BUYING a home, be it to live in or for investment purposes, is a huge step for anyone.
Considering that it’s the single largest financial commitment that the average person will make during his or her lifetime, it’s important to ensure that the house-buying transaction is a smooth one.
Here are eight mistakes to avoid when buying a home.
Not doing your research
Savills (M) Sdn Bhd group managing director Datuk Paul Khong says young or first time property buyers at the low and mid-class segments buy properties without really doing much research.
“Many of them like to decide on impulse and will easily get attracted to cheap pricing and financing, as well as the chance to own property.
“The buyers get attracted to the nice brochures without reading the fine print or looking at their actual affordability, thus subsequently stand to regret their decisions.
“This is not a new phenomenon and it is a repetitive mistake by many, ” he tells StarBizweek.
If no proper research is done but earnest deposits are already paid, Khong cautions that buyers may stand to lose money.
“This can happen if the transaction falls through or if there is an error in the transaction due to some erroneous restrictions or for just buying the wrong property.”
Not managing your finances
City Valuers & Consultants Sdn Bhd real estate services and business development head Ruben Kelvin says a wise homebuyer or investor needs to analyse their income assets, decipher debts and get pre approved for financing before putting in an offer or an earnest deposit.
“At times what you think you could afford and what the banks are willing to lend you may not match up. If you sign a contract and the bank is not able to lend you what you need, you may have to forfeit any earnest monies if you are unable to pay the differential amounts, ” he says.
Buying with your heart, not head
Rahim & Co International Sdn Bhd real estate agency chief executive officer Siva Shanker says it’s understandable to get carried away in the excitement of buying a home, especially for the first time.
“Many people get caught up in the moment.
“They don’t think about it being a potential investment, what problems they may have with the property down the road, if they do decide to put it back on the market.
“They fall in love with it and do the silliest things to it.”
Turning it into what it’s not
Siva says many buyers, especially here in Malaysia, just love buying a brand new home, tearing it completely down and then rebuilding it all over again with some “personal touches” added to it.
“Many people like to tear it down and do extensive renovations to it.
“They may buy a property that costs RM500,000 and then they spend another RM500,000 on renovations.
“But what they fail to realise is, all that work doesn’t turn it into a RM1mil property.
“If you wanted a different kind of house, then why didn’t you buy that type of property? You might think it’s cool to have an orange kitchen cabinet, but the next buyer that comes along might not think the same way.”
Siva says that any kind of renovation should first be well thought of, adding that whatever changes made should be something that can cater to a wide market.
“Just do basic fitting-out, things that are neutral. Leave the walls white. Everyone likes a white wall. As for furniture, go with something that will accommodate a wider spectrum of people.”
Not inspecting the house
Ruben, who is also director of design and build outfit, Greenhill & Mason, says one should always inspect the premises thoroughly before buying it.
“A well designed home with nice finishes, quality fittings and built-ins are always a plus point, but most of us will not be able to see beyond the appearances.
“In the cases of purchasing older property, unseen things such as the wiring, plumbing and structural works, if unchecked, could be costly in terms of repairs and reinstatement.
“It would be wise to consult a competent contractor or consultant who would be able to access the property thoroughly and advise on any repairs needed and the funds to allocate accordingly.”
Not knowing the neighbourhoodDon’t just love the home; love the neighborhood and surroundings as well, advises Ruben.
“If you are buying a landed property to stay, do take into consideration your neighbours, security and traffic conditions. Having commercial facilities nearby can be convenient as well.
“If you are purchasing a unit within a development for the purpose of gaining rental income, check on the occupancy of the development and the condition of the common areas and facilities.
“A well maintained development and good occupancy would most likely attract tenants to your investment.”
The old adage, “location, location, location, ” is often considered the golden rule of home-buying or property investment.
However, there are exceptions to every rule. Siva says that many people are so fixated on a particular location that they fail to compromise.
“Location is still a large motivating factor.
“However, what if the property you want to buy... your dream home, is in a location that you can’t quite afford yet? This happens to many people.
“They save and save to buy the house but by the time they can afford it, the property is no longer worth the same price that they were planning to buy initially.
“It would cost even more now and these people still hope to own it someday. What’s happened is that they have wasted the opportunity of owning a (cheaper) home and slowly upgrading.
“With patience and a bit of luck, who knows? That dream home may just be yours some day.”
Khong, meanwhile, says that the old adage “location, location, location, ” is a mantra for the richer and more affluent buyers that can afford to pay extra for better-located units.
“There is always a trade-off between price and distance from the city when buying a house.
“Decisions must be made with purpose in mind, whether the purchase is for owner occupation or for investment purposes.
“What matter most when considering the locational factor in buying a house, is that the buyer must firstly figure out what is the most important consideration here.
“Is it close to the office or to school, or even to the in-law’s house? Is it critical to have an MRT station nearby?”
Khong adds that the decision to purchase will be more obvious if more than one of these factors are fulfilled.
“The quality of the neighbourhood, or whether it is within a gated and guarded development, will also be positive push factors to this decision.
“From an investment angle, the importance of location is observed from a tenant’s point of view.
“Being in close proximity to public transportation, amenities and shopping malls will be a plus point, as it attracts potential tenants.
“Security is also a crucial factor here.”
Not obtaining professional advice
When in doubt, Ruben says one can always seek advice from a professional.
“Although you could compare the prices with similar listings online, it would be wise to engage a qualified valuer or estate agent to determine the correct market price for the property and to guide you though the buying process.”
Similarly, Khong says there is always merit in seeking professional help from a reputable property valuer when buying a house.
“They are qualified professionals who will help you do your homework for you prior to buying a place.”
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