Biggest Challenges for Home Buyers?

My wife and I bought our first place at the end of 2019 after researching (and continuing to save) for a few years. We were thankful when we were able to buy somewhere and even more thankful that the process of buying a house was over.

Throughout the process I was struck by how biased everything was toward sellers and the real estate agents who represented them. Price guides were one of the most frustrating things because the sale price at auction was always higher than the price guide advertised, but on top of that were the hoops needed to jump through in order to even get information about a property. It felt like real estate agents held all the power.

Agents and sellers aside, we also found it tough to find properties that appealed to both my wife and I, and then to prioritise those inspections (which were often overlapping). Many times we'd return from the inspection having found a huge dealbreaker that was not disclosed in the listing, and feel that we'd wasted our time.

All up it feels like the system is broken on purpose, and I'm exploring ways to make life easier for buyers, possibly through some kind of online service, especially as the property market heats up again.

For anyone who is looking at buying a house right now (or who has bought a house recently), what are some of the biggest challenges you've faced throughout the process?

Also would love to hear any helpful solutions you've found in the comments. Thanks!

Poll Options

  • 2
    Figuring out how much I can afford
  • 57
    Finding house listings that appeal to me
  • 16
    Finding house listings that appeal to me AND my partner/family
  • 14
    Getting accurate information about a property
  • 298
    Price discrepancies between listings and final sale price at auction
  • 7
    Having to provide my phone number, email and post code at every inspection
  • 13
    Dealing with the subsequent calls & emails from inspections
  • 17
    Getting building/pest/strata inspections
  • 6
    Prioritising inspections on the weekend

Comments

            • @johnno07: Real estate is an investment instrument. Most owners normally make a fair amount of gain without being subject to CGT.

              • +1

                @whooah1979: You keep saying things at me that aren't actually relevant to my point.

                • @johnno07: You want the loan process to easier so that borrowers can get a bigger debt while my posts advocate that the process should more difficult.

                  • +1

                    @whooah1979:

                    You want the loan process to easier so that borrowers can get a bigger debt

                    This is not what I said - don't put words in my mouth. I want a process to be easier for the sake of a process being easier.

                    my posts advocate that the process should more difficult.

                    You don't make people financially literate by making things more complicated. This is actually the opposite of what you want to do. I think Australians are largely absolutely shocking with their money. Like you say - obtaining credit is (relatively) easy. Want a credit card to buy a TV because you're living paycheck to paycheck, and the TV is worth 5 paychecks? Sure! It probably should be more difficult - but just adding more paperwork is not the way to do that. Regulated responsible lending helps - but debtors still worm their way through the cracks. Financial literacy and responsibility needs more focus at a younger age. Why is this not something we were taught in school?

                    Social media has also exacerbated the problem with FOMO-driven spending. Random insta-influencer just bought a Mustang, a Facebook friend buys an inner-city McMansion. There is no disclaimer that these people are, more likely than not, in debt up to their eyeballs.

                    These are a few of the things I see to be problems (at least related to money) in Aussie society. But none of them are "it's too easy to organise and print mortgage paperwork".

                    • @johnno07: The $$$ value between a property and a TV is quite large, hence why it is easier to obtain credit for one, hell, obtaining a credit card is somewhat similar to obtaining a car on finance.

                      The process is difficult because of the laws it has to abide by. That is why you have solicitors and brokers that make the process easier for you.

                      You cannot expect school to teach people everything about life. Financial competence needs to come from the parents, but more so, from common sense.

                      Social media? Common sense should prevail and they should know that not everything is what it seems to be. If they are easily fooled then so be it, let them fall into financial debt by their own mistakes.

                      People need to look into themselves first before blaming others.

                      • @pogichinoy:

                        The process is difficult because of the laws it has to abide by. That is why you have solicitors and brokers that make the process easier for you.

                        I have an appreciation for regulation-inspired beauracracy. My point is not that it just was a lot of effort to get a loan, but there were masses of double handling due to process inefficiency, and even multi-week-delays because printing stuff was hard (we nearly weren't able to settle on the date due to this).

                        You cannot expect school to teach people everything about life. Financial competence needs to come from the parents, but more so, from common sense.

                        Sure, in an ideal world parents know everything, pass it perfectly down to their and schools become redundant. The fact of the the matter is that financial illiteracy is absolutely rife - the parents are the people that don't know how to handle their money. As a society we need to look into deficiencies in our knowledge and work to rectify them. I'm not sure what you mean by saying it needs to come "from common sense". Common sense subsists - it is a result of learning and experience. And financial literacy is clearly not common sense as it's a problem.

                        People need to look into themselves first before blaming others.

                        I'm not blaming anyone. My point is that the people that I'm referring to don't even know they have a problem.

                        • -1

                          @johnno07:

                          I have an appreciation for regulation-inspired beauracracy. My point is not that it just was a lot of effort to get a loan, but there were masses of double handling due to process inefficiency, and even multi-week-delays because printing stuff was hard (we nearly weren't able to settle on the date due to this).

                          Agree there is always room for improvement. But it is what it is for now.

