When people buy property it can be an exciting but also stressful time, particularly if your buying experience is limited.
Most people who buy property will only do it a few times in their life, maybe decades apart, and in varying conditions. So it’s difficult to gain real hands on, up to date experience that helps you avoid making errors.
Generally there are 5 types of common mistakes people can make when they buy property:
The first one is falling in love
Of course it’s not love, it’s more like obsession, where you set your heart on the thing and decide it’s got to be the one. When a buyer makes decisions with their heart instead of their head they can pay too much for a home. They might overlook faults that are plain to others. They may ignore small things that really should have been fixed up before the sale and will develop into a problem later on.
Don’t allow your better judgement to be clouded. Be attracted, but don’t over invest emotionally when you buy property. Stay clear-minded.
Don’t pay too much
Avoid paying too much, because costs really can blow out, very quickly. When dealing in hundreds of thousands of dollars it’s all too easy to extend your price range ‘a little’ to buy property and get that perfect home. But a little in this case can mean tens of thousands too much.
Being talked into buying (by others or by yourself) a home outside your price range could scuttle your finances in other departments, if not now, then further down the line. Spending more than you really need to leaves you in a vulnerable position regarding financial shocks, including unexpected interest rate rises or other changes in circumstances.
Not doing enough research
You might decide you have found the perfect home but a failure to research and completely understand the area is a mistake. You might end up in a great home but in an unpredictable or inconsistent area. Those neat lawns either side of you may end up overgrown with old cars sitting on them, when the next renters move in. It really does pay to understand the neighbourhood you are likely to spend the next decade in when you buy property. Is it really on the up? Or going sideways? There may be undesirables frequenting the area on weekends or late at night. That handy little local milk bar and grocery store on the corner might be about to shut down, and then become an eyesore for a year or more.
Check local crime rates. And the levels of public transport. Check the local schools for their performance levels. Good schools attract families and better home value growth. Check there are no unsuitable developments planned for neighbouring blocks.
Not enough preparation
Be sure you accurately factor in your finances and needs before you even start looking to buy property. As a starting point you need to have analysed assets, organised debts, and secured pre-approved finance.
Underestimating the costs
Besides the costs linked to the purchase of the property itself there will be a string of less obvious associated expenses.
You will need a building and pest inspection. Insurance. Moving costs.
And just down the track you will be paying hefty council rates and land tax. Homes are like cars – something will break down and need fixing. Like the heating, which often goes in winter. Or heavy weather wear and tear, again, usually when the weather’s at its worst. You need to have something in reserve for those rainy days. So you can attend to the problem and get it fixed quickly. There’s no landlord to call for assistance. You are the landlord now.
And it’s a great feeling when you buy property i.e. being the landlord. But prepare well for it!
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