Time to Downsize?

It’s not only couple in their 20’s and 30’s buying new houses.

There are a lot of retirees, and people approaching retirement, who are downsizing to a new house built in a retirement village.

Don’t Leave It Too Late?

I have seen a lot of people, including my mother, leave it too late to downsize.

They have a sentimental attachment to their home and hang on until they can’t cope anymore.

They then have to deal with the stress of selling the house, disposing of many possessions,and moving.

Once moved they are away from their friends and with the possibility of reduced mobility have problems making new friends.

When is a Good Age

Well we made the decision to downsize when we were both under 60, and still working.

The children had left home and our dog had recently died.

There was 2 of us in a four bedroom home and only using about about a third of the space.

We decided that we would give downsizing a go while we were young enough to easily adapt.

Try Before You Buy

We weren’t certain about downsizing so we decided we would rent an apartment for a year to try it out.

We decided to sell our house, but if you aren’t sure you could keep your house for the trial period..

We enjoyed our new freedom from gardening and convenience of living near work we actually rented the apartment for 4 years.

After the 4 years retirement was looming for me, and another block of apartment s had been built spoiling out view.

That made the decision to buy a retirement unit easy.

Whats your downsizing story?

Show House Sales Tricks

The thing you need to remember when visiting a display house is it is not a real home, it’s more like a television set with tens of thousands of dollars of upgrades.

The builders want to show off their houses in the best light so you can’t blame them . . . but don’t forget you are buying your home.

Here are some of the tricks that big builders can use to make the house feel more desirable:

- Internal doors removed to make it easier to walk around.
- As much open plan as possible, but remember this won’t work as well when using it has a home. . . For example if someone wants peace and quiet while someone else wants to watch TV.
- Higher than normal ceiling height.
- Lots of mirrors and glass furniture.
- Less furniture, for example just a bed and a bedside table in a bedroom.
- If there are a couple of different sizes of the same model – the show house will be the bigger size.
- Build on a larger than normal block to make it seem that there is more space around the house. . . or build two or more show houses with no fences between the houses.
- Large windows to make the house seem light and airy. Remember the builder is happy to pay for higher heating and cooling bills for a year or so, if they get sales.
- The minimum number of power sockets, remember the home entertainment units don’t have to work and nobody has to cook in the kitchen.

Some smaller builders may not even furnish the show house, which can make the rooms seem much bigger than they really are.

These are some of the things that you could see that won’t be in the standard package:

- High quality kitchen and bathroom fittings.
- Gas log fires
- Expensive light fittings.
- High quality tiles.
- Landscaped gardens
- High quality paving.
- Water features
- Fences.
- Decks.

Other subtle tricks I have seen to make a show house more home like are are:

- Coffee or baking smells to give a subtle message.
- A few tins in the larder and cups in the cupboard but nowhere near how much you might need if you lived there.
- A few clothes hung up in the Walk In Robe.
- Toys in bedrooms.
- A lace nightie laid across the bed in the master bedroom to make it more like a home.
- One builder in the UK even paid someone to live in the house at the weekends, and show people round “our home”.

What things have you seen in show houses?

For similar posts see Starting Off

Choosing A Block

There are lots of things to consider when choosing a block.

My basic preference would be an East facing block on a court.

This gives the best orientation of the house and minimises passing traffic.

Here are some of the things, besides price, that I think about when I look at a block:

Will it fit the house I want to build? Remember that there will most likely be a 5m setback at the front and you will probably need at least 2m from the back fence to avoid building on the drains and sewers.
Does it have room for a caravan, or a boat.
Which way does it face?
Will there be enough room for a garden at the side? I don’t want the side windows on the sunny side looking out onto a fence 1m away!
Will it be overlooked or shaded by a 2 storey house next door?
Does it have a view?. . . . if it has is there a danger that the view will be blocked in the future?
Will it be noisy due to a busy road or railway?
Will children be able to play safely outside?
It convenient for shops, schools and public transport?
Is it above the level of the road (preferred) or below it?
Will it need additional excavation to get a flat site for the house?
Is there any danger of flooding? (I used to work in drainage so have seen a lot of houses flooded and am very careful about this).
Are the adjoining houses going to be Owner Occupier or Rented Out?

In order to make a choice within a reasonable time scale most people will have to compromise.

For example our last new house is West facing at the end of a court, it has a good view westwards, but gets lots of passing foot traffic. It’s a very wide block, 25m+, but below the street level at the front.

For much more advice why not get a copy of THE GUIDE TO BUYING A BLOCK for only $4

How Much House?

Do you know that in spite of the standard block getting smaller over the past 20 years the actual size of the houses has been getting bigger. The builders are doing a good job of selling us on the idea of more space.

There are three sizes of house you could buy:

The size you need . . .. SMALL
The size that you would like. . . . BIG
The size that the builder wants to sell you. . . .ENORMOUS

Get a bigger house and it could blow your Budget. To keep costs in check you need to do some preparation. Here are some suggestion:

Avoid starting by visiting show houses.
Go through your existing house throwing away all the junk you haven’t used in the last year or two. You could even raise some money and have a garage sale.
Measure the internal size of each room in your house, in m² and think about whether that room needs to be bigger, or could be smaller.
Don’t forget to include the wardrobes, the pantry, and the garage.
Don’t measure the hallways but allow 15-20m2 for hallways and passages.
Allow around 15-20m2 for internal and external walls.
Decide what additional rooms you need, for example an extra bedroom if you have another child on the way.
Add all the areas to get the total area of the house.
You could also convert the sizes to Squares for easy comparison when looking at adverts.
Start looking on the builders web sites or adverts for houses plans that are close to this size.
When you are looking at plans use the dimensions you originally took for each room to get a feel for the room sizes.
Only go and look at houses that are within the dimension you calculated, plus say no more than 10%.

