Buying a home or an investment can be a highly emotional process, but if you harness these emotions and learn what not to do from our list of 7 home buying mistakes to avoid below, the process should be both successful and enjoyable.
Over the years we have seen buyers make a number of mistakes and we thought you might benefit from finding out what these are so you can avoid them when buying a property. Your aim is to end up with a home that you love, in an area you like, at a price that you can afford, and we hope that these insights help.
If you don’t know how much you can afford to spend on a property it makes it harder to narrow down your search, negotiate with certainty and bid with confidence if going to auction. Plus, not having a budget, you risk falling in love with a property that may well be outside what you can afford. This can put you in a position with you trying to stretch beyond your means financially or you could feel dissatisfied with the property you end up purchasing.
Before you even start looking around for properties to buy, it is a good idea to find out how much you can afford to borrow by talking to a mortgage broker or a home loan lender. They will assess your employment history, your deposit, your monthly expenses, your credit history, any debts, your assets and any other loans and give you a guide as to what you could afford.
Better still, organise pre-approval for a home loan so if the right property comes on the market, you are in a position to make a quick offer without having to spend time locking in your finance.
Buyers who aren’t out looking for the best home loan deal could be throwing away thousands over the lifetime of the loan. At the moment with interest rates so low and lenders offering highly competitive rates it’s important to do your research.
Home loan brokers can be a great help here as they have access to scores of lenders and can often negotiate even better rates than those advertised. They also know the criteria of each lender so they can identify which ones are likely to approve you. This is important as a failed application can impact your credit scores. Oxygen Home Loans can help you navigate the lender market and to find you the best loan for you. Click here to connect.
Buyers risk paying too much for a property or buying a dud if they don’t spend time actively researching the local market, the neighbourhood and understanding what properties are selling and for how much.
Understanding whether there are any planned infrastructure upgrades to the area and whether they will have a positive or negative impact on housing is also important. For instance, will these changes make the area accessible and therefore boost a property’s value or will it add to noise, traffic and air pollution and devalue the property? It’s also a good idea to understand the crime rate of the suburb before you buy. For a full list of neighbourhood features to look for when buying click here.
You need to spend time researching the property market. But the good news is you can find a lot of information online or by contacting and talking to your local Ray White Real Estate agent. For an in-depth list of what to research and where to find the information read our article How to Research the Property Market article here.
Buyers who skip this step are in danger of buying a property lemon. Not thoroughly inspecting the property, engaging a conveyancer or a lawyer to check through the contract, and having a qualified building and pest inspection may mean there are issues with the property you’re unaware of.
Whilst any issues may not be a deal breaker, knowing what they are before you buy the property means you going in with your eyes wide open. You can then factor in how much it is going to cost you to fix the issues and build that into your budget.
Step one is spending time thoroughly inspecting the property. To help you know what to look for download our Inspection Checklist for Houses or Inspection Checklist for Apartments. Hire a conveyancer or lawyer to review the contract and organise a building a pest inspection. Qualified inspectors are trained to spot issues that are not visible to the naked eye, issues that can cost you a fortune down the track.
If there are a lot of buyers in the market and you find a place you really like, it’s easy to get sucked into a bidding war or to end up offering a higher price than the property is worth. This can lead to financing issues if your lender values the property under what you have offered. It may also create problems when you go to sell if the market conditions are similar or worse than they were when you bought the property, you may find yourself owing more on the home loan than you can sell the property for and therefore find you can’t afford to sell.
Research, research, research is key here. Knowing what similar properties are selling for in the area is critical to help you make the right decisions. For an in-depth list of what to research and where to find the information read our article How to Research the Property Market article here.
Whilst in a hot seller’s market it might be necessary to make a fast offer if you find a home you like within your budget. But you need to balance the need to make a quick decision with the need to make sure the home will be right for you.
Why because if you end up rushing in and buying a property simply because you are desperate, you may end up buying a property that doesn’t suit your needs. With so many costs associated with both buying and selling a property it can be extremely costly to get out of.
Ideally you have already done your research on the area and are familiar with local property prices and you know what an appropriate offer would be. Even if you are rushed, never sign a contract unless your lawyer or conveyancer has reviewed and approved the contract.
On the flip side, if you find a property you love that’s within your budget, not acting quickly enough and putting an offer in may mean someone else beats you to it. And this can be heartbreaking.
By having your finances sorted and having done thorough research so you know how much a property is worth can enable you to act quickly with confidence. Of course, as we have said many times before, only sign a contract after your legal team have reviewed it.