For many Papua New Guineans, their home is their largest asset and also the one they are likely to hang on to the longest. Purchasing your first home should be an exciting milestone, but unfortunately, the experience can be tarnished if buyers aren't adequately prepared for the unexpected.
In PNG, there are intricacies to buying property you must know how to navigate properly. Otherwise your purchase will be stressful, drawn out or could even fall through. Here are four tips to overcome these obstacles for a seamless sale.
— Hausples.com.pg (@Hausples) January 12, 2015
1. Plan for unexpected costs
The sale price of a home can be a daunting figure. Generally, however, buyers have planned accordingly for this – with a deposit stashed away and their finance options at least partially sorted through a bank or lender.
But what about the other costs of purchasing property? Inevitably, expenses will arise, so be sure to budget for the following:
- Stamp duty
- Renovations and repairs,
- Moving costs
- Agent fees
- Lawyer and/or conveyancing fees
- Home and contents insurance
Smart house hunters will make a thorough budget that considers what they can afford in terms of deposit in mortgage repayments. To avoid unpleasant surprises later, be sure to factor in these expenses as well.
2. Conduct your own valuation
Do you know who sets a property's sale price? Many first time buyers assume it's the real estate agent or that the figure is based simply on market value. This is not the case. In fact, sale price is determined by the seller, based on their own private valuation and insights from their agent.
Banks and lenders will conduct a valuation before deciding to finance a purchase, but at this point, buyers have already made an offer. Therefore, be sure to make your own formal assessment of a property's value.
This can be done in two ways:
- You can hire a private valuer – This is a cost you'll have to front, but it's also the safest way to ensure you don't pay too much;
- You can do the valuation on your own – This option involves buyers investigating the sale prices of similar properties sold nearby recently to determine what is fair market value.
While experienced property investors are able to do the latter, we recommend that first time buyers always hire a professional to help.
3. Get all of the proper documents in order
When you find a property you'd like to buy, one of the first things to ask for is proof of ownership in the form of the title. If you're buying a new home, you'll need to ask the seller to write a formal letter stating the amount he or she is selling the property for. In return, you should write a letter accepting.
The title and letters are just a few pieces of documentation required to apply for a loan. You will also need:
- Copy of driver's license, passport or other accepted form of ID
- Written confirmation of employment and salary
- Evidence of deposit
- Superannuation ID and copy of recent superannuation statement
Different banks and lenders will have various requirements, such as a credit rating or other proof of your financial standing. To avoid problems later on, stay organised and compile this kind of information from the start.
4. Purchase adequate home and contents insurance
Thanks to the First Home Ownership Scheme, buying property is becoming realistic for more Papua New Guineans.
With such an important purchase, it is essential to have adequate home and contents insurance. After all, not only will the home itself likely be your biggest purchase to date, but the vast majority of your valued belongings will be held inside of it.
Home and contents insurance can protect you from damages due to storms, burglaries, fires or other unexpected events. Without insurance, you'll be forced to recoup these out of your own pocket – something few first home buyers will be able to afford. To find out more about comprehensive home and contents insurance built for PNG, reach out to Trans Pacific today to request your free quote.