InvestmentReal Estate

5 Mistakes To Avoid When Buying a Home

For every one buying a home is a very exciting time  and every one await for this moment. There are many emotions and feelings that a buyer experiences during the process and buying a home is no-doubt, a process that requires a lot of focus and attention to details. There are mistakes that buyers make that are more common than others!  These mistakes can easily be avoided with proper research and preparation.

Here are five mistakes to avoid when buying a home:

1. Lack of Research: Before you can decide whether you’re getting a good deal or not you need to do some detailed research to work out the market value of the property. The process is called comparative market analysis and it’s extremely powerful when you’re trying to negotiate the best possible price.

You need to select a maximum of three suburbs and see as many properties as you can in preferably a 5-10 week time frame as 2-3 months is a long time in real estate and prices can move quite substantially. As a general rule I would advise you to inspect at least 70-100 properties within that time frame and document all relevant features.

2. Believing More on Agents: Selling Agents are NOT to help you to get a good deal.   They are working for the seller, NOT the buyer.  Selling Agents will tell you what they want you to know about the property and they can be very persuasive especially when they’re using negotiation and influencing tactics.  If you want to really know important details about the property, then you need to ask the right questions and do your own research.

Some good questions to ask when doing your research are:

  • How did you come to the asking price?
  • Are there any recent sales in the street or surrounding streets that are comparable to this home? If yes, make sure the selling agent can show you the evidence of this.
  • What are the offers so far on the property?
  • How long has it been on the market?

3. Searching Without Finance Approval: The last thing you want to do is to watch the home of your dreams slip through your fingers while someone else is exchanging contracts, especially while you’re trying to arrange an interview with a your local bank. It can be a very emotionally draining experience.  Don’t waste your time and put yourself on an emotional roller coaster ride.  Make sure you know how much you can borrow before you start your search.

4. Overstretching your Finances: We’re currently seeing the heartache of thousands of people across Australia who have financially committed well beyond their means.  Don’t repeat their mistakes.

I have two rules that if you follow you shouldn’t get yourself into trouble.
1. Despite what the bank says, make sure your repayments are no more than 25% of your total household net income.
2. Don’t borrow more than 80% of the property’s value.

These days, you can obtain loans for 90, 95 or even 100% of the purchase price.  Why would you want to put this sort of financial pressure on you and your family?  I believe that if you don’t have a 20% deposit, then you can’t afford to buy that property.  Remember, it is much better to be able to sleep well at night in a smaller house, than to be at the mercy of a bank and constantly worried about having your home sold from under you.

5. Ignoring Inspections: There are many potential problems with any home that you’re not likely to pick up yourself. Most solicitors I speak with tell me that only about 30 – 40% of their clients obtain all the appropriate inspections.

For your peace of mind just get the inspections done. I have seen first hand many homes that are riddled with termites. It’s simply not worth the risk!’

To ignore all these mistakes, I would suggest  you to visit a websites like Realtycompass which are helping many people by solving problems:

1. Giving Detailed information of each and every project- 80+ Data Points
2. Giving Additional charges details
3. Giving Carpet Area and Floor Plan Analysis
4. Giving Ratings for every project
5. Helping people compare similar projects in a very detailed manner

Vikas Agarwal
the authorVikas Agarwal
Vikas Agarwal is an IIT-Varanasi graduate in Chemical Engineering. He is the Founder and CEO of Finaacle.com - an investment advisory website. He is a Business Development Professional but a Value Investor at heart. He writes articles on Finaacle, which focus on simplifying the art of investing and the causes of human misjudgment when it comes to investing. He also shares his experiences as an investor and lessons from some of the greatest investors of all time.

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