Buying your first home is an exciting milestone, but it is often a daunting and complex process. Many first home buyers often wonder if they should engage a buyer's advocate or do it alone to save on fees. Today, we bring you a true story that highlights the experiences of two groups of friends. Both are first home buyers and they are embarking on their first home buying journey with similar budgets in May 2020.
Let's delve into their contrasting paths and uncover the valuable lessons they learned along the way.
Group One: The Investment in Buyer's Advocacy
Group One decided to seek a professional buyer's advocates to guide them through their property search and purchase. Being their first homes, they have little to none experience in property buying, and they decided a property buying expert will help them buy what they want, help them understand what they need to know about the buying process and the property. With their maximum budget of $800,000, they engaged a buyer's advocate to help them find their first dream home. After two months of dedicated searching, they secured a beautiful house in an Eastern Melbourne suburb for $760,000, well within their budget.
Fast forward to a year later, Group One's smart investment in buyer's advocacy had paid off significantly. Their property's value had surged to over $950,000, with potential buyers willing to offer up to $1 million in the current market conditions. IE, their wealth and asset value has grown $200,000+ in a year. With a staggering 26% increase in capital growth, Group One was not only delighted with their purchase but this increased equity in their asset also allowed them to make further investment decisions.
Group Two: Buying Solo, Without a Buyers Advocate
In contrast, Group Two opted to forego buyer's advocate services to save on fees. Little did they know, this decision would prove costly to them. A year later, they were still searching for their dream home. They felt helpless, tired and frustrated. Rising property prices had unfortunately pushed them further away from their desired location. Without extending their budget, they could only afford properties in suburbs 10-15 km further out.
Group Two faced numerous challenges during their solo journey. Searching in unfamiliar locations every few months, they spent weeks redoing the due diligence process, trying to understand the new areas they were considering. This time-consuming process added an months to their search, only to realize that prices had surged again when they are comfortable buying in the area. Frustration mounted as they had to consider moving even farther away from their work locations, resulting in longer commutes and additional inconveniences.
After a grueling 10 months of unsuccessful searching, Group Two finally came to a tough decision: to extend their budget to $1,000,000 for a property in their initial preferred location. They managed to secure their first home eventually, 12 months AFTER Group One. It was a smaller house than what their friend in Group One had bought, and it took them 12 months longer to buy. In these 12 extra months, prices had gone up on top of paying extra rent to their landlords.
How much did the Buyers Advocate Save the buyers?
Now let's put their experience into this table for comparison. Let us look at who is ahead:
| Group One | Group Two Bought 12 months later | Savings without a Buyers Advocates |
Buyers Advocates Fees | $15,000 | $0 | $15,000 |
Price of Purchased Property | $760,000 | $930,000 | -$170,000 |
Mortgage (12 month) | $21,280 80% LVR @ 3.5%pa | $0 | $21,280 |
Rental (12 month) | $0 | $30,160 $580 per week | -$30,160 |
Total Spent | $796,280 | $960,160 | -$163,880 |
The Valuable Lesson Learned:
While this story centres around 2 groups of first home buyers, it serves a powerful lesson for all home buyers: being penny-wise can often lead to being pound-foolish. Group One's investment in buyer's advocacy services not only made them $200,000 richer in nett worth, but also empowered them to make well-informed and confident buying decisions in a competitive market. This confidence allowed them to buy 12 months faster than their friends. They also saved 12 months of rental, and they put this rental savings into their mortgage to build their assets and wealth.
Group One's investment of $15,000, effectively make them an extra $200,000 in assets in a year. That is an ROI of 13.3 times!
While Group Two saved on Buyers Advocates fees, they spent a lot longer. Considering the extra year of rent they had to pay, plus having to eventually extend their budget, they paid over $163k more to buy their first home. And this does not consider the lost time, the stress and the hours spent researching and on disappointing property inspections.
The value of buyer's advocate services lies not only in the dollars saved but also in the confidence, experience, and resources they bring to the table. With their deep understanding of the property market and access to off-market properties, professional buyer's advocates can give you a competitive edge in securing your dream home or investment property faster and more confidently, saving you time, money and stress. While these 2 groups did not encounter significant problems, the buyers advocate's experience will also come handy when dealing with curveballs, roadblocks, and problems which tend to crop up with every purchase.
Lesson for home buyers:
As home buyers, the journey to finding your perfect property is filled with twists and turns. This true story of the two groups of first home buyers highlights the importance of investing in buyer's advocate services. Group One's decision to seek professional guidance paid off handsomely with significant capital growth and a sense of empowerment in their investment decisions. They are literally $200,000+ richer than Group Two.
When it comes to your property search, don't underestimate the value of a buyer's advocate. Working with a professional property buyer can save you both time and money and ensure a rewarding investment in your future.
If you're ready to embark on your property journey with confidence, our team of expert buyer's advocates is here to guide you every step of the way. With our extensive knowledge of the property market and access to exclusive off-market opportunities, we can help you secure your dream home or investment property while avoiding unnecessary pitfalls.
Make the smart choice today and invest in your future with our buyer's advocate services. Your dream property awaits!
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