Buying a property is something most people do only a few times in their lives.
Given that it’s not something we do everyday, there can be a lot of room for error, especially if you go it alone and don’t seek help. Here are the most common mistakes buyers make:
Mistake #1: Forming an emotional attachment
Many buyers fall in love with a property. As we know, love is blind, so once this happens you can’t see any imperfections with the property and you’re willing to pay whatever it takes to buy it. This is where you end up overpaying, and potentially buying the wrong property. If you can’t separate your head from your heart find someone who can. A buyers’ agent, for instance, can be completely objective. They’ll spot any imperfections and will negotiate hard, ensuring your budget isn’t exceeded, as they don’t have a fear of missing out.
Mistake #2: Buying on a whim
This happens when people either a) fall in love with a property, or b) are sick of looking for the right property so they decide to just buy anything. Property is a huge financial commitment, so a purchase isn’t something that should be entered into lightly. A decision to buy should always be well thought out, and backed up by plenty of research. In addition, you should plan ahead when it comes to choosing a property type and location – for instance, don’t buy a one or two-bedroom home if you’re planning on having a family in the not-too-distant future. There are big costs associated with buying and selling, such as stamp duty and agent commission, so you want to hold the property for a long period of time.
Mistake #3: Failing to do proper due diligence
This applies to researching the area before buying, right through to inspecting your chosen property. When you start looking for a property you should do plenty of research, on both the location you’re looking to buy in and the prices being paid for properties in your area. This will help you make an educated decision about whether you’re making a smart purchase. When you find your ideal property, your due diligence should continue with thorough inspections (by you or a representative, as well as a building and pest inspector). You need to ask the right questions of the agent to find out every necessary thing about the property, and getting the appropriate searches done through your conveyancer. Always make sure you have the right protection clauses in the contract, including making the purchase subject to a building and pest inspection. If you miss a defect you could be thousands of dollars out of pocket, and if you don’t get to know the property you could get a rude shock when you take ownership.
Mistake #4: Getting the search area wrong
Some buyers look to buy over a huge geographical area – they might be looking to buy property on the Gold Coast, north of Brisbane and south of Brisbane. It’s better to narrow down your location based on set criteria. This will differ depending on whether you are an owner-occupier, investor or renovator. If you can choose a couple of different suburbs to look in you’ll be able to do better research and make a smart purchase. Having said that, particularly if you’re an investor, be prepared to look outside your home suburb. The best investment areas might be a little further afield.
Mistake #5: Spending too much
Before you even start to look at properties, calculate how much you can really afford to spend. Most people don’t buy with cash, so this will likely involve going to your financier or mortgage broker to find out how much you can borrow, and getting pre-approval for that amount. Don’t buy a property at the maximum amount just because you can – buy what you can comfortably afford. Remember to take into account all the costs associated with buying, such as stamp duty and government fees, which can be tens of thousands of dollars. Other costs include moving, insurance, building and pest inspections, bank fees and conveyancing, as well as running costs of the new home, especially if it’s bigger than where you were living previously.
Mistake #6: Failing on finance
Any property investor will tell you that having the right finance structure is key to having a successful portfolio. No matter what type of buyer you are, you must get the right type of loan for your circumstances. This will involve looking at which financier can provide the best rate, whether you pay principal and interest or interest only and even the loan’s duration. No matter what you do, make sure any purchase contract is subject to finance, so if you can’t secure a loan you won’t end up in trouble.
Mistake #7: Failure to act
Some people start looking for a property to buy, and then either get overwhelmed or fed up with missing out on properties, and give up. Others get caught up with constant research and, while they’re always looking, they never quite get the courage to commit to a purchase. While it’s important to do thorough due diligence on both the area you’re looking to buy and the property itself, don’t let fear about something going wrong hold you back. If you do the necessary checks you can be confident 99 per cent of the time things will go smoothly. Spending years on the sidelines can see you miss out on smart buying opportunities and capital growth as the market continues to move. If you lack the confidence seek the help of a buyer’s agent who can guide you along the way, and decrease the chances of something going wrong.
