The 5 Key Life Changes Of Property

Posted on 27/05/2019  

Planning is crucial in all property-buying decisions but many consumers make mistakes by failing to think ahead.

For typical Australians there are five major life changes that involve buying and/or selling property and it’s important to apply planning to each stage. Failure to do so can cost time and money.

The life stages include buying a first home, up-sizing later and eventually down-sizing.

Award-winning Property Mavens buyers’ agent and best-selling author Miriam Sandkuhler says: “There’s complexity in each step along the way and it’s important to understand the processes - or to work with experts who do.

“You don’t want to be swapping homes every five years as your needs change, simply because you haven’t given it enough thought in the beginning.”

According to recent research by Roy Morgan, 40% of households haven’t changed homes in over a decade and almost 60% haven’t moved in over five years.

But when it comes time to move because of significant life changes, it’s crucial to have a coherent plan based on an understanding of the processes involved. Usually it will involve selling one property and buying another, which creates myriad complexities including timing issues.

“There are advantages in engaging a property advocate early to assist with both sides of the  transition,” Sandkuhler says. “People can start with a vendor advocate who can then move on to a buyers’ advocacy role.

“That means they are dealing with one adviser, who knows their story, through the whole process. As an independent Property Advocate, we can help them sell and we can help them buy regardless of the order in which they want to do it.”

These are the five main life stages for real estate consumers …

1 First home:

Sandkuhler says that, for first-home buyers, the right time to buy is when the bank will give them the money. So FHBs need to understand their budget and their borrowing capacity before they do anything else.

“The first property you buy is a key stepping stone for your life so it’s important to get that right,” she says.

Planning ahead – e.g. considering when they might start a family – can influence the type of property they buy and prevent them from having to sell/buy when that next stage of life happens.

“If they started with a one-bedroom apartment, they would have no choice but to move out when they’re at the point of starting a family,” she says. “It might make sense to get a two-bedroom unit in the first place.”

2 Up-sizing:

Often up-sizing from the first home happens because a couple wants to start a family. Sandkuhler says that it’s important that they understand their future needs before acting.

Considerations include:

-       How long do they plan to be in the new home?

-       Do they need to be in a particular school zone?

-       Can they buy in a catchment area for private schools?

-       Will all their children go to the same school?

“When you are upsizing there’s always a risk in the process of selling and buying,” she says. “You need to understand the pros and cons of selling first and buying later, or the other way around. Ideally you want to sell first and buy the new home after that, because you might struggle to sell in the first instance and you don’t want to pressure of having to settle on the next property without a sale.”

3 Separation/Divorce:

These circumstances dictate, usually, that you need to sell first and buy later. But the processes can be hindered by stress and mistrust.

People can get stuck and not want to make decisions, being perhaps reluctant to leave their home of several years – or because they mistrust their former partner.

Sandkuhler describes a case study where a separated couple eventually sold for $100,000 less than they could have achieved earlier, through lack of flexibility and trust.

“After the agent had estimated their property price, the market dropped a lot but one of them was refusing to compromise on price,” she says. “Three months went by and the home ended up being sold for $100,000 less than it could have achieved earlier. They had declined a good offer earlier because she couldn’t let go of the initial appraisal.”

4 Down-sizing:

Later in life, perhaps after children have grown and moved on, people will seek to sell the family home and downsize to something more manageable. Once again, selling before buying is the best approach.

Considerations include:

-       Is there a need for urgency?

-       Are you buying and selling in the same market?

-       If the market is rising, you’ll want to get into the buying deal as soon as possible.

-       If you are selling in a soft market, what you lose on the way out you’ll pick up on the way in.

5 Retirement:

This may mean moving to a retirement village or nursing home.

“There can be resistance from older people to transitioning to that kind of environment,” Sandkuhler says.

“And you may need power of attorney for someone acting in your best interests - rather than having the state step in – to give your family some certainty if you no longer have capacity to make your own decisions.

"This is usually a stressful time for all family members involved in this process, so any way that you can make it easier on everyone will make an enormous difference to everyone’s stress or guilt levels.”

 

 

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