The four most common mistakes first homebuyers make during housing booms
A home is the biggest purchase most people will ever make but few homebuyers get it right the first time.
With skyrocketing prices and a shortage of listings putting pressure on buyers to make snap decisions with their purchases, buyer’s agent Michelle May said it was inevitable for buyers to come up short in certain areas.
She added that there was no perfect property even for those with a high budget and purchasing real estate usually involved some compromises. But the mistakes first homebuyers made tended to follow a similar pattern.
These mistakes were often with the selection of properties but there were also frequent errors inexperienced buyers made when considering the market. Ms May said these were the four most common first homebuyer mistakes:
- Getting caught in the FOMO trap
Auctions can be really competitive. You need to go in with a game plan and stick to it. There’s no room for impulse decisions in property. The last thing you want to do is spend more than you should or buy a home just because of the fear of missing out. The best game plan for an auction is to stick to your finances and needs and wants list.
- Misunderstanding pre-approval offer
Many people forget that getting pre-approval for a home loan doesn’t secure you that money.
Pre-approval only assesses your desirability as a borrower based on your income, financial history and ability to make mortgage payments.
The figure is only an estimate of what the bank is confident you’ll pay back. The bank still needs to see that the property you choose is worth the loan’s value, so they have appropriate collateral should things go south. Pre-approval is an important number and will help narrow your search. But it doesn’t give you the freedom to spend that money on any old property.
- No list of non-negotiables
We’ve all heard the phrase “it has to tick all the boxes” but before setting off to purchase a home, it is crucial to know what those boxes are for you, and also what those deal breakers might be.
No matter what budget you have, there is no such thing as a perfect home. Some compromises will have to be made. There are many things that should be on this list including location, internal light and practicality. Don’t lose sight of what matters to you in a home.
Make sure you take a breath and see the property at least twice before making a decision. Usually on the second inspection the rose-coloured glasses come off.
- Being heavily influenced by ‘the market’
When you’re in the thick of things, it seems that prices will only ever go up and stock will keep shrinking. In reality, when looking at previous hot market history we see that potential vendors are encouraged by crazy sales results and decide to sell because they believe they’re going to make a killing.
This means that more properties come onto the market, buyers have more choice and steer clear of properties with inflated price tags. As the market goes from hot to warm, buyers have more choice and less reason to panic buy. Better to wait than make a bad decision.