                          I went thru the buying process recently. I went thru a broker and it made things so much simpler. All I needed to do was meet with the broker twice and the solicitor once. Easy as.

                          Sure, in an ideal world parents know everything, pass it perfectly down to their and schools become redundant. The fact of the the matter is that financial illiteracy is absolutely rife - the parents are the people that don't know how to handle their money. As a society we need to look into deficiencies in our knowledge and work to rectify them. I'm not sure what you mean by saying it needs to come "from common sense". Common sense subsists - it is a result of learning and experience. And financial literacy is clearly not common sense as it's a problem.

                          Even if your parents don't know everything, a lot of it is from common sense. e.g. don't spend more than you earn. Surely people are capable of seeking information out there which for most of the part is free.

                          Schools aren't redundant if that happens. Family values or life values cannot always be taught at schools. Citizens should not overly rely on their governments for direction.

                          I mentioned common sense in the context of knowing how money works, how credit works, how debt works. It isn't rocket science, nor people should be silly enough to believe money is given to you for free. Financial literacy comes from experience, common sense, and information.

                          I'm not blaming anyone. My point is that the people that I'm referring to don't even know they have a problem.

                          Then it is due to their own downfall.

      • Anything to pump the Australian economy, which is heavily reliant on building houses (which IMO is funny).

  • Lost $200k when transferring the deposit …..https://www.ozbargain.com.au/node/608152

  • What would you make easier?

    When someone sells a house they enlist a real estate agent to get the best price out of it. The strategy is pretty simple:

    Advertise to get as many people in to have a look as possible so there is a sense of competition. That means put a 10% lower price and highlight the best features, hiding the worst. Someone will like it and put in a strong offer to ensure they get it.

    Rinse repeat.

    A real estate agent is working for the seller, not the buyer.

  • +2

    All those who keep buying property for “investment purposes”, leave something for the poor first home buyers too you greedy bastards. Stop hogging up all the property.

    • “No, work harder and earn more then buy a place and stop complaining you lazy entitled socialist.” - Ozbargain property investor buying his 9th investment property.

      Just wait one day all residential property will be owned by 10% of all Australians with the way this country is going.

  • Don't think the poll options really cover reality of the issues.

    I'd say biggest issues during covid is lenders making you jump through 10X the requirements even when you have a reasonable deposit and very stable job with good income as everyone else was trying to refinance or was out of work.
    Up front costs quickly escalate, dealing with REAs has been the most unpleasant thing as they don't really care knowing that whatever you're looking at will be sold if you buy it or not due to demand, especially when they seem to make everything they sell like the last good property out there that you can't miss out on.
    The fact that none of the REAs were interested in any negotiation and were wanting X price only (or higher) and nothing else which we felt in a few occasions was well above what it's worth and also what the bank would lend or value the bank would place on it.
    No finance clauses in some contracts that were non-neg and also not disclosed that it was no finance.

    Knowing I'm going to have to live in some far flung suburb, far away from the area i'm in as anything closer is just a run-down POS that is overpriced and not somewhere I want to be trapped with the debt of for many years to come?
    Value for money in Australia for property \ housing is very poor and quite depressing.
    Throw in that several people I know have had so many issues either with off plan or property a few years old with defects really doesn't make the whole process that appealing if I'm honest.
    At this point I think i'd rather live a shorter life and rent, travel, do as I please and not have to worry about the "where are you going to live when you're old" or those sorts of questions, cant take money with you so better to burn thru it and then exit when it works for you over living in the burbs with a 30 year debt for something totally average.

    • +1

      The fact that none of the REAs were interested in any negotiation and were wanting X price only (or higher) and nothing else which we felt in a few occasions was well above what it's worth and also what the bank would lend or value the bank would place on it.

      Firstly, it doesn't matter what you think the value is, it matters what the market thinks the value is. This will determine how willing they are to negotiate. Considering you also agree they will sell the house anyway due to demand, I think you proved that point too.

      Regarding the banks valueation, are they not trying to determine market value as well. Thier valuation may also take into consideration expected fluctuation for safety. I overheard a REA talking to a first home buyer today and he claimed that 90% of the time the bank will agree with the sale price for valuation automatically. I think that's beleivable if a bit risky (like in the US when the GFC hit. There were a lot of people who owed more than the house was now worth).

    • +7

      Real estate agents are not legally required to be pleasant with you - sure it is in their interest to build a positive relationship with you because you might engage with them in the sales/purchase in the future - but their primary obligation is that of an agency relationship between them and the seller. They act for the seller because you feel that they weren't interested in negotiation, the truth is the seller is probably isn't interested and has probably informed the agent to refuse anything under $x (especially when it is a hot market like it currently is)

      Most agencies charge a flat fee commission on the sale price. So let's say it is a 2% commission. If they sell a house @$1m, they get $20,000. @$1.05m, commission is $21,000, @1.1m they get $22,000 and so on.

      IF I was an agent, whilst my intention is to get the best price for the vendor, my practical goal is to sell the property as quick as possible because the moment I sell, I get 2% (and had to deal with less work). Imagine you could sell for $1m in the first week or $1.1m in the fourth week. which would you choose as an agent? which would you choose as the seller?

