Thursday, March 11, 2010

Some small pointers for first-time buyers...

In response to the promise I made to Myblahblahblah a couple of weeks ago about doing a post on my experience of interior decorating, I've finally managed to get around to typing this up (although various paragraphs have been storing in my heads since, in addition to the bookmarking of sites).

Sincere apologies MBBB for the delay -- it is absolutely inexcusable that "a couple of days" became "a couple of weeks"! Very sorry. (But today's been a marathon blogging day for me! 3 posts in one day when I normally manage about a post a week if I'm lucky. This is a first.)

Anyway, I meant to say that this is actually quite a timely post because my brother just bought a place with his girlfriend :) The sale went through late last month but as usual with these things, it's been months of activities (if not years of passive planning) before it came to fruition. So MBBB I'm really happy to hear that you've been keeping your eye out for apartments now even though the price levels aren't right yet. The months and months that I've spent trawling through interiors sites, furniture and homeware stores and show apartments and indeed negotiating with various banks and mortgage brokers really paid off when I was finally in a position to act.

I'm going to sum up my tips in an easy list form. Obviously the tips listed here are not meant to be exhaustive and the important caveat is that they are all just based on my own personal experience, hard-won though that was. If others have different ideas please do share them in the comments as I would love to be able to pass them onto my brother also :)

But allow me to first share a couple of non-décor related advice. I know it's probably of no relevance to you MBBB as you probably are well-versed on the financial and legal side of things, but I thought I'd include them here as well because getting the financial and legal things well sorted means you're more than two-thirds of the way to happy home ownership. (And because I know how easy it is to ignore the financial and the legal issues and just concentrate on the fun side of interior design, but that would be a BIG mistake indeed for a first-time buyer.).

So please note that the "you" used in the sentences below refers to a general "you" rather than you specifically, MBBB :)

1. Do take your time and don't feel under pressure to act.

The mantra is that "if it's meant to be it will happen." This sounds rather counter-intuitive and seems self-defeating but please do hear me out. Obviously you do all your due diligence and pre-sale prep as much as you can (more on this later), but at the end of the day an apartment sale is a transaction between two parties and you have as much right as the other party to walk out on the deal if things aren't right and vice versa. Don't feel induced into buying something whether because of a perceived time pressure or because of perceived limitation of your options given your budget. You are going to have to literally live in the place and it is important that things felt right. But don't feel disheartened either if a deal falls through -- it's happened to me and I made the decision to pull out as it was becoming clear that it was getting nowhere and it was one of the best decisions I've ever made in my life.

2. Get a good conveyancing lawyer.

I'm not sure of course about the buying situation in Hong Kong but I assume you have a system quite similar to the British like we have here in Ireland for the buying and selling of properties. I'm not sure about the lawyerly profession in Hong Kong either of course, but there might be cowboys operating who specialise in preying on first-time buyers. Be clear about the level of access you can have with your appointed lawyer (if committing your business to a law firm), don't be fobbed off with just the legal secretaries, and a good firm would have checklists in place for both clients to ask of the other party, the property, and of themselves as clients, and could provide you with time-frames for the processing of different steps as well a briefing you on what those steps are. Be clear about your own list of demands (more on this later) and make sure that the lawyer dealing with your case are informed of these as s/he would be the one helping you scan through the lease documents and other agreements. Don't be afraid to fuss, which is the Achilles' heel for a lot of first-time buyers. Ask questions when you don't understand the legalese and don't be afraid to push for explanations if things have been stalling (I'm not sure about Hong Kong but it generally takes about 8 weeks for sale to be completed here, I imagine Hong Kong being the highly-efficient city it is this time-frame would be completely laughable, but it is the reality here and a lot of times it may go on even longer than that, and you have to not to be afraid to hassle your solicitor to get him to hassle the other solicitor representing the other side). They are supposed to be providing you with a professional service and they would act like professionals as you're paying for engaging them on a professional level.

3. Go around the banks and building societies and/or get a mortgage broker to do some legwork on your behalf.

I know this point sounds prosaic especially to smart Hongkongers who are well up on all the various banking products, etc. etc. If you're a stereotypical Hongkonger then you don't need me telling you this (or indeed any of the above, come to think of it). So again I'm not sure how much this would translate to Hong Kong. But my basic point is that, for a lot of first-time buyers, they might not realise that it's not just about getting a mortgage (which in turn means getting the best rate for the term that you desire given the deposit that you can afford). There are also associated financial products like household insurance and life assurance, and whilst I don't know anything about the mortgage products in Hong Kong, it's really worth doing one's own homework on these. A mortgage broker comes in really handy also who could help you cover some of the legwork (although you have to know with whom he's affiliated with and to what extent his coverage of these banks' products are representative of all the products on offer). And a good one (and I was blessed with one such mortgage broker) would be very helpful to sort out and keep track of all your mortgage application documentation and being able to follow up directly with the loan officer on your behalf.

Most importantly, having your mortgage pre-approved and knowing exactly what financing options you have available to you is a BIG bargaining chip when it comes to choosing the right place for you. At the very least, it affords you a level of comfort knowing exactly what your own parameters for price negotiations are.

So as you can see obviously now, over here in Ireland, unless you're extremely financially secure, one rarely just goes out and buy an apartment at the drop of a hat as a first-time buyer, but I'm not sure of course if this scenario is the same in Hong Kong. That said, people do sometimes pay down an initial deposit (aka "booking deposit") to secure an apartment quickly to get it off the market, but this deposit is refundable within a cooling-off period minus a small charge to the estate agent (if applicable). Again, not sure if this is the same in Hong Kong.

The key thing is that, doing one's homework on the financing and legal sides makes it easy for one to decide to pay down a deposit when one finally finds a place that feels just right. Indeed, knowing your financial options inside out makes it easy to decide on a furniture budget, which is one of the first key things that you've got to decide anyway before choosing what style of furnishing may best suit a particular flat and indeed your personal style.

Okay, finally, let me get on to the fun tips of interior design and home décor :) Methinks I should actually write these now actually in a separate post as I don't want the above serious tone about the serious bits of home-buying to hang over me while we're on the fun subject of interior design. Especially this post being quite long-winded as it is! Sorry!

So onto the next post! (I may not get to finish it and post this by tonight - I'll see how far I can get it written up - but be sure it's on its way!).

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