8 Mistakes You Must Avoid When Buying Property

Buying a property requires a serious capital commitment.

You should ensure that the property you're purchasing will match what you expect from a real estate investment because it is difficult to rectify any errors after purchasing the property.

In other words, any misinformed or hasty decisions can result in unfavorable outcomes. In the excitement of becoming a homeowner, it is easy to miss some points that can affect the value of a property. The intensity of the mistakes you could potentially make varies depending on what you want out of a purchase. 

We've listed some common mistakes that soon-to-be homeowners make while choosing a property and things you should do to avoid them:

(1) Exploring all your financial options

Most homeowners only visit a few big brand financial institutions for securing funds for their investment and make a decision depending on which of them offers the best terms.

You need to explore the market more even though the terms of the loan meet your budget. Finding out about all your options can help in saving more on interest payments.

(2) Ensuring you qualify for the loan

Before going house-hunting, you should do preliminary research on how much properties cost in the general area you want to buy in.

You should check your credit score to understand the terms that banks will offer loans to you. Being eligible for pre-approved loans is a good start for preparing a budget for your house-hunting process.

(3) Identifying your final loan amount

Let's not forget: the capital value of the property is not the final expenditure you'll incur.

You'd also have to capitalize on the amount you spend on insurance, rates and taxes, modifications, agent fees, and brokerage. Sometimes your agent or buyer broker might miss out on mentioning any incidental costs. It is always advisable to inquire.

Compare your budget against the calculations made for all capitalized expenses. It is important to not overreach in anticipation of future gains.

(4) Budgeting for unforeseen eventualities

Factors like the type of tenants, changes in the neighborhood, geo-political and socio-political climate, state of the economy can impact the value of your property and the additional expenses you'd have to incur.

Making a hasty decision or not budgeting for expenses you'd have to bear in the future for maintenance, renovation, modifications, or alterations depending on the intentions of usage can affect the value of your investment.

(5) Physical examination of the property and contractual obligations

As a new homeowner, you can't identify all the problems with a property, no matter how thorough your research was.

It's therefore advisable to bring in a professional to maintain the quality of the requested changes made. Any further alterations or modifications you decide must be agreed on paper with the developer to ensure he doesn't skimp on providing the quality he should.

(6) Planning your expenditure carefully

Taking on responsibility for any part of the project before the transfer of ownership may be a liability that could end up having legal ramifications.

It is best if you wait until the ownership has been transferred before you spend money on upgrading the house, or undertaking any other changes you would like to see done.

(7) Peruse the contract properly

Contracts drafted at the time transferring ownership will outline all the rights and responsibilities of both the parties.

If not appropriately perused, you could be taking on liabilities that can end up creating unfavorable situations in the future.

Who knows: developers may pressure you into signing the contract before you had a chance to examine it. If you feel you don't understand the terms, it is advisable to talk to an expert to ensure you emerge with the best deal possible.

(8) Make a wise choice

In summary, it is essential to note that buying a property is a long-term commitment.

It pays to research all the relevant elements before making a decision patiently. And, if done well, you could end up with a great deal.

The alternative is being the owner of a property with unfavorable terms that you can't wait to get rid of, even if it is at a price lower than your ROI.