Buying your first home is an exciting endeavor, but it can initially be intimidating—after all, where do you start? What’s the process? It’s easy to get lost in real estate terminologies and confusing fine print, which is why we asked licensed real estate consultant, appraiser, broker, and accredited lecturer Prof. Eden Dayrit, REC REA REB, to give a quick guide on how much you should be saving, who to talk to, and what to look out for when buying your first property.
Real Living: Many fresh graduates and young and upcoming professionals are interested in investing in property, but worry that they can’t afford it. How much should one have at the very least to do so? What loans and financial schemes are safe and available?
Prof. Eden Dayrit, REC REA REB: Affording a home is two-fold: (1) Sufficient Downpayment, and (2) Manageable Amortization. First-time home buyers should have savings specifically allotted for real estate purchase, amounting to at least 30% value of the property they wish to acquire. Save at least 1-1.5M for a 5M worth condo unit. If you haven't yet, start saving. Maximum monthly amortization usually allowed by any financing institution is about 30-40% of your combined household income. If husband and wife earn 100k/month, expect 30-40k as maximum monthly amortization. A good real estate broker can help you compute the value of real estate you can afford based on these figures.
For those who have saved enough to afford purchasing real estate in full cash (congratulations!), a good real estate broker will help you get the best deal through proper negotiation. Remember, a broker's professional fee is usually paid by the seller, therefore, it is to your best interest to seek representation. Caveat: some brokerages may charge a fixed fee (or %fee) for buyer's representation (Even with fees, I'd argue that this is still part of a good investment) Best to ask first!
Real Living: What are the first three things a person must do when buying property?
Prof. Eden: (1) Get pre-approved by a bank to determine your capacity to pay and make adjustments if your dream home is above your pay grade. This will save you a lot of time and guesswork in determining and checking only homes you can afford.
(2) Make a list of non-negotiables. This includes most ideal location, number of bedrooms/bathrooms, a special area for you for your most loved hobby, or a home feature that has a sentimental value to you (you grew up in a home with a nice balcony facing the gate, bringing you fond memories). Now, shorten this list to top 2 only. This exercise will help you identify what you need in a home that will serve as your criteria in narrowing down listings. This will also give your broker an idea on that 1 non-negotiable thing you want that should be there in your future home, to be able to help you make your dream a reality.
(3) Take to heart that purchasing a home is an emotional process that will bring out the best and worst in you. A real estate broker can help take out the emotions in the process and help you make good objective decisions. It is in your best interest to have a person handling the dealings with sellers, developers and other brokers to save you from unnecessary heartaches and headaches. Find someone you're comfortable with.
Real Living: What are items often printed on the fine print that buyers should take note of and prepare for?
Prof. Eden: Make sure you read and understand all contracts entirely. Ask a lot of questions. Have a professional review all documents for you. Check fine print for penalties should you default on payments, additional charges, terms and conditions of agreement etc.
Real Living: Would you know of any common property scams to be wary of?
Prof. Eden: From experience, real estate scams can be easily spotted by conducting proper due diligence. There are a lot of articles and videos online that can teach you how to do due diligence. Scams range from ownership issues, to unauthorized selling, to fake documents. As a general rule, if you encounter any hesitation on the seller in providing documents, or answering simple questions pertaining to the property, best to stay away. Still the best advice to keep yourself protected from scams is by working with licensed professionals.
Real Living: Would you have any tips for first time buyers?
Prof. Eden: Buying a home doesn't only require financial investment, but also investing a piece of yourself in the process. Be like a sponge, absorbing the know-how while learning the process. Sway with the wind like bamboo, adjusting your beliefs and finances along the way, without breaking your being. Find a trustworthy partner who will lead you on your quest to buy your dream home through his/her expertise and client-focused care. Lastly, enjoy the process. Recognize and celebrate your efforts because every step is a milestone. I promise you'll learn more a lot about yourself than with any other activity.
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