That Home Loan Hub
Welcome to That Home Loan Hub, your ultimate guide to mastering the world of home loans and property. I'm Zebunisso Alimova, here to simplify the complexities of real estate and provide you with expert insights and the latest trends.
Whether you're a first-time homebuyer, an experienced investor, or simply curious about the property market, this podcast is for you. Join me each week as we unlock the secrets to property success and help you make informed decisions. Let's dive into the world of property together!
That Home Loan Hub
The $2,000 House-Hunting Mistake You're About to Make
Ever wondered why mortgage advisers caution against making cash offers? This candid conversation pulls back the curtain on a common property market misconception that can leave first-home buyers thousands of dollars out of pocket before they've even secured a property.
We dive deep into what constitutes a "cash offer" - not literally paying cash, but making an unconditional offer with no contingencies. For first-home buyers with deposits under 20%, this approach carries significant hidden costs. Between registered valuations (up to $1,500) and legal due diligence fees, you could easily spend $2,000 before knowing if your offer will be accepted. Multiply that across several rejected offers, and you're looking at a substantial dent in your hard-saved deposit.
But the risks extend beyond financial considerations. We explore the emotional investment that comes with property hunting - how buyers envision their future lives in potential homes, from raising children to planting gardens. This emotional attachment makes rejection even more painful when an unconditional offer isn't accepted. As we explain, our caution against cash offers isn't about being difficult - it's about protecting both your wallet and your heart during what's already a stressful journey.
Knowledge truly is power in the property market. Whether you're a first-time buyer or looking to upgrade, understanding the implications of different offer strategies can save you thousands and prevent unnecessary heartache. Want more insights? We're running a free webinar this Thursday packed with essential tips and tricks. Comment "webinar" for your invitation link and take the next step toward making informed property decisions that work for your unique situation.
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Hello and welcome to that home loan podcast. Hey, kunj Kia ora, how are you? I'm good. How was the weekend? The weekend was awesome. Happy Mother's Day. Yes, mother's Day.
Speaker 2:I hope you got treated well. I did Breakfast and dinner cooked for me, so that was lovely. That's awesome, you wish.
Speaker 1:Mother's Day was every day, right. Yes, that's awesome. Yeah, my kids showered me with chocolate and then they asked to eat that chocolate.
Speaker 2:Normal, normal story of the household I think Mother's Day is about us, but then about the kids as well.
Speaker 1:Well, look, they're the ones that made us the mothers, Exactly so you know sort of got a give and take, so Conch day.
Speaker 2:Well, I thought we'd have a chat about that cash, making a cash offer, like just revisiting it. Why is that? Well, over the weekend had a couple of questions that popped up and asking why not a cash offer, like what's wrong with a cash offer, sort of thing. So I thought we'd just dig in a little deeper into the why not of cash offers.
Speaker 1:Why not of cash offers. All right so just to recap what is a cash offer. Let's start with that for those that just tuned in and haven't listened to the episode we did about cash offers. So cash offer is basically you're going in, signing the sales and purchase agreement with the agent, with the lawyer, and putting no conditions down. So basically, if the vendor agrees to that sales and purchase agreement, you've bought a house. Yeah, no way out.
Speaker 2:No way out. You're pretty much locked in Cash offer, cash offer.
Speaker 1:Yeah, all right. So what was the first question?
Speaker 2:I just thought we'd break it down a wee bit, because we do have a lot of first-home buyers. So when you're a first-home buyer you get a smaller deposit of less than 20%. Most lenders or banks require you to have a registered valuation done on the property because of your low deposit, have a registered valuation done on the property because of your low deposit. So clients are having or people are having to actually pay early for a registered valuation. So a registered valuation could cost you anywhere between $950 to, I don't know, $1,500 depending on the If you add an urgency fee.
Speaker 2:Correct or depending on the size of house as well. So already you're putting up front almost $1,500 and then you go and put in your offer. Or on top of that, your lawyer has to do all the checks and everything as well. So they check your title and things for you as well and lawyers charge for that service, that fee, and we call that due diligence Correct.
