Common buyer mistakes: Are you guilty?
Because so many buyers only go through the buying process once every seven years or so (the average time that Australians move house) they can be a little “rusty” when it comes time to purchasing what is often the largest asset of their lives. Here at House Search we’re often approached by several clients who elect to seek professional help during this very emotional time. Being at the coalface we also hear about the previous experiences they’ve had and mistakes that have been made along the way. Here’s some of the more common errors that many inexperienced purchasers make:
Not conducting enough local market due diligence. This is imperative to avoid overpaying when you do come across the ideal property. Invest in some recent sales data, follow local sales and auction results and track the specific market in which you’re aiming to buy.
Not obtaining finance approval. Don’t even think about looking at real estate until you’ve obtained pre-approval for finance so you know exactly how much you have to spend. Not doing so can be a recipe for heartache, not to mention a waste of time.
Believing the “price guide”. Though we like to think that agent-provided price guides are accurate, buyers need to conduct their own realistic research as such guides can be misleading at times. Again, this comes down to local market knowledge and research into values.
Not being organised. In any market a quality property will more than likely have other interested buyers. Often buyers can miss out as they didn’t have all their “ducks lined up” ready to purchase and so miss out or become gazumped by a more organised purchaser. Ensure the finance is approved, have a solicitor or conveyancer ready to review the contract, have the chequebook ready and be prepared to make a decision. Vendors can be fickle creatures and verbal acceptances sometime stand for little in the world of real estate.
Poor negotiating. Inexperienced buyers can end up overpaying here due to their inability to “read the situation” and negotiate favourably. It’s also not about just getting the right price- terms and conditions can make a difference as well to the vendor’s decision. Increasing offers without a counter offer, leaving too much time between offer and exchange and losing out to another buyer, letting personal pride or ego get in the way of a win-win transaction, being impatient, not acting quickly enough, being unrealistic on price- these are all common mistakes that can see buyers lose the house of their dreams.
Emotional buying. Need we expand here? Auctioneers love emotional buyers – they go over their limit, have no time to suffer buyers’ remorse as the hammer falls in their favour and spend the next few months justifying the extra tens of thousands of dollars spent to themselves as a form of solace. Do yourself a favour and get someone else to bid on your behalf if you feel you can’t stick to your limit- and never make it an even number. Round up (or down) to a price you’d be 100% happy to walk away from. Auctions are not for the faint-hearted and you also need to have a “passed-in” plan should you find yourself at a negotiating table with three agents and the auctioneer after the event.
Analysis Paralysis. Doing nothing at all can often be the result of information overload, lack of confidence and an inability to take action. For those investors or home owners waiting for a 30-40% fall in market prices before they decide to buy, best of luck in your quest! Whilst you’re paralysed by inaction, there are many others out there who’ve bought, regardless of the section of the cycle we happen to be in, and been more than happy with their decisions and results. As for future property predictions, I’d be more than happy to hear from someone who has access to that elusive crystal ball- guaranteed capital growth is a myth and don’t believe anyone who can tell you otherwise. Buy when you can afford is an oft-heard mantra and for good reason.
If, like many of our clients, you wish to avoid making some of the above mistakes by engaging a professional advocate to work on your behalf we look forward to hearing from you. Having an advocate in your favour can make all the difference.
This article first appeared on the REBAA website