Buying a house is a stressful & expensive process. Mark an experienced buyer’s agent from Wise Real Estate Advice points out the common mistakes so you can avoid the financial risk’s in purchasing.
Underestimating the full costs of buying a home.
Many first homebuyers fail to budget for the full costs associated with buying a house. A buyer’s advocate will take into consideration the hidden cost’s when negotiating a final price for a property.
- Mortgage insurance.
- Stamp duties.
- Unpaid rates.
- Legal representation.
- Building inspections.
Clauses are added to a contract of sale to protect the buyer interests.
Example: a finance cause allows a buyer to terminate the contract if finance is declined, hence all deposit moneys will be paid back to the buyer with no penalty charges.
A common mistake property buyer’s make is letting real estate agents influence what you insert into a contract of sale. The correct wording of a contract clauses can allow a buyer to terminate a contract of sale without losing any money hence reducing the risk involved in purchasing. Incorrect clauses can force a buyer in to purchasing a dodgy house, major repair bills or not losing a 10% deposit. Below are a few example clauses real estate agents should not insert into a contract as they represent the sellers interest not the buyer:
- Building inspection clauses.
- Pest inspections clauses.
- Finance clauses.
Short financing periods
Short finance periods can allow vendors an opportunity to end a contract of sale due to the buyer not being able to obtain finance approval in time. The benefit to the vendor terminating a contract is accepting a higher offer from another buyer, a common occurrence in a hot real estate market. It’s much better to have a longer period to secure financing at least 21 days.
Don’t assume you have bank approval
Not having finance lined up exposes first homebuyers to the emotional distress of losing their dream home. ‘The devil is in the detail,’ and when bank’s offer conditional approval it’s up to the buyer to meet the conditions of the approval. A good buyer’s agent will make sure these conditions are fulfilled to reduce risk to the buyer. Example: buying a property at auctions with a conditional approval can expose the buyer to huge financial loss if finance is declined.
Some more areas of risk:
Not attending the final inspection before settlement,
Over spending on a house
Choosing a risky loan
Not visiting the property multiple times.