Speaker 2:So they do all that side. So you add the lawyer's fee, you add the registered valuation and before you know it you're already at $2,000 sort of thing. But you haven't actually won this house. So you go $2,000, you put in a cash offer, unconditional payment, and then what if you don't win?
Speaker 1:You've just wasted $2,000 plus out of your first home buyer budget that you would have had aside for your deposit et cetera, and if you repeat this scenario at least two or three times, it gets very costly, very fast.
Speaker 2:Because generally you know nine times out of ten you're not going to get that first offer.
Speaker 1:Yeah. So what we're trying to make people understand. We're not trying to be mean and say no, no, no, hold on, sir. You cannot put a cash buyer's offer. You can, if you want to, absolutely can, and if you've got unlimited resources of going out and getting valuations done and lawyers, et cetera, you can go for it.
Speaker 2:But what we're trying to do is have your back. We're trying to protect you, yeah, yeah. So we're trying to save you money as well. Because you're a first-time buyer, you've got to set aside around $5,000. If you really set that aside, but you're paying for something earlier than you should, then and you know I always look at it from a relationship point of view.
Speaker 1:It's almost like when you pay for those things right, when you pay for registered valuation and for lawyer's fee, you get invested.
Speaker 2:It's like in any new relationship.
Speaker 1:You get invested, You're invested Before you're too invested and before you suffer that heartbreak of your offer getting declined.
Speaker 2:I love the analogy.
Speaker 1:You love my analogies. It all relates back to heartbreak. But before your heart gets broken, we're trying to protect your heart because people do fall in love with properties, especially our first-home buyers. They do. They see themselves in that property. They see their families grow there. They see their babies being born there. They see already the trees they would have planted. You know what color is the roof, what color is the room? What color is the roof, what color is the room, what kitchen is going to look like? And before you get too invested, we're trying to pull you back and put that bubble wrap around your heart so you don't get that broken yeah.
Speaker 2:So yeah, I just thought we'd just break that down. So yeah, we're trying to save you money, people.
Speaker 1:Yeah, we're trying to save you money. We're trying to save you the emotional tool because it's not just the monetary, you know. We're trying to save you the emotional toll because it's not just the monetary, you know, expense that people incur, it's also the emotional rollercoaster and it's so stressful as well yeah, buying a home.
Speaker 2:So we're here to make it easy, and by doing that, as you know, giving you the correct advice, guidance in terms of you know, don't just jump in.
Speaker 1:I always I'm scared of this phrase, but at the same time I'm like, no, I actually have reason to say this phrase, I promise you, if you listen to our advice, to my advice, Yours, our tips and tricks.
Speaker 1:If you listen, I promise you, you will get into your first home into your second home, et cetera, but in this case, you know when we're addressing it for the first time. I promise you, if you follow our steps, if you listen to our advice, you know it will happen. Yeah, and you know what? Actually, because of this, I'm running a webinar this Thursday and I'm inviting anyone to come in and listen to the tips and tricks. We're going to cover all sorts of different things through a one-hour webinar and it's free. Yes, so join people, free webinar. Comment webinar if you want us to send you a link. So I just can't address this enough that knowledge is power and this is what we're trying to do.
Speaker 1:Right, we're trying to educate them. So, go back to your friends and tell them that they can be a cash buyer if they've got a limited amount of money to spend.
Speaker 2:If they're happy to spend that up front, then of course you're going to be a cash buyer. But just be aware that you may not get that house, your offer may not be accepted and if you're prepared to lose those, lose those funds, then yeah, and I've seen.
Speaker 1:I've seen things go wrong for people that have been cash buyers. Yes, and we have. We have a few times yeah, so we want to make sure that people don't repeat someone else's mistakes. Absolutely awesome. Well, thank you for coming along and sharing this important topic across thank you bye.
