First Time Home Buyers – Guide to buying your first home (Part 3)


Searching for and buying your first home is an extremely exciting time. However, if you are unsure of where to start or what to expect during the process, it can also be a very daunting time. 

It is essential you understand the home buying process and real estate terminology (See our article on Key Terms and Jargon explained). According to, with property prices high and rising in many parts of Melbourne and Regional Victoria, buying a home, even a modest home, can be a very expensive exercise. It is therefore imperative, to get your purchase right. 

We have put this guide together to answer the most common questions we hear from clients. In last week’s edition, we focused on home loans and delved into how to find the right property (see First Time Home Buyers – Guide to buying your first home Part 2. Click Here)

This week we’ll provide a summary of what to look for during an open home inspection, the costs of buying a property and what to expect at settlement.  Again, it’s important to remember your first home is probably the most important home you’ll buy, as it will set you on your property journey. So, let’s delve into it. 

What to look for during a home inspection?

As we unpacked last week, once you find the right home or homes, it is time to thoroughly inspect it – both inside and out. When inside the property, check the condition of the interior and exterior. Has the property been well-maintained by the current owner, or tenants? Are there any visible cracks inside – on the ceilings or walls? Or even any cracks on the external brickwork?  As you walk through the home, does the floor feel even underfoot? Are external gutters intact? Can you see any water damage? What is the condition of the roof tiles?

Ask the agent for permission, but also take photos or short videos so you can review in detail later.

If the property requires any work prior to moving in, make sure you factor these costs into your overall budget.  It is important to consider obtaining a professional building and pest inspection. While this will add to your costs, it is vital that you find out about any hidden surprises like damp, termites, shifting foundations, or faulty wiring and plumbing.

What are the costs of buying a property?

Before signing a contract of sale, you’ll first need to understand the costs involved in buying a property, as some of these can be significant.  

Stamp Duty

This cost is a charge that is applied by State Governments to the sale of residential property. The amount will differ by State. Aside from the initial deposit, stamp duty is one of the largest costs you will face when buying a property.

Stamp duty is usually calculated based on the price of the home purchased, but the rate also depends on several factors, which are:

1. Whether you are purchasing vacant land or a brand-new home.

2. If you’re a first home buyer.

3. If you’re buying under a nominated price threshold, for example, under $1,000,000.

4. If you are using the home as your main place of residence.

It can be complicated to work out stamp duty on your own. Consult an online calculator or speak with an experienced Mortgage Broker to help determine the cost. 

Other “at-purchase” costs

In addition to the deposit and stamp duty, there are other costs to consider when buying property. These are:

1. Application or establishment fees for your home loan.

2. Legal and conveyancing fees.

4. A property valuation report.

Individually, these costs may not be significant, but they can add up over time; especially if you are considering multiple properties.

Ongoing costs

Congratulations! Once you’ve settled and moved into the property, there will be regular ongoing costs you will need to consider too. It’s important to know these up-front, as this can impact what type of property you choose to buy. 

These costs include council rates, utilities (water, electricity, gas), building insurance, and potentially body corporate fees (if you are purchasing within an apartment complex).

Finally, if you are purchasing a property which is further from work, friends or family, be sure to consider the additional transport and petrol cost too.

Private Sale – how to submit an offer?

When you’ve finally identified your dream home, it’s time to submit an offer! When buying property, there are two types of offers you can make: conditional and unconditional. 

A conditional offer is one that is subject to one or more conditions. A condition may be “subject to finance” or “subject to a building inspection and pest report”.  Once the offer is accepted, and both parties agree to the sales price, you will sign the final contract of sale. This is also when the deposit is paid to the vendor.  Under a private sale, the contract of sale will be subject to a cooling off period – the length and conditions will vary by State. 

Submitting conditional or unconditional offers is more common for private sales, however even when a property is scheduled for auction, you can speak with the agent and submit an offer earlier – as long as it’s prior to auction day. However, the vendor may already have decided to go to auction, and would need a significant offer to sway them to sell early. 

Remember, once you pay a deposit on a property, you have a financial interest in that property. It is recommended to then arrange building insurance on the home. In fact, some banks will request a certificate of insurance from you, so it is best to get this completed early.

Buying at auction

Buying a property via an auction is an exciting and fast-paced experience. If you’ve never been to an auction before, ensure you attend a few to get an understanding of how the process works. Remember, sales by auction are unconditional. So be sure your finances are in order and your deposit is ready to go. 

Ensure you know what deposit you will need, because if your bidding is successful, you will be required to pay the deposit on the day.  Decide on a strict price limit and don’t over spend. It is wise to have an odd-number as your limit. For example, you may decide prior to auction that $841,800 will be your limit. You may find other bidders would stop at a more natural number, such as $840,000. 

During the auction, if you can, present bids in larger increments to knock out those who cannot afford to pay more. Often the best tactic is steady, firm and unemotional bidding. Set your limits and stick to it. If the reserve price set by the vendor is not reached, there is an advantage in being the highest bidder, as you will have the first right of negotiation.

The winning bidder will then have to pay a deposit on the spot, usually by bank transfer. The contract will detail the deposit required, but it’s usually 10% of the purchase price.

What does ‘exchange of contracts’ mean?

When an offer is accepted by the vendor, or a property is bought at auction, the buyer and vendor will need to sign a copy of the contract and keep one copy each. This process is known as contract exchange. When a property is bought at auction, this ‘exchange’ process occurs on the day immediately after purchase. The buyer and vendor agree settlement terms (30, 60, or 90 days usually), and the buyer will need to pay the deposit at the time contracts are exchanged.

What is settlement and when does it occur?

Settlement is when a property’s legal ownership is transferred from the vendor to the buyer. Once a property is ‘settled’, the buyer is able to move into the property.  Settlement is managed by the buyer’s and vendor’s solicitors or conveyancers.  

On settlement day, solicitors will arrange the transfer of the balance of the purchase price from the buyer’s bank account into a trust account, after which it is paid to the vendor. Once the payment is confirmed, the title of the property is transferred into the buyer’s name.

Always seek advice from a trusted professional.

Purchasing and investing in real estate is exciting and when done well, can significantly transform your life.  Your local One Agency specialist, lives and breathes real estate in your area and has insights into exactly what is happening in your community.  

Now is a great time to get started on your property journey, or continue climbing the property ladder, as interest rates are at an all-time low. Our agency is also seeing high-quality family-oriented supply begin to come onto the market, and this is set to continue as we progress summer.

To learn more about the benefits of real estate investing and what prices may do long-term, please contact us at One Agency.  With One Agency being one of Mildura’s most trusted real estate agencies, we are well placed to provide you with our view of the current market based on our local experience. We’ll thoroughly guide you through the process and help you take advantage of this opportune time in the property market.

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