Common Property Purchase Pitfalls
Is moving forward with your property portfolio one of your New Year’s Resolutions?
If so, then here are some common mistakes to avoid during your property hunt.
Once you’ve fallen in love with a particular property, it’s hard to go back. To avoid the temptation to get in over your head financially, or the disappointment of feeling like you’re settling for less, it’s best to only look at real estate in your price range.
Start your search at the low end of your price range – if what you find there satisfies you, there’s no need to go higher.
Pitfall 2: Assuming There’s Nothing Better Out There
Unless you are a high-end buyer, chances are that for any home you find that you like, there are quite a few others offering something similar. If you’re considering an apartment or townhouse, the odds are certainly in your favor. Even when you have a long list of must-haves, there are probably several properties that can meet your needs. If there are snags with the home you’ve decided you like – such as major repair issues, an inflexible asking price or a difficult possession date – consider moving on.
Pitfall 3: Being Desperate
When you’ve been looking for a while and you’re not seeing anything you like – or you’re getting outbid on the property you do want – it’s easy to start becoming impatient. Often is much better to wait until something more suitable comes along.
Pitfall 4: Overlooking Important Flaws
You might be tempted to ignore major problems with a property that will be difficult, expensive or impossible to change. Carefully consider your options. New properties come on the market every day.
Pitfall 5: Overestimating Your Handyman Skills
Don’t buy a property that’s more than you can handle in terms of time, money or ability. If you think you can do the work yourself then realize you can’t, any repairs you were planning to make will probably cost twice as much once you factor in the labour.
Pitfall 6: Rushing to Put In an Offer
In a hot market, it may be necessary to move quickly if you find a property you like. However, don’t neglect your usual important research. Take at least a night to sleep on the decision. Taking the time to consider the decision also gives you a chance to research how much the property is really worth.
Pitfall 7: Dragging Your Feet
It’s a tough balancing act to make sure you make a careful decision, but don’t take too long to make it. If you don’t move swiftly, someone else might. Don’t underestimate how time-consuming and routine-disrupting real estate search can be.
Pitfall 8: Offering Too Much
If there’s a lot of competition in the market and you find a place you really like, it’s all too easy to get sucked into a bidding war – or to try to preempt a bidding war by offering a high price in the first place. Make sure the purchase price for the property you buy is reasonable for both the house and the location by examining comparable sales.
It’s natural for emotion to come into play in the property buying process, even for an investment property. Slow down, overcome your emotions and, ultimately, make a purchase decision that’s good for both your feelings and your finances.
Excepts from an article on Investopedia.com