Buying a home is an expensive and time-consuming process so it’s worthwhile considering how to avoid common mistakes that could cost you dearly.
As a buyers’ agent, I’ve seen many buyers rush in and make offers without considering their long-term needs or the current market values. The most classic mistakes that we regularly see include:
1. Lack of research
Many buyers are under time pressures due to work or family commitments, so they buy in a hurry without doing enough research.
To buy well you should be inspecting at least 50 to 100 properties in your target areas, taking notes and monitoring auction and sales prices.
You need to create a ‘property brief’ and set your priorities in terms of suburbs, type of property, features and price range. This helps you shortlist only the most suitable properties and avoid wasting time at inspections.
2. Buying before selling
This is where many buyers back themselves into a corner with the time constraint of settlement.
While it would be ideal to be able to sell and then buy immediately, the reality is that the standard 42-day settlement period is not enough time to adequately research the market.
If you need the money for settlement of your new home purchase you could be forced to accept a lower offer for your own home.
Being cashed up from a sale means you are in far better negotiating position and ready to move on the right property.
3. Becoming emotionally attached
So you’ve found your dream home after a six-month search and the auction is in full swing.
You’re being swayed and sweet-talked by the real estate agent.
And your partner really loves the place and you just have to buy it (because you think there is no other option)… and you end up overpaying at auction due to the pressure situation.
Avoid emotional impulse-buying.
Talk your purchase over with a trusted adviser or friend and set your limit before attending the auction.
4. Poor negotiation/evaluation
Some buyers can be too greedy by making low-ball offers in a seller’s market and miss out if they are not prepared to pay a fair price.
On the other hand, some buyers can be too eager or competitive and end up overpaying for a property.
The selling agent is working for the vendor to get the highest achievable price. They are not working for you as the buyer. To buy well you will need to have a good understanding of local values and property types.
Recent and historical sales data is essential to ensure you carefully evaluate your target property. A professional buyers’ agent can give you ‘independent’ advice and negotiate on your behalf to secure a property at the best price.
5. Buying the wrong house for future needs
Don’t make a ‘frustrated purchase’, i.e. buying the next house you see just because you are sick of searching.
Think about your life stage and what will suit your needs for the future. Will you need extra rooms for young children, a level yard, or a separate teenage hangout area with a large rumpus room? Are you downsizing and need to avoid steep stairs?
Don’t just think one year ahead – think 10 years down the track! Stamp duty and moving fees make it too expensive to move regularly.
6. Lack of due diligence
Some buyers are disadvantaged because they do not understand the buying process. Being disorganised will only lead to more frustration. A smart buyer will have their inspection times streamlined, property sales data on hand, finances pre-approved, cash deposit available at call, solicitor ready to review the contract and pest and building (or strata) inspections completed. Having these all lined up means you can confidently make offers.
7. Procrastination and fear of moving house
Let’s face it – moving house is a hassle. There is so much to organise – choosing a selling agent, research, inspections, negotiating, sorting mortgages, legals, disconnect and reconnect utilities, packing and unpacking, and the list goes on. The mental fears of moving house are often one of the major factors that hold people back from achieving their goals. Taking the first step is often the hardest.
Rich Harvey is the chief executive officer and founder of www.propertybuyer.com.au