In a competitive property market where it is increasingly difficult to get a foot in the door, buyers are often tempted to go over their budget when trying to secure the property of their dreams.

Purchasing property has long-term financial and personal consequences. Decisions to buy shouldn’t be taken lightly or be made emotionally, on the spur of the moment. Yet at the 11th hour many people throw the rulebook out the window in a desperate bid to secure almost anything in the market. Here are the top five reasons that buyers are overpaying in the current market and our tips on how to avoid these common traps.

Buyers bid with their hearts, not their heads

The top reason buyers overpay for property is because they develop an emotional attachment to the property; they fall in love. Once you let emotions overtake reason, you can find yourself compromising on other key factors you originally valued, such as price, location or size.

Instead of visualising yourself and your family in the house, take a step back and look at it for what it really is – bricks and mortar. Ensure it meets the criteria you started with and if it doesn’t, remember there will always be more property coming on to the market.

Irrational purchases aren’t backed with adequate research

In an increasingly competitive market, fear can often drive purchasing decisions, rather than logic. It may seem obvious, but failing to conduct in-depth research about a specific property is a fundamental mistake made all too often by enthusiastic buyers.

The property market is currently booming in Sydney and Melbourne, which can cause buyers to make on-the-spot decisions. Ensure you understand the area you are buying into, including comparable sales and access to amenities, and work through a process to avoid spontaneous decision making.

The cost-conscious aren’t seeking professional advice

Whether it’s engaging lawyers to review contracts, building inspectors for a building inspection or a buyer’s agent to negotiate pricing, by cutting back on the cost of professional services, you can in fact end up paying too much for a property.

These services can add to the already daunting cost of buying a property but poor purchasing decisions can have even more significant consequences down the track – like expensive repairs for a termite infestation!

Buying into the hype of a property

Another common reason we see buyers overpay is that they get drawn into the hype surrounding a property. Acting quickly is important if you want to secure the right property, but don’t act before you’ve had the chance to really understand the area you’re buying into. There will always be another interested party with an offer on the table, but don’t let this rush you into a decision if you’re ultimately not prepared.

Be careful if buying at auction

Competition and emotion can push the price up. If you do find yourself wanting to buy at auction, make sure you do your research about what similar properties are selling for in the neighbourhood. Have a walk-away price in your head and ensure you don’t go a dollar above that.

Posted by Simon Cohen – Domain (Fairfax) on 17th March, 2015