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I Issue: August 2004
I Editor: Berry Everitt I |
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Your Area Specialist:
Chas Everitt International
sales agents have all the latest market information
regarding local property values at their fingertips
– and are committed to the highest standards of
personal service when it comes to selling your home.
In addition, the Chas Everitt International property
group offers you, the homeowner, the best possible exposure
for your property in both national and international
markets. So if you are thinking of selling your home,
call your nearest Chas Everitt International office
today for the name of your local area specialist - or
visit www.chaseveritt.com
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Every month the Property
Signpost Newsletter will be issued to all our
subscribers, filled with real estate information to
help you make an informed decision, whether you are
buying or selling a property.
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Contents
1. Welcome By Publisher
2. Check the Rate Before You Commit
3. Is It A "Kind
to Kids" Neighbourhood?
4. FSBO's Tricky For Buyers, Too
5. Keep Your Ears Open While
You Look
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1.
Welcome By Publisher
The interest rate cut announced
this month is excellent news for both homeowners and
buyers. Coming on top of last year's cuts, it makes
it even easier for owners to pay down their current
home loans and access some of the equity they have
in their properties to upgrade or buy a second property.
It will also, of course, make it easier for current
home seekers to finance their purchases.
As such, it is likely to give
the whole residential market more impetus, and help
to sustain values, which will benefit sellers. With
this in mind - and with the spring buying season just
around the corner, we're sure sellers won't mind that
the articles in this month's newsletter are all about
purchasing. And we've got some excellent advice to
share, whether it's an investment property you're
after or a new family home in a quiet neighbourhood.
Meanwhile, we do have one very
important thing to say to sellers: Please don't read
the interest rate cut as a signal to automatically
increase your asking price. If you do, you'll not
only put your chance of selling in jeopardy, but risk
losing out on the chance to make a great "buy" yourself.
And remember, whether you're new to the market or
a serial buyer, you can view the best properties available,
around the country, simply by visiting our website
www.chaseveritt.com
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2.
Check the Rate Before You Commit
If you're planning to buy a second property to rent
out as a holiday home or permanently, you should check
out the interest rate at which your lender will grant
a loan to finance the property before you commit to
the purchase. Many homeowners just assume that they
will be able to secure a loan for a second property
at the same interest rate that the bond on their residence
attracts.
After all, it is being granted to the same borrower.
But this is not necessarily the case. Even if the
second property is in an area that the lender considers
a "good risk", you may be quoted a higher rate than
on your existing bond. Alternatively, you may find
that your lender is only prepared to finance 75 or
80 percent of the purchase price, requiring you to
find a 20 to 25 percent deposit. And before you start
thinking you are being treated unfairly, you should
know that this is common practice for banks - the
thinking being that if a borrower runs into financial
difficulty, he is more likely to default on the loan
used to buy a rental property than on the loan used
to purchase the roof over his head. What is more,
the repayment of a bond used to purchase a rental
property may be heavily dependent on the owner actually
receiving rental income from that property.
In short, banks generally take the view that rental
property purchases are riskier, and that the higher
risk needs to be offset with higher interest rates,
or a lower loan to value ratio. Consequently, if you
want to negotiate the same interest rate as on the
loan for your residence, you will probably need to
convince the lender that you can easily afford the
repayments on the new property, in addition to your
current commitments.
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3.
Is It A "Kind to Kids" Neighbourhood?
One of the greatest concerns of families
with young children when househunting is to find an
area where the kids have a good chance of making friends
and will safely be able to visit each others' homes
and ride a bike to the local library or shops. But rapid
changes in urban areas, and business encroachment into
previously residential suburbs, means that there are
fewer and fewer areas where children are safe on the
streets.
Indeed, it may seem like the only place
to find a "kind to kids" environment now is in a secure,
gated community. Such estates are, however, often beyond
the financial reach of those with young families - while
others simply prefer to live in older suburbs with established
schools and community amenities. And there are steps
that parents can take to reassure themselves that the
new suburb they are moving into offers a good chance
of providing the environment they seek for their children.
First, they must visit the area they
plan to move into several times, and at different times
of the day and week. They need to be sure that the quiet
house over the road does not metamorphose into the local
watering hole on weekends, and that the corner cafe
does not become a raucous games arcade at night. Secondly,
they should consult locally based estate agents, who
should be able to offer sound advice on the advantages
and disadvantages of their area, and ask local schools
to arrange for them to meet and talk to some other Mums
and Dads who live in the area.
And finally, they should look for signs
that the area is really family friendly. These include
active youth groups, nursery schools and after-school
care centres, youngsters walking home from school, children
playing in a local park and young Mums pushing prams
to the local shops.
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4.
FSBO's Tricky For Buyers, Too
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Much has been said about the dangers
of for-sale-by-owner (FSBO) transactions for home
sellers - but there are also many dangers inherent
in such transactions for the buyers. A direct property
purchase, where there is no agent's commission involved,
may seem like a good idea to the buyer intent on getting
the most home for his money. But in an FSBO sale,
it is unlikely that the property will have been subjected
to open marketing, so the "attractive", commission-free
price may, in fact, be way out of line with current
selling price trends in the neighbourhood.
And this could make it difficult for
the buyer to realise any profit on resale for a very
long time. The only way that a price can be properly
tested is by putting the property on the market in
competition with similar homes in the same area, on
the same terms. And even when a direct sale appears
to make good sense, for example a sale to a close
relative or a sitting tenant, it is good practice
for the buyer to seek independent advice about the
value from an estate agent with a thorough knowledge
of the local market.
A commission or a fee paid to an agent
is a small price to pay for peace of mind - or to
avoid a family feud over the price Cousin John paid
for Great Aunt Mathilda's cottage.
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5. Keep Your Ears Open
While You Look
The visual appeal of
a house is almost invariably the overriding factor in
a sale. How often have you heard someone say: 'I knew
it was the house for me as I walked up the drive'? But,
without diminishing the important of appearance, it's
also important to let your ears have a say when you're
househunting. Noise from a nearby highway may appear
insignificant when you view the house on a Sunday, but
traffic may generate an intolerable dawn "chorus" that
is more like the Soviet Army Choir in full voice on
weekdays.
Buyers must thus be
aware of potential noise nuisance before they commit
to a firm offer. Check, for example, that the neighbour
who "works from home" is not actually a weekend mechanic,
or that the friendly-looking pizzeria down the road
is not a live-music venue after dark. They also need
to take into account the different noise tolerance levels
among members of a family.
Someone working permanent
nightshift will need quiet during the day, and new babies
and young children need quiet nights if their parents
are going to get any sleep. Remember, too, that noise
annoyance can build up over time, so that the once-pleasant
sound of children frolicking in a school playground
can become a daily trial after a few months - especially
if it is accompanied by the noise of cars coming and
going as parents drop off and fetch those children.
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