By Hannah Nicholas,
MSN NZ Money writer
Buying a home is an important decision and purchasing your first home, even more so. Here are the 10 steps to avoid when it comes to purchasing your first property.
1. Not securing pre-approval
One of the first things you should do once you decide you're going to buy your first home is to get pre-qualified for a loan. This way you will know in advance how much you can afford and what the lender will loan to you. You will also be ready to act once you spot your dream home.
Make sure the pre-approval from your lender is put in writing, giving you the confidence and means to make an offer on a home or bid at auction.
2. Not doing your research
Failing to understand the market and exactly what properties are worth could be your downfall in securing a property at the right price. There are lots of places where you can research property prices. Look at auction results in newspapers or on the Internet, speak to local real estate agents regarding recent sales or consider purchasing a professional sales report for the suburbs you are interested in. Such reports give a detailed analysis of sales on a street-by-street basis.
3. Not being familiar with the sales process
Before you start your search be aware of the practicalities of buying a home. For example, read up on how auctions work, the best way to go about making an offer, what to look for when buying property, and real estate agent tricks and traps. Speak to friends and family about their experiences.
4. Not looking at all aspects of the property
When searching for your dream first home, it's not just about inspecting the rooms and outdoors areas, you need to take many other issues into consideration.
Consider the following:
- Possibility of aircraft noise
- Local traffic levels
- Parking availability
- Nearby industrial activity
- Developments planned for the nearby area (talk to the local authorities about this)
- What the rest of the street looks like
Tip: Visit the property and surrounding area at different times of the day and observe what's happening. The last thing you want is one of these factors affecting your quality of life once you move in.
5. Choosing the wrong area
The suburb you move into will become a big part of your life so it's important you make the right decision when it comes to choosing a suburb.
When compiling your list of suitable areas, consider the following:
- Are there adequate transport facilities?
- Will you have to commute far to work?
- Do you like the surrounding area and the facilities it offers? Are there adequate amenities nearby for your needs?
- If you plan on starting a family, are there enough related services nearby, such as parks, childcare centres, hospital etc?
6. Failing to get a property inspection
We've all heard horror stories about those who've purchased a new home only to face endless problems. While you might think this will never happen to you, just remember that buying a property will be one of the most expensive financial commitments you'll ever make. And it could prove an even more costly one if you don't get an independent pest and building inspection done prior to purchase.
7. Not acting quickly enough
Once you see your ideal home, you may have to move quickly. Whether it's the first house/apartment or the 100th one you see, if it feels right and it's within your budget (and you've looked at all the aspects above), don't leave it too late before making an offer. Someone might just beat you to it.
In the same vein, don't be talked into buying any property you're not sure about.
8. Not being alert to gazumping
Just because you've made an offer and it's been verbally accepted, and the real estate agent tells you "It's in the bag", don't be fooled into believing the property is yours. Until you and the owner sign a legally binding contract nothing is set in stone and another buyer could make an offer and outbid you.
9. Letting your emotions get in the way
While the search to find your home will be an emotional one, it's best not to let your emotions get in the way when it comes to transacting a purchase. This especially rings true when it comes to auctions, as under the circumstances, it's easy to get carried away. If you feel too emotionally attached and feel you will go over your budget, consider having someone else do the bidding for you.
10. Going beyond your means and budget
As a first home buyer (and this rule applies to anyone buying property), you should never go above your budget and financial means. If you do, it may affect you and your family's short-term and longer-term financial situation. It's always better to play it a bit safer and think about events that could happen in the future, for example job loss or interest rate rises.