Living out in the suburbs when you miss the city which might be ready for you for the next 10 years.  
  • If you can’t see an easy 10 years, it’s probably the wrong family home.  
  • Stepping stone home – at least 7 years, real minimum is 5. Plan for 7 to 10 – give yourself time to run through cycles, build up equity or pay down debt or build in the offset account. But you really need to project how will my life look 7 or 10 years ahead.  
  • You need a plan B – you can delude yourself into thinking your plans will work.  
  • Often people can only afford to purchase a stepping stone home, unless they purchase it first as an investment.  
  • You have to assess your dream financially and practically.  
  • How frequently does your dream-home come up for sale? 
  • In a moving market, you’ve got to ask yourself how often you’ll see a product that will tick the boxes.  
  • If you know that where you’re looking at what you’re looking for fits the budget, then you know it  
  • If it’s infrequent, you need to go hard at it when it comes up. If you miss it, and 6 months go by, you’ll be paying more.  
  • Pragmatic about it – let it go and wait for the next one. Or you may need to put a determine a stretch budget to secure the property.  
  • Sometimes you don’t know what your dream home is until you walk into it.  
  • If you have so many intricate things that make up your dream home, then just build it. You will get exactly what you want, because otherwise you will never find it. This is not good advice for investment.  
  • Please don’t turn it into a personal monstrosity that no one else will want. You will shoot yourself in the foot when you try to sell.  
  • If you put too much money into it, then your emotional premium could blow your budget way out of the water.  
  • How fussy is too fussy 
  • When looking at an established property, if it comes up less than once a quarter it’s a fussy brief. Less than twice a year is an impossible brief.  
  • If you can’t see what you want for the last year, it doesn’t exist and you’ll be chasing a mirage.  
  • If you have access to a property database – here is the brief and get the business or yourself, how many of that type of property has sold in the last 12 months or 2 years.  
  • The risks of chasing a lofty or infrequent dream 
  • Lost opportunity. 
  • In a moving market you are eroding your own currency. 
  • Take a long time to buy. 
  • Not realistic on price point, it will drag out further. 
  • You put your life on hold for a period of time and it’s exhausting. 
  • Chasing the market – cost you $100,000 or more. 
  • From an agent point of view, you are looking seriously and financed and ready to go, you want the agents to support you. They won’t put time into you if they think you’ll never buy and you don’t give enough feedback on why a property is not suitable.  
  • What is it ok to compromise on and what isn’t? 
  • Pete would never compromise on location, because that cannot be changed.  
  • You can change the dwelling, yes it’s expensive to do, but you can never change the location.  
  • See the dream, what it could be, rather than looking at what it looks like now.  
  • What you’re prepared to compromise on has to be ok with you. But if the compromise that you choose involves a land issue (south facing, busy road, next to something noisy or yuck). You could buy a bargain, but you’ll sell a bargain as well, particularly if the market is not hot.  
  • Common compromises 
    • Budget 
    • Location 
    • Land size 
    • Dwelling make-up 
  • What are the must haves and what are you willing to compromise on.  
  • Some people choose to move to the next suburb to get more land size and better dwelling within your budget. 
  • How long tenure should a buyer aim for? 
  • Buying one home in your lifetime as the holy grail – in and out costs, stability in life. Two is a good result, three is not unusual, but you don’t really want to be going into 3 or more family homes.  
  • How do you start documenting your wish list and action plan? 
  • Must have vs nice to have – if that attribute isn’t on the property, it won’t be on the list.  
  • Sold tab – reverse search engine look – 2 or 3 months for what’s sold recently. If the type of property they are after isn’t showing up within their budget, we’ll talk about compromises.  
  • You need a realistic and feasible brief before you have an action plan.  
  • Be conscious that your budget could be increased, better to be honest with yourself about this earlier, because you’re less likely to chase the market. You put a limit on yourself to save money, but in the end you cost yourself money.  
  • What are the things that can future-proof a purchase? 
  • Think about your needs, not just now.  
  • Think about the space, land and amenity that you need.  
  • What will it feel like if you have children and your family is not nearby.  
  • What can you achieve in your lifestyle that you don’t necessarily need to pay for – zoned schools or parks so you don’t need to have a big backyard.  
  • Public transport should be a consideration too.  
  • If it doesn’t suit your needs now, is there development potential? Are there other properties in the area that have gone through an extension? 
  • How does your long-term family home help to keep your life simpler? 

 

Gold Nuggets

Peter Koulizos – The Property Professor’s Golden nugget: it’s wonderful to chase your dream, but don’t end up chasing your tail and going around and around in circles because you’re too fussy. A good step would be, work out what are the must haves vs nice to haves, your partner does the same and then come together and work them out together. You both need to agree.

Cate Bakos – The Property Buyer’s Golden nugget: Remind yourself that property is like people, there is no perfect property, but you can get a high scoring property that’s a really good match. Sticking to your must haves is the key to nailing this. If you’re looking for the perfect proeprty, you’ll be chasing the dream and going around in circles.

 

Market Updates

  1. Two speed market emerges. The latest data for January discloses a two-speed market emerging within our capital cities. Adelaide and Brisbane have continued their outstanding growth, demonstrating 7% and 8% respectively. The other capital cities, while not going backwards in value, are showing a significant slow-down in growth. The trio discuss whether this is transitory and whether can the data be relied upon for determining a trend in to 2022?
  1. Will interest rates rise? The RBA’s stance on the cash rate not seeing a rate hike this year is slowly softening, with Governor Lowe stating that it’s plausible we will see a cash rate rise this year. Most economists are forecasting that an interest rate move is unlikely until at least August, when we will have two data sets of quarterly statistics for 2022 for the RBA to use to make a decision. Watch this space.

Listen to Our Podcast

240+ 5tar Reviews, Over 500,000+ Downloads

Join Our Newsletter

Subscribe to “The Property Planner, Buyer and Professor” Newsletter

11 + 6 =

Email us your questions or any topics you would like to be covered off on in future episodes:
Follow the podcast on social media