7 costly emotional mistakes made by first home buyers
Buying a property will always be an emotional decision, particularly if you are a first home buyer or next home buyer. Even property investors can get emotional and nervous. However, by not keeping your emotions under control can mean you make mistakes, of which can be costly.
At iBuyNew we find that first home buyers and next home buyers find it difficult buying a property off the plan as they are unable to see the property in its physical form compared to buying an established property.
It can be a hard concept to grasp as buyers rely on looking at floor plans, pricelists, brochures and images to go about their off the plan property purchase. Instead they should be considering their property not as a home, but as an investment for the long term.
So what can buyers do to avoid making costly emotional mistakes when buying property?
Here are 7 emotional mistakes you should avoid: 1) Falling in love at first sight
It’s very easy to fall in love with a property from just looking at the images and floor plans. However, it is important to remember that the images are not 100% accurate and are normally based on artist impressions and drawings, which means that your apartment might not look like these images once built. They are just an example of what they will look like.
It is also important to remember that you review and compare other off the plan properties too to discover what you like or don’t like and determine what it is you actually want to buy.
2) Overpaying for a property
Another costly emotional mistake is by overpaying to get into the property market, which is particularly true for booming markets such as Sydney and Melbourne. Buyers will often become desperate to enter the property market or buy in an area that is becoming increasingly popular that they may end up paying over the odds for it. To avoid overpaying for a property, buyers should take a step back from the emotional side and do their own research first and check prices of similar properties in the local area to ensure you are not being ripped off in a heated market.
3) Waiting for the perfect property to come along
By waiting to find the perfect property then you are wasting valuable time in the market. Those who tend to wait for the perfect property are normally using an excuse to avoid buying or are scared to buy and will be constantly looking for a better property, which unfortunately may never come. This means that not only are you wasting time, property prices are also likely to go up in value and become more expensive making it harder to enter the property market. It also means there is likely to be more competition to go up against.
You therefore should make a list of all the things you must have and all the nice to haves. When you come across a property within your budget, you should tick it off against your list and if it matches then this is the right one to buy and you should act quickly before anyone else snatches it up first.
4) Buying the cheapest property
If you are a first home buyer or home buyer then you might be on a strict budget. However, this does not mean you should buy the cheapest property you find. Typically, the cheapest properties might have problems with it or are not shifting so the price has been lowered. It is important to research the property first to find out if there is anything wrong with it and the likelihood of it growing in value. In an apartment development it might be that the apartment has a small floor plan. Try to buy an apartment that is at least 50 sqm in size as lenders will be more likely to assist you with a loan package.
5) Becoming too attached to a property
There is also the emotional mistake of becoming too attached to a property. Whilst this can be common for established properties, it can also occur when buying a property off the plan. It is important to look beyond the pretty pictures and look at the solid facts which back up why this makes a good investment and property purchase.
The property you might become attached to might have been highly marketed and so has videos, glossy brochures and display suites which give you a real feel for the property. However this marketing does come at a price and this cost will be passed on to you when buying the property so bear this in mind. You should also look at other properties as well before making the decision to buy, so you compare numerous properties.
6) Thinking your property will always grow in value
Generally properties will double in value every 7 – 10 years. However, this is not always the case for every property. Yes your property might have a few good years of growth, but the property market can also stagnate and not move much, or even fall. To reduce the likelihood of this happening then you should aim to buy in a high growth area with high demand and low supply.
7) Signing the contract too soon
Before buying a property you need to sign the contract and pay your 10% deposit. It is important that you don’t get carried away on an emotional wave and sign your life away as soon as you make the decision to buy as this can turn into a costly emotional mistake. You need to carefully check the contract and ensure you get an independent and reputable lawyer who is familiar with off the plan contracts to read through it first and insert any clauses that need including to ensure your interests are protected. It is extremely hard to make changes once the contracts have been exchanged as you will require a new contract, which the developer might not agree to.
Although buying a property can be an emotional experience, it is also an exciting time. By avoiding the above seven emotional mistakes, keeping a level head and doing your own research, you should be able to buy a good property in a good area with good growth.
Published on 20th of October 2015 by Marty Stanowich