To help I have prepared a Google documents Checklist which can be accessed from the link or the Checklist tab at the top of the page.

How have you made sure you haven’t finished up with a house that’s too big?

For posts about Costs see Budget

For Posts about Design see Floor Plans

Big or Small Builder

At the end of the day what everybody wants is a quality house built at the right price.

So does the size of the builder matter?

Here is my experiences:

Small Builder

We had our first Australian house built by a small builder and we were very satisfied with the result.

One of the reasons for choosing the small builder was that we had just moved to a small country town.

We felt that the well established local builder we chose must be building to a good standard otherwise he wouldn’t be getting work.

Also in a small town it was reasonably easy to find people who could give you an independent view about the quality to expect.

As the nearest large builders base was in a town an hours drive from where we were planning to build we were concerned that travel costs would increase the overall costs.

Further advantages of the local builder were he was happy to build the house to our design, and that he promised, and delivered on the promise, to complete the house in five months.

In spite of me being about the most “hands on” clients that he had ever had we became long time friends with builder. A good result all round.

Large Builder

Our last house was built in Werribee, by one of Ausralias largest builders Metricon.

For this Melbourne Suburb we felt that it would be hard to get reliable references for a small builder.

We decided that a large builder would do a good job as they would be keen to maintain a good reputation.

Having had a look at a number of show houses we felt that one of Metricon’s standard designs was fairly close to what we wanted.

They were also prepared to amend their design to meet the majority of our requirements.

For this house we were sure that travel costs weren’t an issue with several houses being built be this builder on the same estate.

One disadvantage with dealing with a larger builder is the whole process become more bureaucratic and it took a lot longer than five months to complete the house.

Overall we were happy with the house.

What made you choose a particular builder?

For similar posts see Starting Off

How Close Is Too Close

Here is a photo from the ABC Brisbane facebook page

I would say this is far to close.

That space is just going to be a collecting point for spiders and vermin.

I really don’t see the point of wanting a detached house and then having it look like a terraced house.

It is really going to hit the resale value as well.

Recommendation

A good rule of thumb if you want to avoid something like the above photo is plan for a house 2m narrower than the block.

That means you can have a 1m path on either side

Base Plan has 6 Star Energy Rating

But What Does it Mean?

If you think it means is that your house will have a 6 Star Energy Rating you could be wrong!

You could be up for thousands of dollars of upgrades to meet the required standards.

All the following, and more, can lower your energy rating.

Less than ideal orientation
Add windows or increased window sizes
Add stacker doors, or even just ordinary doors
Increase room sizes
Adding down lights
Removing a rainwater tank

If you aren’t careful you could find you will be getting a bill for extra insulation and double glazing to restore the rating to 6 star.

Half Houses

Can’t afford the price of a new house?

How about half a new house?

This is a radical idea to help affordability of new homes by Chilean architecture company ‘Elemental’.

Basically they provide half a house fitted out; with the other half just having a roof.

This means you can complete the remaining half in your own time when money become available, and perhaps save money by doing some, or all of the work yourself.

To find out more check out : www.99percentinvisible.org

For more Unusual Houses, and Fails, check out What the………………….?

Prescribed Easements

Easements are generally shown on title drawings;

For example the sewer easements E-1 and E-2 shown at the rear of these blocks.

These easements are created when the land is subdivided.

However if you are buying an old block of land you may discover that even though there is no formal easement on the title there may be pipes or cables that need to be protected.

For example if a water,sewerage or electricity utility has used the land for 20 years or more then an easement by prescription may have been created.

I have had several personal experience of discovering prescribed easements that were initiated many years ago when local goverment areas were much smaller than now.

As everybody knew one another many permits to lay services were simply a handshake arrangement.

Worked well at the time but can be difficult to sort out now.

The laws on prescribed easements do vary from state to state so I recomend you consult a local property lawyer.

Who Decides The Size Of Your Mortgage?

You or the Broker?

A Larger Mortgage Means More Broker Commission

Well the typical mortgage broker gets over 0.5% of the initial value of your mortgage and a trailing commission of around 0.15%.

With a typical 30 year mortgage having a life of around 6 years the total commission is going to be around 1.3-1.4%.

That’s $3,900 -$4,200 for a $300,000 mortgage, with an additional $1,300 – $1,400 for every additional $100,000.

Do you think that means there might be an incentive for the broker to ‘stretch’ you to a bigger mortgage?

Sounds great if it means you can get a bigger house, but a lot of people that have been sold that story are suffering mortgage stress!

But Doesn’t The Broker Gets You The Best Deal?

I’m not so sure, as the banks own most of the big name brokers, for instance:

Commonwealth Bank owns Aussie Home Loans
NAB owns First Choice

Do you think there might be some pressure to direct your custom to the Big Bank?

If you are getting offers from subsidiaries, of a big bank are they really that different?

Bank of Melbourne, Bank of SA, and St Georges Bank are all subsidiaries of Westpac.

An independent broker won’t have as much pressure to use a non big bank lender, but they may want to use a bank with a higher commission level.

After all consumer law only requires to the broker to identify a ‘Suitable Loan’ not the ‘Best Value’.

So What Can You Do?

Before you go to a Broker think about how much you can safely repay,even if interest rates go up.
Treat brokers as you might treat a typical purchase. . . . . ask a couple of different ones for a quote.