Steps to Purchase a House: 7 Pricey Mistakes to Avoid at All Cost

Purchasing property is no longer a process covered in mystery. Thanks to the Internet, there is now plenty of data accessible to anyone who desires to research the whole home buying process.

However, there are still common traps that people inadvertently fall into. Whether you’re buying your first home or investment purposes, small mistakes and ignorance can cost you a lot and shatter your dreams of buying new home. If you are not careful, buying a new home can become profoundly exhausting and scary, instead of exciting. So, here are the 7 top mistakes you can successfully navigate your way around them in a completely stress-free fashion when you do your house hunting.

Let’s jump straight in with number one on the list!

MISTAKE #1 – Overshooting Your Original Budget

It’s important to remove all your emotion when purchasing a home. You must keep your budget firm and not to easily fall in love with the property just because of the appealing interior design, marketing gimmick and over-promise agent. Always spend within the budget required because mostly life is full of uncertainties. What happens if you change jobs, your salary dips, or the Malaysian housing market takes another dive?

What to Do Instead:

The easiest way to adhere to your budget is simple. Try to seek advice from expertise i.e banker and get pre-approved for a home loan before you begin your home buying journey. Pre-approval on home loan is a great validator as you know what you can actually afford and you will save countless hours on research and purchase your home within your predetermined price range. Therefore, make a budget that enlists all sources of income and all expenses. At all cost, avoid maxing out your spending power as you might require cash for other purposes later. It would also be worthwhile to ensure that all your paperwork is in order at this stage.

MISTAKE #2 – Finding the Home Yourself

Most of you are going to browse Iproperty or Propertyguru to find homes for sale in your desired location. But don’t rely on just your brilliant research skills because finding your own home is like diagnosing yourself of an illness.

What to Do Instead:

Let the real estate consultant vet the homes for you. A professional and good real estate consultant might find you properties that aren’t yet on the market. And of the homes that are on the market, your agent should be able to tell you “what the home looks like, where it’s situated, and the price per square foot in the neighbourhood.”

MISTAKE #3 – Not Knowing the Neighbourhood

When you purchase a home, you are also purchase the neighbourhood. You should equate house hunting to dating. It’s easy to fall in love with someone until you meet their nightmare family. It applies the same with buying a house. You fall in love with the desire property and most of you absolutely must have forget the neighbourhood.

What to Do Instead:

It’s very important to ask the sales consultant to give you data on the neighbourhood so you know how the neighbourhood is doing economically. Secondly, you need to ask your sales agent about the crime rate or any surprises going on in that neighbourhood. Try to explore and visit the neighbourhood around night time. What do you hear? What do you see? There may be meth dealers or biker gangs hanging around, club or bar that comes alive at night disrupting the peacefulness of the area itself. So please study the neighbourhood. If nearby businesses are boarded up or there are lots of empty houses, think twice about moving in when so many people seem to be moving out.

MISTAKE #4 – Not Taking the Time to Understand Housing Market Trends

It’s imperative to conduct due diligence on the housing market trends when you are keen on purchasing a house. The adjustment between supply and demand cause fluctuations in the housing market. At times, it becomes a buyer’s market and favours those looking to buy houses. On other occasions, it becomes a seller market conducive to those looking to sell houses. Customer confidence levels, interest rates and changing economic conditions will also influence the housing market.

What to Do Instead:

Consider to read more different varieties of newspaper, magazines and websites that pertain to the real estate sector. This will greatly assist to offer you significant insights and understanding into the current state of the housing market trend.

MISTAKE #5 – Neglecting the Hidden Costs of Ownership

As a new homeowner, you often make the mistake of neglecting minor cost associated with the house. Therefore, you don’t look beyond your loan amount and your monthly mortgage payment. By doing so, you tend to forget abundant minor expenses that could add up to several thousands of dollars. To name a few of these will includes of maintenance fees and utilities bill, assessment tax and quit rent expenses, property taxes, mortgage insurance, homeowner insurance, repairs or maintenance services and etc. If you don’t have a standby funds in your monthly budget, it will quickly put you in the red state of emergency if you’re not prepared.

What to Do Instead:

Try to work with real estate consultant to help you crunch the numbers on maintenance fees, assessment tax, quit rent expenses, property taxes, mortgage insurance, homeowner insurance and utility bills. Look around for varieties of insurance coverage to get a quotation for comparison purposes. Lastly, aim to set aside at least 1 to 3 percent of the purchase house price annually for repairs and maintenance expenses.

MISTAKE #6 – Looking for a ‘Perfect Home’

Perfect home does not really exist in real estate, and finding the perfect property is like a finding a needle in a haystack. Looking for perfection can narrow your choices too widely, and you might pass over solid contenders in the hopes that something better will come along. But this type of thinking might limit and sabotage your real estate search or lead to you overpaying for a home. The duration also will take longer to find such a home.

What to Do Instead:

Always keep an open mind about what’s on the market and be willing to put in some sweat equity. Gratefully searching for a house to match with your desire and requirement is a lot easier than finding a perfect partner. A bit of planning and some legwork can get you into the home that fits you. No blind dates needed!

MISTAKE #7 – Ignoring the Resale Value

If you are first-time homebuyer, resale value of your home may not seem important at move-in, but you can bet it will be at some point in the future. Sometimes, you may think the property you bought will be a permanent home stay until you reach old age. However, research shows that people typically live in their homes for less than 10 years. So, do not get caught in the trap of thinking that the home is forever. Keep that in mind when deciding which location and home features are right for you.

What to Do Instead:

Study the location and neighbourhood. If nearby businesses are boarded up or there are lots of empty houses, think twice about moving in when so many people seem to be moving out. Ask if there are any developments planned for the area. Being next to a busy road could also reduce value of the property and majorities don’t want to live right next to a hospital or school because of the noise from the playground. To add value to your property, you should focus buying on emerging areas where there are plans to improve connectivity of Greater Klang Valley such as expansion of MRT, LRT and KTM lines.

Conclusion

A home is not something you would purchase several times in your life. Hence, it’s important to be cautious when you are shopping for a home. After all, it is a huge investment and you will want to be sure that you’re making the best decision possible. By knowing the pricey mistakes that you need to avoid, you could safeguard that you commence your association with your new house purchase on the right foot.

Contributed by: Nicholas Chan

For further details please email nicholaschan@hartamas.com