In this post, we will analyze common mistakes people do while buying property
Emotional Property Buying
– People usually satisfy their immediate needs and fail to understand that your first home is not your last home. It is just a path to buying your next home. As tomorrow you will want to buy another one.
– Therefore it is important to keep the purchase price under control while buying property.
– It is not ok to overpay because of the tile colors or because of the color scheme.
– Location is equally important as it will help in capital gains in the future.
– Failing to remind yourself that you are talking with a real estate agent who has years of experience selling and negotiating properties as compared to yourself.
– Fear of missing out is another emotional outburst while buying property.
– On the flip side, if you negotiate too much and offer low prices or extremely below market prices, in that case also you are likely to miss out on the property or land up making costly mistakes.
Not Factoring in the Cost before buying property
– Not considering or undervaluing reno costs before buying property
– Not knowing about the stamp duty costs, building and pest costs, strata reports, and due diligence costs.
– Not factoring in the cost of a solicitor.
– Considering everything is free in the world.
– Cost to move.
– Electricity/water/council/strata costs
– Insurance costs before buying property
– Not considering that the mortgage interest rates can rise in the future.
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Stretching Financially
– Buying purely due to emotions.
– Thinking only with the heart and not the head.
– Not considering all the costs as explained above
– Not having any budget
– Not having finance pre-approvals and assuming that it can be done in the 5-day cooling period.
– Assuming that the bank is only working on your file during cooling off and they don’t have any other work to do.
– Blaming everyone else in the world apart from yourself because neither you had pre-approvals nor budget.
– Not having time to invest in relationships with real estate people nor having a team of mortgage brokers, solicitors, and building inspection guys.
– Not knowing your borrowing power and paying more than u can borrow.
– Not knowing that the bank will also do a valuation on your purchase and you have to pay/cover for the shortfall.
– Not having any buffer in place.
– Assuming that you have good friends and you can borrow from them if required. That is one of the most important mistakes people commit.
Due Diligence
– Trying to save money on building and pest inspection which can be a crucial part and should not have been missed.
– Trying to save money by hiring less competent or less experienced solicitors.
– Not getting the contract reviewed at all by a solicitor and signing without it.
– Not getting the strata report prepared.
– Not making a few council enquiries for example checking any development plans underway nearby, widening of roads, public housing nearby.
– Not taking insurance.
– Not checking the zoning or development approvals on the property.
– Not checking whether the local school catchment maps.
– Not checking with neighbors as they usually have something hidden to tell.
– Assuming a lot of things and not getting points added to the contract.
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Disclaimer: Articles in this blog are just the author’s or authors’ personal opinions.
It may or may not be correct. Please do your own due diligence and seek professional advice according to your own personal circumstances. The author or authors cannot be held responsible/liable for any content in this blog.
*all images are for illustration purposes only
