Buying a home is the largest purchase many people will make in their lifetime and for first home buyers the process can be overwhelming. While making mistakes and learning from them is a part of life, there are certain mistakes that can be avoided when it comes to buying a property.
1. Be patient
Buying a home does not happen overnight, it can be a long process. You might have been spending several Saturdays running to inspections and bidding at auctions, but still haven’t managed to successfully land the keys to your dream home. If this sounds like you, don't fall into the trap of making an offer on a home just to get the process over and done with. Remember, this may be your biggest single life purchase. Plenty of buyers suffer from remorse when the right property comes along after they have made an offer on a home that was not 100 per cent right. If you’ve lost motivation finding a new home, take a step back, revisit your wish-list, and have a brief break from your property search.
2. Let your emotions take over
Buying a home for the first time is exciting, but be sure to keep your emotions in check and don’t let them take the overhand when buying your home. This will ensure you remain calm and make rational decisions. By being in control you are able to review the home properly, find any potential issues or concerns and be realistic when it comes to price. Involving a trusted family member or friend to review the property is a great idea. This third party will help you stay objective and give you unbiased feedback.
3. Get your finance sorted too late
If you are ready to buy, the main thing you need to get sorted straight away is your finances. Have you been pre-approved for a loan? Do you know how much you can spend and how much you can afford in your repayments? If you know your budget you can start to look seriously at properties, and are ready to make a decisive and quick offer. Not having your finance sorted can lead to missing out on a property. Have the documentation of your loan ready and by having your deposit, you immediately have a great deal of power in the negotiation phase.
4. Failing to consider hidden costs
There are many costs involved when buying a home. Don’t forget costs like building and pest inspections, stamp duty and legal fees to cover conveyancing and title searches. Banking and mortgage broker charges, such as loan application fees, valuation and settlement fees may also fall under hidden costs. The property price is just the beginning, so remember to factor all of these costs into your budget. When renting or living at home, there are many costs you didn't have to consider. When owning a home, you need to factor in insurance, council rates, and ongoing maintenance.
5. Stretching the budget too far
It is not worth increasing your mortgage and exceeding your budget just because you have fallen for a specific home. Having to struggle each month with repayments is stressful, and not good for your physical or mental health. If the bidding goes way over your budget, let it go and another home will come along, even though it may not feel like it in that precise moment.
6. Building inspections: don't think they are a waste of money
For only a few hundred dollars a trained building inspector will find potential issues with the property that you won't be able to see during an inspection. Once issues are identified, your offer on the house can reflect those problems found, or you can safely walk away before you make an offer.
7. Doing enough research
Before buying a home, you need to make sure you have done your research. Do your homework on the area, what is the demographic like? What are some of the recent sales in the area? What are the investment prospects like? Having as much knowledge as possible will help you place that bid on auction day and it may also help you back down without getting emotional if you know that the property is overpriced. If you are still in doubt, it is worth considering seeking advice from a buyer’s advocate with lots of knowledge in the property field who can help you secure a home that not only ticks all your boxes, but that is also a good long-term investment.
Julie O’Donohue is the founder of start-up Next Address, a real estate platform that directly links buyers to sellers. www.nextaddress.com.au
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