Buying
a home can be one of the most exciting and rewarding times
of your life. Or it can be a roller-coaster ride of financial
and emotional devastation. It depends on what you do. And
what you do, depends on what you know. Most homebuyers do
not have enough accurate knowledge. Worse, many are ill-informed.
This list states 13 of the worst mistakes made by homebuyers.
It suggests, briefly, how to avoid these mistakes so that
buying a home will indeed be an exciting and rewarding experience.
Mistake
Number 1
Exceeding Your Future Financial Limits
Financial stress is horrific. It tears families apart. The
most important financial question to ask yourself, before
you buy a home, is: "What's the worst that can happen?"
What if interest rates rise? What happens if you buy based
on two incomes and you lose one income? Think of the future.
Your financial limit today will rarely be the same as your
financial limit in the future. Sure, it might be better.
But what if it's not? What if things get worse? Play it
safe. Make sure that when you buy a home, you will be able
to keep your home.
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Mistake Number 2
Buying What You Want Instead of What You Need
There are TWO kinds of buyers: Those who buy what they want,
and those who buy what they need. The public world of materialism
is often a private world of financial stress. Do you need
four or five bedrooms? Do you need to live in the "best"
area? You can buy a better home in a less expensive - and
less prestigious - area. What's more important - struggling
to maintain an image of wealth or living safely within your
means? Most buyers could save tens, even hundreds, of thousands
of dollars by buying what they need instead of what they
want. Think about it. Be careful.
Mistake Number 3
Ignoring the Extra Costs and the Hidden Costs
The extra costs of buying a home can add as much as ten
percent to your purchase price. Sometimes, the government
stamp duty climbs as high as six percent of the price. Will
you need money for inclusions for your home, items such
as carpets and curtains? And then there are the hidden costs
of ownership - rates, taxes, insurance and maintenance.
These can add up to thousands of euro - all of which are
constant costs. The price you pay for your home is not your
final cost, it's the first of many costs. Know what they
are and make sure you can afford them.
Mistake Number 4
Failing to Research the Area
There are few things worse than discovering, after you have
bought, that you could have bought better. If you intend
to live in your home for many years, take some time to check
out the area before you buy. Visit the area and make sure
you like it. Check the prices of recent sales in the area.
When you find the home you love, don't be shy about inspecting
it more than once. The more you see a home before you buy
it, the more you'll know if it's the right home for you.
And, finally, check out the neighbours. Research is always
time and money well spent.
Mistake Number 5
Tolerating Poor Service from agents
Before you find the right home, find the right agent - one
who will listen to you and one who is prepared to help you
find the right home. Sure, agents are paid by sellers, but
this is no excuse for the widespread apathy, deceit and
rudeness shown towards buyers. All agents are not the same.
Try to find one who will sit down and discuss your needs
with you. It is a mistake to think that you have to tolerate
poor service. An agent who is courteous and caring will
make all the difference to you.
Mistake
Number 6
Taking the Bait About the Quoted Price
One of the most unethical tricks in real estate is advertising
a home at a price well below its real price. Thousands of
buyers get their hopes up, only to discover that the home
they love was never in their price range. Advertisements
which say "price range" or "offers above"
or "bidding to start from" are usually misleading.
The agents will use the excuse of the "market"
to cover their lies. Be very careful – financially
and emotionally – when you see "quotes"
about likely selling prices. Most times, it’s just
a bait to lure you. Take the bait and you’ll almost
certainly get hurt in one way or another.
Mistake
Number 7
Losing
Money with Auctions
While you can often buy at a lower price with auctions,
your challenge is discovering the truth about the likely
selling price. At auctions, thousands of home buyers lose
money through legal and inspection costs for homes they
never had a chance of buying. When they realise they have
been tricked it breaks their hearts. Auctions can be deceitful
and cruel. Unless you know what you are doing, it may be
best to do what many buyers do - forget about buying at
auction.
Mistake
Number 8
Being Unprepared for Gazumping
Sometimes after you make an offer and it is verbally "accepted",
another buyer will offer more. No matter what you are told,
you have never legally purchased a home until both you and
the owner sign a legally binding contract. Until this happens,
remember five words: Don't Get Your Hopes Up. One way to
reduce the risk of being gazumped is to meet the owners.
At the very least, ask the agent to confirm that should
another buyer make an offer higher than yours, you will
be given the chance to increase your offer before the home
is sold to the other buyer.
Mistake Number 9
Being Too "Clever" With an Offer
If you decide to make an offer for a home you like, be aware
that the lower your offer the less chance you will have
of buying the home. Often it is best to make one offer -
your best offer. Make it in writing and state that you either
can not or will not pay any more. Be careful playing the
'bluffing' game, it can easily backfire on you. Decide which
is more important - the home you love or the price you will
pay. You don't have to pay more than you can afford, just
don't be too clever or else you may miss the chance to buy
the home you love.
Mistake
Number 10
Not Getting INDEPENDENT Inspections and Advice
It is essential - for your financial and emotional safety
- that you obtain an independent building inspection report.
Be sure you discover any major faults before you buy the
home. The biggest word to remember is the word "INDEPENDENT".
Be careful using anyone recommended by the agent. Some agents
receive kickbacks from advisors they recommend. Also, be
sure to get legal advice before you sign anything. It is
madness to make one of the biggest financial decisions of
your life without independent advice. If in doubt about
the price, consider obtaining a valuation. The hundreds
of euro you spend could easily save you thousands of euro.
Spend it.
Mistake
Number 11
Being Too Quick or Being Too Slow
The right time to buy a home is when you find the right
home at a price you can afford. This can happen on the first
day you start looking or it can take weeks, even months,
of painstaking effort. Don't hesitate to buy if you find
the right home; but, also, don't be pushed into making a
hasty decision. No matter what you might think, you will
always find another home. Take the time to make sure everything
feels right and that everything checks out right. Whenever
this happens, be it on the first day or after several weeks,
it is then the right time to buy.
Mistake Number 12
Being Caught By an Investment Scam
Despite all the negative publicity, thousands of consumers
are caught with investment scams. Be very wary of "free"
offers, such as investment seminars or trips to inspect
property in distant areas. No matter how good these offers
seem, many are a nasty con where consumers are tricked into
buying properties at hugely inflated prices. Often, it is
not until they try to sell that they discover how badly
they have been duped. Be wary of anyone who is trying to
sell you something because it is a "good investment"
or it has "tax benefits" or a "guarantee".
Do your research and don't sign anything without getting
independent advice.
Mistake Number 13
Failing to Complain
If you have a bad real estate experience you must complain. Often the louder you complain the more chance you will have of being compensated. At the very least, you will be helping other buyers to avoid making the same mistakes. Remember, too, that real estate institutes represent real estate agents not consumers. |