Mistake #8: Obsessing over finding a bargain
There are buyers out there that spend their time ‘lowballing’ vendors. They look at a property, they think it’s so-so and then they say ‘what the hell – I’ll put in a low offer’. This is wasting everyone’s time. While you might find the odd opportunity to snag a property below market value, these are rare, and there’s generally a good reason why it’s going so cheap. It’s better to pay market value for a good property than to buy a bad property cheaply. At the same time don’t be afraid to make an offer for a property you want – as long as you really want it – even if it is a little lower than market value. You just never know if you will end up getting lucky.
Mistake #9: Trusting the selling agent
Here’s a tip – no matter how friendly they might be, the selling agent is not there to help you out. They are getting paid by the seller, and their job is to get the seller the highest price as quickly as possible. They’re highly experienced in sales and they have a million tricks to convince you to buy. So it’s simple – don’t trust the agent. If you want someone representing you as a buyer you need to seek the help of a buyers’ agent.
Mistake #10: Failing to seek help
When it comes to property, everyone is an expert. Well, at least they think they are. The reality is that many people only buy and sell property a few times in their life, and so they’re not very familiar with the process. There are plenty of experts out there offering their services though, so take advantage of this. Yes, it may involve a fee, but buying a property is a huge financial commitment that you want to get right and using a professional who has bought and sold many properties can actually save you money in the long run.
Mistake #11: Failing to take advice
Many buyers are wise enough to get advice from experts, but then they fail to listen to it. One example of this is getting a building and pest inspection and then ignoring the recommendations in the report. This can only end in disaster.
Mistake #12: Judging a book by its cover
Some houses have an ugly façade, but a tonne of potential. Most buyers can’t see past the poor presentation, and so they miss out on great opportunities to add value. If you’re a renovator you’ll particularly need a keen eye for spotting an ugly duckling. While buyers need to see past poor presentation, the same goes for a pretty property. Don’t fall for fantastic styling – you need to see past this and examine the bare bones. Focus on the fundamentals of the property – the things that can’t be changed, such as location and aspect – no matter what it looks like.
Mistake #13: Being a sheep
It’s common for people to buy when others are buying. They turn on the news, see the media reporting positive things and others are buying, so they decide they should be buying too. In terms of timing the market, in many cases it’s actually better to buy when others aren’t buying, as vendor discounting will be higher. But the best rule of thumb is to buy at the best time for you, when it suits your circumstances and you can afford it. Don’t worry about what anybody else is doing; focus on yourself. There are always smart buying opportunities around if you know what you are looking for.
What is a buyer’s agent?
A buyer’s agent is someone who will do the research and hard work to find you a sound investment property that will meet your brief, negotiate on your behalf and help you build your property portfolio. A buyer’s agent acts as your advocate in the buying process.
Buyers’ agents successfully negotiate to buy properties for our clients every day of the week, so our skills are fine-tuned.
What makes a good buyer’s agent?
- knows their local market – they must live and breath the property in their area
- can show you the hidden issues that could turn into nightmares after the property is purchased
- understands the true value of property and the fundamentals for capital growth – rather than repeating what is said by the media and sales agents
- understands the power of negotiation and can successfully negotiate on your behalf
- has good relationships with sales agents. This makes it easier to negotiate, especially since sales agents are more candid with buyers’ agents, and it also means the buyer’s agent may have access off-market deals.
- has experience in the property industry.
At the end of the day you will save money by using a credible professional who is your advocate – acting on your behalf and in your best interests.
Let us help you buy your next property
At Brisbane Buyers’ Agency we help our clients make smart property decisions as easily as possible. We are solely focused on the Brisbane market. We have a proven process and are highly experienced negotiators who regularly save our clients money, time and frustration. Our proprietary property analytics tool, the Brisbane Buyers Agency Smart Buyers Index, gives our clients the inside running on the true property hotspots in Brisbane. We work on a flat fee arrangement, we do not work on commission, so you know exactly what your costs will be.
Please call me on 0409 499 034, or email me on firstname.lastname@example.org to arrange a free consultation for your next property purchase or investment in Brisbane.