Ensure you separate fact from fiction when considering your first property purchase, says John McGrath.
During my 27 years in the real estate industry, I have come across my fair share of property myths. While some have merit, some have lost their relevance… and others are misnomers.
The following are some of the most common notions associated with property buying – and you’re sure to come across them at some point.
FACT LOCATION, LOCATION, LOCATION One of merit is the well used mantra: ‘location, location, location’. It is often implied that location is everything – and I’m here to tell you it is.
The three most important things to look out for when buying a property are location, position and aspect.
Location is critical. You must always buy in the best place you can afford.Position is also crucial.
We know that there are good streets and there are better streets. Don’t think that because you are buying in the Sydney suburb of Paddington you are automatically in the best position; always buy, where possible, on the best street in the best suburb.
Finally, there is aspect. If you buy a house with a family room that catches the afternoon sun, for example, this will increase the resale value of your property.
With this in mind, it is essential for potential home buyers to do their homework before leaping into the property market. You need to treat it like a second job. Take it seriously: don’t just wander out on a Saturday morning and expect to find something in the first week.
Talk to friends, talk to agents, and talk to people who have recently bought. Go online and get searching. Once you have found a property you like, research the area.
Also, revisit the house or unit at different times of the day and night to see how it catches the sun or what the peak hour traffic is like.
The best piece of advice I can give to a property buyer is use your intuition: if you walk into a place and it feels good, it probably is good.
MYTH BARGAINS ARE BEST But don’t get caught up in buying a bargain. There is a myth that you make money when you buy and not when you sell – while this would be nice, it is not often the case. I like to think you can make money in both instances.
But while it is nice to make money when you buy, you can only do that if you buy a bargain.
If a property is a bargain, there are reasons why – and that is usually because nobody else wants it.
So don’t shop around for a bargain; shop around for the best property.
And often, the best properties are sold at auction.
MYTH AUCTIONS ARE EVIL There is a commonly held belief that auctions force you to pay more for a property. However, this is not the case.
Auctions are a great way to see exactly how many people are willing to pay the same price for the property as you.
If you are uncomfortable buying at auction, get comfortable because auctions are becoming more commonplace.
MYTH THE NEWER THE BETTER Older properties, especially historic dwellings in Sydney, are increasingly being sold at auction.
Old houses and old units nearly always outpace new dwellings.
While there is nothing wrong with a new home, they don’t have the same allure as older properties – especially when it comes to resale.
Wealthy property buyers are far more likely to buy a historic building rather than a new dwelling.
Unfortunately, most first home buyers want new properties.
As a general rule of thumb, houses outpace apartments. Old houses outpace new houses and old apartments outpace new apartments.
MYTH STAY AWAY FROM STUDIOS It never ceases to amaze me how many people say a one bedroom unit or studio has no resale value.
That said, I once believed this sentiment myself. I remember selling a studio apartment some 20 years ago for $25,000. At the time, I thought nobody would ever pay that much money for such a small space.
However, we now know that those studio apartments sell for more than $250,000 – and this will only grow over time. Prices will continue to climb until a one bedroom unit in the inner city will eventually sell for $1 million.
John McGrath is chief executive officer of McGrath Estate Agents