“I think the biggest mistake for first-home buyers is they are gathering their information; it takes them so long to get their heads around it. I understand it, because it’s daunting having such a big mortgage and these days you’re spending $500,000 at least just to get into some of these suburbs.” In today’s show we talk with Chris Gray, the host of Sky TV’s show Your Property Empire about first-home buyers.
Kevin: It’s a shame, but when it comes to mistakes, we find that there’s some uniformity especially when it comes to first-home buyers. I guess it’s a very, very nervous time. A man who is used to talking to them and helping them through this process is Chris Gray. Chris is a buyer’s agent. He works at Your Property Empire and is also the host of Sky TV’s show of the same name, Your Property Empire, Friday nights on Sky TV at 6:30.
Chris, thanks for your time.
Chris: My pleasure.
Kevin: How do you go about helping first-home buyers, and what do you find are the most common mistakes they make?
Chris: I think the biggest mistake for first-home buyers is they are gathering their information; it takes them so long to get their heads around it. I understand it, because it’s daunting having such a big mortgage and these days you’re spending $500,000 at least just to get into some of these suburbs.
They go around talking to their friends and family, taxi drivers and God knows who else, and all of these people aren’t necessarily qualified to give them any reasoned advice, but they get so many differing messages that they end up doing nothing.
Most of Australia is in the rising market at the moment, apart from certain pockets, and the big thing is you just have to get in. I’m definitely a fan of learning stuff, getting education, but you’re never going to know everything, so I really try to push people to get some knowledge but then just get in the market.
Kevin: It’s interesting when you talk about taking advice from family and friends. My experience is that normally family will err on the side of being super-conservative and think it’s their role to actually talk you out of it.
Chris: They’re not doing it for malice; they’re just trying to protect you. They don’t want you to get ripped off. They don’t want you to make a mistake. But mistakes in property over time – even if you overpay for a property or it falls down almost and has some rising damp or something – in time, it’s generally going to be okay.
I understand where they’re coming from, but people just need some encouragement and a kick up the backside at times.
Kevin: Indeed they do. Other mistakes, mate? Anything else you’ve come across?
Chris: Again, one of the big things that I find is that they spend so much time trying to research a mortgage. Obviously it’s a big part of the cost of the property, and it is essential to try and get a good rate and there are lots of differences between the banks, but most of the time, a mortgage broker can do this for you.
What they’re trying to do is save a few hundred dollars or a few thousand dollars, but then they go out and just buy a property because they get fed up with looking because it’s boring after a while, and it costs them tens and tens of thousands because they either buy at the wrong price or they buy the wrong type of property.
I’m an advocate of almost go to any mortgage broker – especially if you’re an employee, there’s not a lot of difference between most of the banks – and then spend 90% of your time trying to find the right property at the right price and doing the research on what it’s worth rather than concentrating on those hundreds and thousands of dollars.
Kevin: I love what you say there. Those mortgage brokers can also become quite good consultants in helping you as well, can’t they?
Chris: It’s good. While I am a fan of going to the banks at some point, a lot of the time I’m preferring to go to mortgage brokers, because at a classic bank, you’ll get a 20-year-old telling you what to do. They’ll say, “Right, buy a home and get a principal-and-interest mortgage and pay it off,” whereas mortgage brokers are more entrepreneurial – they deal with investors all the time.
Look, it’s fair enough to buy a home and pay principal and interest, but quite often, it’s not the ideal home so they’ll end up renting it as an investment later on and going interest-only. I worked out my figures years ago and the repayments are the same for $500,000 principal and interest versus $600,000 interest only.
I would much rather buy a $600,000 property now that gets me a better suburb and a better property – even though I’m not paying it off – than buying a $500,000 property and paying it off, and you’re not really paying much money off it anyway.
Kevin: As a buyer’s agent, how often have you seen young people come to you with a huge shopping list and then miss out on what would be their classic property because the list is just too long?
Chris: That’s what I was going to get into. I think the next biggest mistake is that they buy something beautiful – they love it; they can show it off to their mates – whereas typically, as a buyer’s agent, I buy ugly properties. But I might buy for the same price, something a kilometer closer to the beach that’s ugly, but I know I can change that. Whereas the beautiful property that is one or two kilometers away, there is nothing you can do to improve it and you can’t physically move it.
It’s trying to get away from the cosmetic, beautiful things and look to see “Has it got parking, has it got double bedrooms, is it small block, has it got low maintenance, and what is the physical location?” rather than those other things that really don’t make that much difference.
Kevin: Wow, there’s a wealth of experience coming through there, Chris. I appreciate you sharing that with us, too. Chris, of course, is from Your Property Empire, also on Sky TV Friday nights 6:30, Your Property Empire.
Chris, thanks so much for your time.
Chris: Thanks for having me on.