When you’re throwing your life savings (and future earnings) into a pile of bricks and mortar, even a simple blunder could end up costing a fortune.
That’s the bad news. The good news is that you can learn from other people’s property mistakes, to avoid making your own.
Here are some of the most common real estate stuff-ups, according to four experts who’ve seen it all before.
The real estate agent
Stop waiting for the perfect home, says Gary Sands, co-owner and director of Di Jones Real Estate in Sydney.
‘I see people who keep waiting for the perfect property and they miss out on so many great homes because they keep waiting,’ Sands says.
Even if there is no initial urgency, buyers will probably become more motivated eventually.
‘They end up buying something that’s not as good as they could have bought many months ago.’
Sands also cautions against relying solely on online searches. Entering specific parameters may mean you miss a property that has everything you need – except a car space, for example.
‘There might be a rear lane that you can use but it’s not on the title so we can’t include it.’
The mortgage broker
Mortgage paperwork is as dull as it is important. (Hint: very.)
Jonathan Lee, a Mortgage Choice broker in Melbourne’s inner west, says not knowing the loan-application process can be costly.
‘If you have a small deposit, an auction probably isn’t a good idea,’ Lee says.
In cases where the lender’s valuation ends up significantly less than the auction price – a high loan-to-value ratio, in banking jargon – the buyer may be forced to rope in family to provide additional security or, in the worst-case scenario, forfeit the deposit.
‘Try to buy before auction,’ Lee says. ‘You can put in an offer and still have time to get organised.’
Another common hiccup is having an inconsistent employment or savings history in the six months leading up to the application.
‘If you think your circumstances are going to change, try to buy first,’ Lee says.
The buyer’s agent
Falling madly in love with a home isn’t always a good thing, according to buyer’s agent Simon Cohen, managing director of Cohen Handler.
‘Probably the biggest mistake people can make is getting too emotional,’ Cohen says.
‘If you get too desperate, you could end up paying too much, buying the wrong place or buying a place with problems.’
He suggests making a criteria checklist. Ensure any home you are looking to buy ticks as many boxes as possible.
‘If it ticks none, it’s a sign you’ve become too emotional.’
Cohen says it’s a good idea to independently research the market, because real estate agents tend to mention only comparable properties with high sale prices.
Lastly, don’t be dazzled by stylish furniture. Focus instead on the quality of the building, including any renovations, and unchangeable features such as size and aspect.
Strata reports, pest inspections, building reports, building certificates and council inspections are time-consuming and potentially expensive. They are also really important, says lawyer Dion Vertzayas, principal of VC Lawyers in Sydney.
‘If you don’t discover the issues until after settlement, it’s too late,’ Vertzayas says. ‘You might not have the money to fix them or it might mean the property is not a viable investment.’
For off-the-plan sales, he advises negotiating a schedule of specific fixtures, finishes and inclusions at the point of exchange, not relying on marketing materials or statements by salespeople.
‘The biggest thing to be careful of buying off the plan is to negotiate a proper sunset clause so the vendor can’t hold you to ransom for years until the strata plan is registered.’
As well as having any contract reviewed by a lawyer, consider seeking financial advice before buying.
‘Lawyers and purchasers tend to gloss over this [but] you need to tailor the purchase to your long-term investment strategy,’ Vertzayas says.