First homebuyer mistakes to avoid
The world of property ownership can seem scary for first homebuyers who are often buying purely with emotion.
Yet every homebuyer and investor had to start somewhere and there were many lessons they learned along the way.
Empower Wealth’s Ben Kingsley said first homebuyers often broke the cardinal rule of not sticking to their original budget.
The offer of more money from a lender was usually too tempting for a first-timer to pass up, he said.
“The number one is they blow their budget,” he said.
“They normally justify to themselves to actual spend a little bit more. If they go back and reset their numbers that’s about false expectations around what does my money really buy me? Am I willing to move on that and what are the consequences? And what sacrifices am I going to make around my cash flows and budgets?”
First homebuyers also often bought in, or close to, where they grew up because of its familiarity, which could have financial implications over the long term, he said.
Another blunder was thinking that finance pre-approval meant their finance was approved when it was not. Kingsley said first homebuyers also did not review contracts of sale thoroughly enough.
“Some people spend more time studying their phone plan than they do studying their contracts or they don’t want an out-of-pocket ‘expense’ of a couple of hundred dollars by a conveyance or a solicitor,” he said.
Doug Disher Real Estate principal Doug Disher has seen his fair share of first homebuyers in his 30-plus years in the sector.
He prefers to consider the do’s rather than the don’ts to help would-be homeowners and investors into the market. And two of the most important are to be ready and not to get too much “advice” from friends and family.
“Make sure you’ve been to the bank and shop around for the right deal. Be prepared because often the first property you see can be the best. It happens very frequently,” he said.
“Avoid asking family or friends for their advice about whether this is the right house. Asking someone else to make a decision like that, it’s unfair on the person you’re asking, and they’ll generally say to keep looking when that could be the wrong thing.”
Disher also recommends prospective property owners be persistent, submit written offers rather than verbal ones, use a lawyer to complete conveyancing and always consider the property’s position.
“Always go for a good position, even if the house needs work. You can always fix up the house, you can’t change the position,” he said.
“Also, even if you have to go back with the same offer twice, don’t give up.”