The three biggest mistakes first home buyers make
We've assisted thousands of first home buyers. Here are the top three mistakes they make, and how to avoid them.
Rushing and panicking
Real estate agents can be very intimidating for inexperienced first home buyers. It's important to remember that the real estate agent works for the vendor, not prospective buyers, and the agent's job is to sell the property quickly and for the higest price possible. They are not there to get the buyer the best deal, or to reveal negative things about the property. They can use tactics that can generate artificial urgency and create panic for flustered and overwhelmed first home buyers. They can write in special conditions that are not worth the paper they are written on. That's why it's so important that first home buyers never sign a contract without obtaining legal advice first, to ensure they know everything they need to know (including things like illegal building work, or a massive land tax liability) before they sign anything. There are plenty of properties out there, and frankly it's not worth making a rushed and emotional decision that could be financially disasterous.
Failing to get financial advice
Buying a property without first obtaing finance pre-approval (unless you are fortunate to be paying cash), is risky in today's volatile banking environment. Never assume anything, regardless of the experiences of friends and family. And pre-approval is not a blank cheque - it's always subject to a valuation. Small one-bedroom apartments, in new-ish large buildings, with no car parking, can be difficult to get finance for. So can two-bedroom apartments that don't have any windows to the outside in one or both bedrooms. Obtaining sufficient finance approval for houses in new-ish estates, and vacant blocks of land in brand new estates, can also be problematic due to lack of comparable sales. Have you consulted a reputable mortgage broker, who can advise you about what various lenders can offer? Has your previous pre-approval expired or is it close to expiring? Before you go anywhere near signing a contract, it's crucial to know how you are going to fund your purchase.
Not doing your research
Have you checked out the reputation of the builder of the recently built house you are interested in buying? Have you turned on all electrical items to check that everything (including heaters and aircons) is working? Have you walked around the neighbourhood (including at night) to check the amenity and safety of the area? Have you organised an independent building and pest inspection, to ensure there is no illegal building work, asbestos, water leaks or structural issues? Have you inspected enough properties to be able to spot when finishes are shabby, when rust and water damage is painted over and when appliances are poor quality? Is there enough natural light at different times of the day? Have you brought along a tape measure, to check if your furniture will fit? The more research you can do, the more times you inspect and the more information you have empowers you to make a fully informed decision - and helps you avoid buying a lemon.
Note: the above is general information and should not be considered as legal advice.
Photo via Vista