Being a first home buyer can be a confronting experience. You’re entering into the transactions cold, often trying to trump other more experienced buyers and grappling with your hopes and limitations.
While there are many things that can go wrong, there are five typical mistakes to watch out for. Here are the most common trip ups and how you can overcome them.
Not enough research
Not taking the time to research is one of the biggest setbacks any buyer can face, be they a first timer or a multiple property owner. Researching the area, the prices, the buying process and all aspects of the transaction will not only make you feel more comfortable with purchasing, it will also mean that you are in an informed decision when you buy. Being informed ensures you can quickly jump over the majority of hurdles thrown at you.
Research comes in many forms, some of which can include paid-for reports. Other research is less tangible, and often involves visiting the area and inspecting local properties. First home buyers are advised to give themselves enough time to explore the market, both online and off, before diving into a purchase.
Tip: Create yourself a research plan that involves heading to auctions in the months before you are ready to put money down onto a property.
Buying on emotion
It’s natural to feel emotional about purchasing property. After all, it’s likely you’ll be living in this dwelling for a lengthy period of time and calling it your ‘home’. You are also most likely making a significant financial commitment to the project. These aspects always come with emotions involved. This can range from desperation and excitement to pride and fear.
However, while many purchasers will take that emotion with them through the buying process, often leading them to pay more than what a property is worth just to secure it, the savviest home buyers know to leave their emotions at the door and enter into a transaction with a level head.
Tip: If you don’t trust yourself to keep your emotions in check, either pay a professional to buy for you, or find a trusted acquaintance to play your ‘devil’s advocate’ questioning your decisions. Remember, taking a five minute step back now will save you plenty of money in the long run.
Relying on those who are not experts
Younger first home buyers, especially, are prone to asking their parents, friends and those they don’t know online for help. While these three avenues can prove very useful, it’s important that you are aware of the source of the information, why it is being provided and how it relates to you.
There are many people who will call themselves a property ‘expert’, and it’s unfortunately often the job of the home buyer to determine whether or not this is the case.
Tip: Ensure who you are speaking to is qualified, and if you’re not paying them then know how they get paid and their motivations for giving you this information.
Being aware of what the bank will lend you is one, very critical, element to purchasing. However, being aware of what you can realistically afford is just as important.
Many buyers, particularly when the market increases in value, look to get the best, and often priciest, property that they can possibly be provided with little regard to the stress and lifestyle pressure this commitment may come with. This is your first purchase, not your last, and should be considered a stepping stone.
Overextending yourself in this aspect is likely to cause you financial hardship in the long term, and little wiggle room should anything go wrong in those ‘what if’ situations. If you are borrowing large sums at high LVRs then you need to be extra careful.
Tip: Set yourself up a financial plan ahead of time to see if you can afford the mortgage repayments. Also bear in mind extra unexpected costs, and speak to a professional about insurances for the worst case scenarios.
With all this said and done, one of the most common slip ups for first home buyers is simply analysis paralysis, or delaying without reason to. If you have undertaken your research and prepared yourself, there’s no reason you shouldn’t buy a home.
You can quickly identify whether or not you are stuck in analysis paralysis by considering the following:
- Am I financially able and prepared to purchase?
- Have I undertaken all the necessary research?
- Am I afraid of purchasing a property?
If you answered yes to these questions, then the issue may lie in your fear and emotions. Rationalise the process to yourself.
Tip: If you can’t bring yourself to buy, you either need to do some soul searching and take some time to decide whether this step is right for you, or consider speaking with a buyer’s agent.
Research your market with our Property Price Estimates tool.