How to avoid traps when purchasing property?

Published on: Nov 5, 2020

Don't let the horror stories about purchasing a property put you off. Buying property can be a thrilling time, and if you're doing it for the first time, you are about to change the course of your life for the better.

The number one thing to remember when you want to buy property is to learn from other people's mistakes rather than make your own. That means do your research and pick the agent and team you can rely on.

Learning from others

When there is so much at stake, you can't afford to make mistakes when it comes to buying or selling property. The price can sometimes be enormous and can turn a significant event in your life into a colossal tragedy. It's certainly worth learning from other people's mistakes, and here's some you can easily avoid making yourself.

Buying on emotion

This is a bit like some other great advice – don't go grocery shopping when you're hungry. It is never more important to purchase with a clear head than when you are making what might be the most significant investment in your life.

Buying what you want instead of what you need can lead to disaster. Ask yourself, do you need four or five bedrooms? And genuinely consider whether a house or an apartment will best suit your needs.

Do you have to live in the best suburb? These kinds of options might provide better capital growth, and that's fine if investing is what you're aiming for, and it is within your financial means. But it would help if you balanced everyday lifestyle with financial commitments.

Lack of research

There's nothing worse than finding out all the negatives of a property and its location after you've paid good money for it. The answer is research, research, research. The more you look at a home and the more time you spend in the neighbourhood, the more confident you will be that you are making the right decision. Of course, it pays to use a real estate agent who has researched the area, the region, and the property inside out.

Some smart buyers even try camping in their car for the night to see what the neighbourhood is like.

Maybe that's going too far, but it is worth at least driving from the potential new home to work during peak hour in the morning to see if that is something that will get on your nerves.

Buying a house or a unit is usually a long-term investment so it's good to get an idea of what your street and surrounding suburb will be like in five or ten years (or even further into the future). An excellent real estate agent, especially one with a history of selling big projects, will have a good idea of what is in their pipeline – so ask them what their research says about the medium-term future.

Lack of Independent advice on buying a house

There are several stages during the process where independent advice can prove invaluable. Getting a Pre-Purchase Building Inspection can save some nasty surprises at a later date and this is pretty much standard practice for people buying a house or unit in the Whitsundays.

Also, don't forget to take legal advice before signing any contracts as it might be advisable to add one or two clauses for your protection. Having a conversation with your solicitor (or the business you intend to use for conveyancing) at the start will give you more confidence about negotiating a deal and also give you a better understanding of the costs of buying a property in the Whitsundays.

Over-committing financially

Be realistic with your expected budget, and you will need a buffer. Consider what will happen if interest rates rise – which, given the current historic lows, is inevitable.  What will happen if you lose an income or two? Look for the dangers so you can be prepared.

This is an easy trap for first home buyers to fall into. The critical thing to remember as a first home buyer is that the purchase is your first house, not your last house. The best thing you can do is buy a place you can afford, pay it off as soon as you can and then you can look to upgrade. It is better to take a few steps to get where you want to go, rather than risk over-extending and having to go back to square one.

Some of the other pitfalls that can leave you over-committed are hidden costs (see below) and failure to account for future maintenance issues. That's one reason why building your first home from scratch is often a good idea. Firstly, you may qualify for the First Home Owners Grant and, secondly, there should be little to no maintenance in the first few years because everything is brand new and any building faults are the responsibility of the builder.

Hidden costs

Don't underestimate the impact of hidden costs in buying a house or unit. Be prepared to pay as much as an extra 10 per cent by the time the transaction settles. Many additional costs come on top of the purchase price, including legal, search fees, stamp duty, mortgage fees, etc..

Be aware that things such as rates, insurance, and maintenance are ongoing costs that you didn't have to pay when you were renting.

To help you through the process and avoid the pitfalls of buying real estate in the Whitsundays, find an excellent real estate agency and deal with someone you can trust.

If you're new to the area or just a local looking to move, contact us here 07 4946 2000, for more assistance.