Making the move from the family home or a rental property to owning your first home is a big step and for the novice, there is a lot to think about. Much is at stake and emotions can run high. There is plenty of advice available from both reputable sources as well as well-meaning anecdotal advice from family and friends. Coupled with the punishing round of open houses and inspections, home ownership can become overwhelming.
But before you get caught up in the excitement of looking for your first house or apartment, make sure you are not making any of the following mistakes:
- Not understanding your budget
Searching for a home can be addictive. There are some beautiful properties on the market. Real Estate Agents will want you to see as many of these as possible. But be aware of the desirability trap. The budget you have in mind can start to creep up by $2000, $5000 or even $10,000. Before you know it, your expectations and your budget have well and truly parted ways. This can lead to disappointment and frustration when a lender or bank won’t extend the required amount. Make sure you keep your budget at the forefront of your mind. If you know you are susceptible to ‘budget creep’ make sure you only view properties you know you can afford.
- Assuming mortgagee sales are a bargain
A mortgagee sale can smell like a potential bargain but buyers need to be very aware of the true value of the property in the current climate as well as what was actually owing on the property to begin with. Mortgagee sales can also indicate a house that has been vacant for some time and may require unexpected renovation and repair that is not covered by your budget. Research and a solid understanding of building and repair costs is vital when looking at mortgagee sales as a potential purchase.Showing emotion.
- Showing Emotion
The less emotional you can be when purchasing property the more clarity you will have with your decisions. Having said that, your first home purchase can be very emotional as it represents many important things to do with your sense of home, and family. It also represents a large capital outlay. It is very easy to get caught up in the moment when attending auctions and viewing houses or apartments, however emotion is the main culprit in blowing the budget. Try to keep several potential properties on the radar and not invest too much emotion on a single option.
- Underestimating the real costs of owning a home.
Many new homeowners are shocked at the real cost of home ownership. While there are many additional costs during the purchase process, they are usually expected and budgeted for. Post purchase there are other, often unexpected, outgoing expenses that, while they seem minor at the time of purchase, can add up quickly. Beyond ongoing costs such as house and contents insurance, council rates and utilities, areas to keep an eye on are plumbing and roofing repairs, anything electrical as well as structural issues.
- Failing to find a good buyer’s agent.
Engaging a buyer’s agent is one of the most efficient ways you can approach the daunting task of a first home purchase. The real estate market requires both knowledge and confidence. A buyer’s agent represents you and they can guide you through the complexities of securing finance, to understanding valuations, inspections, auctions, conveyance and contracts. While it may appear to be an unnecessary cost, the number of mistakes and pitfalls a buyer’s agent can save you from are priceless.