      That extra three weeks meant that the sales team had to go have an open house six more times, contact xx people a few days later to see what their thoughts are, field more enquiries and so on …. for an extra $2,000. To the seller $100k more is great.

      Would you take $20k for the week or $22k for four weeks of work?

      (Yes I am excluding the admin work that happened pre-listing and post-sale because that would be fixed time).

  • Throughout the process I was struck by how biased everything was toward sellers and the real estate agents who represented them.

    Well, put yourself in the sellers shoes. When you go to sell your house, you're not going to employ someone that's working to get a good price for the buyer, are you?

  • Stamp duty

  • Biggest issue is:

    "Price discrepancies between listings and final sale price at auction"

    A. Isn't post sale data available for free? I know Domain publishes the Auction Results once a week. Not sure if you can easily get historical data.

    B. No one has done analysis or have those existing websites which shows Price Guide and Actual?

    • A. No. RPData has the data you need but there is a cost involved.
      B. No, because no one would do it for free.

  • +1

    I would say competing with so many buyers out there

  • Differences between price estimates and sale prices at auctions I can understand. Strictly speaking, this can actually be driven by the market. “What really grinds my gears” is when properties pass in for significantly less than the agents price guide.

    Situations when an agent says they expect $x and the reserve price is several hundred thousand more than this should be outlawed!

    • You can report that.

      • Technically yes, but most agents will say that they didn’t expect it to go so high because they weren’t provided the reserve price until the day of the auction.

        • Victoria actually has a range or percentage in which it has to fall into. If the result exceeds this, then the RE agent can potentially be fined.

          Report it, and help make them more accountable.

  • I bought a house before Christmas in a regional area. The discrepancy between list price and sale price isn't really an issue here - it's rare for something to sell in excess of its list price, and auctions rarely occur. The good properties aren't lasting long though, and there's been plenty of properties that have been on the market for months that are suddenly being snapped up. I've heard a few people say that overall, it's gone from a buyer's market to a seller's market.

    My biggest complaint, which I noticed from when I purchased my first house and my current house, is the discrepancy between a listing and the actual house. We were looking at some pretty reasonable houses (generally either <15 yo brick, or renovated Queenslanders) and I'm generally pretty cynical when I look at listings online, however I had plenty of complaints with the houses we actually inspected: basic neighbourhood, obvious water damage, smaller than anticipated, dark and gloomy, poor workmanship, etc. Even had a 5 year old house under contract that didn't have council approval…

    • smaller than anticipated

      Most real estate photographers use wide lens on their cameras on purpose to give that fake feeling of a “bigger” space.

      Quite scummy to be honest, but again, it is their job to make the place look as good as possible.

      Here’s an example.

  • +1

    Everyone knows that you budget at least 10% above the top of the price range. Then your problem is solved.

  • +1

    Its mostly the foreign buyers driving up the markets, theyll pay well above market value and sellers know this

    • Foreign ownership is only ~10% and that was pre Rona. Post Rona may be be lower.

  • Buy during the pandemic. Problem solves itself.

  • +1

    Everyone hates the fact that auctions prices are higher than price guides. It sucks, but it's a ploy of course. However the single thing that allows you to manage that is research and know the area and type of property you are after. This means checking weekly, beating the pavement and seeing them for at least a few weeks. Theres just no substitute for that, and there never will be one, because everyone wants to grab a bargain. If not, pay the extra 50 to 100k or 5 to 10% up front to the seller, because I bet that everyone complaining about auction prices is also in the business of lowballing on their pre auction offers

    • +1

      This ^

      I was searching for property for 2.5 years in my suburb. After about 1 year of being shocked by how much extra properties were selling for I had enough knowledge that I could independently value properties in the suburb and would laugh at the agent price guide half the time as it was hundreds of thousands off the market.

      Some really sad moments too, particularly when an unrenovated 4 bedroom home on a double block was advertised at the 2 bedroom single block price. I opened the bidding at 30% above the price guide and still missed out when it sold for 43% higher. The look on the face of around a dozen families who'd walked through the place with their kids was terrible.

      Agents are scum for deceiving people like this.

  • +1

    Slightly off topic, but for anyone who wants to get a price evaluation using CoreLogic.

    Anyone that holds a NAB homeloan (and uses the app) can click the home loan account > Estimate my property equity > Type in any address and it will spit out a range pricing based off the CoreLogic data.

  • I think the most frustrating thing about buying a first home has been older (boomer) friends and family telling me its not as hard as I was making it.

    I was looking in Sydney, and my in-laws in Brisbane were advising me to offer 20% below asking (to be able to negotiate and land at around 10% below asking) and they kept getting surprised that homes were selling 30-50% over asking.

    Or family telling us: "don't forget, you're the buyer, you've got the power!" and then you turn up at open homes with 80 other parties and the property already has 7 offers (over asking) before you even enter the door.

    Or the absolute worst…. being told: "by your age, I already paid off my house…. If only you didn't spend all your money on XYZ…" or "the problem with your generation is that you want your forever house straight away" (coming from a boomer who is still living in the 5 bedroom half acre they bought in the 70's).

    • Didn't a prime minister say the answer is to make more money?