BUYING a house is a huge investment – probably the biggest one a person is likely to make during his or her lifetime.
As such, most people would have taken into cognisance their investment. However, there could be some details that they may have overlooked.
The following are some mistakes to avoid when buying a house.
Location – be all, end all?
Location, location, location – it’s the mantra for success when it comes to property – be it for investment or personal ownership.
“Location is everything. You’d want to be in a place that’s well connected and where there’s developed infrastructure so transportation will be easy,” says new Malaysian Institute of Estate Agents (MIEA) president Siva Shanker.
However, he points out that buying property based on location – is not the “be all and end all.”
“In the last 10 years or so, some developments have proven that location is not the be all and end all. Take Country Heights for instance, which is a beautiful development in the middle of a rubber estate in downtown Kajang.
“This development has proven that even if you are not in a perfect location but there is a good product, you can still emerge a winner.”
Siva also pointed out the Twin Palms development at Sungai Long, located off the Silk highway.
“The closest town, which is Bandar Mahkota Cheras, is 3km to 4km away. That’s how far you need to go if you need to get provisions. It (Twin Palms) is in the middle of nowhere but when you go in, you forget it’s in the middle of nowhere.”
One industry observer says banks can be quite strict when it comes to approving loans.
“Banks will usually query the buyer if the house is near a sewage pond, high-tension wire, major highways, electric sub-station. All this will affect the value of the house,” he says.
Ripe for inspection
Many potential buyers, once they see a potential property that they like, don’t quite inspect it enough to be sure it’s an ideal investment.
“Many potential buyers don’t investigate the background of a property. Someone may have died there tragically in the past and after a month of living there, they are alerted by their neighbour and then discover it was a mistake to buy,” says Thiruselvam Arumugam, executive director of consultancy firm PPC International Sdn Bhd.
Thiruselvam says many potential buyers also fail to check if the property is liveable.
“Most people buy property with their hearts and not their brains. Many don’t check if the property is infested with termites, or check if the ceiling has wet spots due to internal leakages.
Buy within your budget
Siva says many people purchase properties that they can’t afford.
“This is especially the case for first-time buyers. Instead of trying to purchase a property that’s worth RM200,000, they buy one that costs RM400,000 and then have problems paying it off.
“Instead, you should slowly upgrade. Start off with RM200,000, after a few years, sell it off for a higher price and upgrade to more expensive property. Then after a few years, sell it off again at a profit and invest in something worth more. Don’t make a bungalow your first purchase.”
Siva also advises that potential purchasers should first check their eligibility – such as credit-worthiness and age – before putting a down-payment.
“Instead of going to the bank and checking with them, many people put down a down-payment on the property first and only then find out if they qualify for a loan.
“Then, when the loan doesn’t get approved, their money gets forfeited,” he says.
Consider added costs
According to an article on Forbes.com, buying a home isn’t just a matter of “replacing a rental payment with a mortgage payment.”
“There are also maintenance costs, utilities (which will likely cost more) and property taxes. Ask the homeowners about their average utility costs and property taxes, get a homeowner’s insurance quote and budget about 1% of the home’s purchase price for annual maintenance. Then run the numbers to see if you can afford the home,” it says.
Renovations and costs
Siva notes that many Malaysians that buy into a property like to make renovations to it almost immediately.
“Some people – they might buy a property that costs RM500,000. They then tear it down and do work that costs another RM200,000. Then, when they want to sell it, they automatically think the property costs RM700,000 – but this isn’t necessarily the case.
“This is because the next buyer may not like what you did. So in the end, the RM200,000 you put down may be worth nothing.”
The proper channels
Siva advises that a potential buyer should engage an authorised estate agent to handle the transaction.
“When buying or selling a property, the biggest mistake is dealing with an illegal estate agent, because then you would be unprotected by the law.”
Another industry observer says one should also engage a good lawyer to handle the transaction.
“Get a lawyer that can verify for you if there is an outstanding loan, to ensure if the title is in the seller’s or bank’s name, or if there is a caveat on the property,” he says.