By the time I was 18, I felt 100 per cent ready to buy my first home — in fact, I could barely think of anything else. As far as I could see, the pros of buying were that I had a long-standing career (nearly 10 whole months) in real estate behind me, I had a tiny deposit saved and I had a desperate desire to own bricks and mortar. A few negatives were also floating around in my head at the time, as I recall. These included parental shock and horror, a decided lack of annual income and my youth and inexperience — I certainly did not know of anyone else that had bought their first home at the age of 18!
I soon forgot about the negatives when I found my first dream home by accident. I was working in a modern suburban area that was popular with first-time homebuyers, and I spent most evenings driving excited clients around a selection of homes. These first-homeowners-to-be would eventually settle on either the smartest house they saw, or the cheapest — that seemed to be the deal back then. During this period, I kept showing clients one particular home. It was neither the smartest nor the cheapest, so no-one wanted it.
After showing the home to yet another uninterested client, I asked my boss for more information about the house at num-ber six. Why, in his wisdom, did he think everyone was refusing its charms?
‘It’s obvious’, he retorted. ‘Number six is a hellhole.’
Well, he was right. Ten years before, the owner had bought number six as a brand-new house with his loving wife — who unfortunately happened to be loving someone else at the same time. Said wife left the owner in the house during their first year together, leaving him alone with his motorbike and his large and rather odorous dog.
The house featured three bedrooms — well, one bedroom (read: camping ground) and two rooms full of junk — one bathroom that looked like it had last been cleaned when his loving wife left him nine years previously, a lounge room that was carpeted in a colour that was now undistinguishable because of the motorbike and its parts that were housed there. It had a kitchen decorated in a tasteful style reminiscent of a ‘70s roadhouse. Outside, the paint was faded, and the yard — well, that was just another place for bike parts. The garage was tidy for some strange reason. The interior smelled of dog, cigarette smoke, dirt and grease — baking fresh bread to impress prospective buyers would have been a waste of time here!
I had seen loads of homes in this suburb by this point. Although I was in England at the time and the homes were obviously sold in pounds sterling, I will convert the prices to Aussie dollars for the sake of clarity. The cheap grotty homes in poor blocks in poorer streets fetched the equivalent of between $34 000 and $36 000 and good homes in better streets got between $44 000 and $46 000. Number six was in one of the better streets but, as my boss had put it so beautifully, was a hellhole. Blind to his home’s shabby condition, the owner had priced it at $41 000.
A few more frantic sales weeks passed by and I began to take more notice of this ugly duckling, as I showed more dreamed-up homebuyers through number six and they continued to refuse its attractions. Some did not even venture to the upper level. Meanwhile, the bank was knocking on the owner’s door and telling him to pay up or get out.
One fateful evening my boss took a call from the owner of number six — which I overheard. The owner really needed to sell, and had decided he might consider a lower offer.
Taking a deep breath, I boldly spoke up. ‘Could I buy number six? I will offer him $36 000.’ The office went quiet, bar a few rude remarks regarding my age.
‘I want to buy it’, I repeated.
‘Have you got $36 000?’ my boss asked.
‘No,’ I said, ‘but can’t I get one of those mortgages like everyone else?’
The next two months were not easy. My parents had only just got over the shock of their teenage son ditching his career in architecture, and now he was about to take out a big mortgage! To make things even worse, getting the mortgage was not easy. Our in-house financial department spent a lot of time convincing the lender to let me have the loan, and I believe some adjustments to my projected salary may have been made.
Despite all that, I knew I was ready to buy that house. I got it for $37 000 and tidied it up with a lot of help from my wonderful father; I think at this point Dad had accepted my real estate addiction and became a massive help in the early years of housing renovations. The news got better, too! Number six sold 10 months later for $51 500.
Although I didn’t plan for this process, it is generally a good idea to have a careful plan in place before you undertake a project such as this one. This chapter outlines all the planning you’ll need to do to buy your first home, as I did with number six.
What is the commitment?
So are you ready to buy a house? You are probably ready if you:
• believe you have a relatively steady income source for the future, and are prepared to change careers if you need to
• have a ‘get out quick’ plan for when things go wrong
• feel as though it is the right time for you
• are prepared to sacrifice all your free time in exchange for either working on the house or staying in because you can’t afford to go out.
In other words, you must be prepared to make a commitment.
Are you ready emotionally?
If an agent asks you how long you have been househunting for, or how many homes you have inspected, he or she is trying to establish whether you are emotionally ready to buy. If your search has taken more than six months, or you have inspected 50 or more homes, you are not ready! Trust me: if you have done your research and really targeted your search, there won’t even be 50 homes to inspect. So ditch the deal until you really are ready.
Obviously, the financial commitment of buying a home is key, but this comes with a range of emotional issues that you must take into account. All your spare money will be taken up in the first few years, not only with mortgage repayments but also with running costs, improvements and furnishings. This means less money for going out and partying. So does that mean boredom? I didn’t think so, and the kudos it gave me among my peers was worth it. But owning a home is a never-ending cycle of financial commitment, and you cannot escape that.
Who can hinder you?
As an agent, the first-time purchaser’s parents are always the people we dread most on inspections. These interventionist, nosy folk have delivered the kiss of death to many a deal. I have to tell you (but don’t tell them!) that, in most cases, their advice is ill informed and sometimes just completely wrong. So watch out, and don’t let your folks influence your emotions too much!
Maybe I am being a bit harsh on the mums and dads out there. As a parent myself, I will of course be offering my offspring advice — but my advice will be right, of course. The agents will take one look at me and give in!
Comments to watch out for include:
• ‘You don’t want to buy there, do you dear?’
• ‘I remember houses here that used to be $100 000 and you couldn’t give them away!’
• ‘Do you really like this place? Hmmm, okay …’
It is not just parents who can give you misleading advice and influence your emotions regarding the house of your dreams — it can be your friends, too. Some people enjoy nothing more than going along with you and throwing in a good ‘tut tut’ and a cutting sarcastic comment here and there.
The key when dealing with meddlers is to trust your own opinions and thoughts. If you have researched all the elements, you will be fine.
Are you ready financially?
The ability of first homebuyers to afford their first home is always being reported on in the media — each generation claiming that it is harder for them to get on the property ladder than it was for the last generation. These observa...