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  • 10 Mistakes You'll Probably Make When You Buy a House

    31st August 2018

    10 Mistakes You’ll Probably Make When You Buy a House

    Buying a house is a fairly straight forward process. That isn’t to say there aren’t questions or issues that won’t come up and leave you wondering how best to proceed. Understanding the overall home buying process and where you are heading next makes getting through any problems a little bit easier.

    There are some simple things many buyers forget in the process. The first one is remembering who is working for you before you give too much information away. The second is remembering a property is fundamentally sold as seen so you really need to make sure you know what you are buying. But most importantly it is remembering that you are making an investment. You should be looking to get the same level of professional advice and do the same level of research as you would if you were looking to invest in shares. It is easy to get carried away and follow your heart neglecting what the head should really be looking at. Maybe this is because we talk about ‘investing’ in shares but not investing in property. ‘Buying’ sounds more like an every day purchase.

    When you consider on top of this that 8 in 10 buyers spend more time researching their next fridge than their next property you can see why mistakes occur.

     

    So, what are the 10 common mistakes made when buying a house?

    a. Not knowing how the process works – if you don’t research how the process works and arm yourself with information you are far more likely to make mistakes and miss things that you needn’t have. Our guide to the home buying process helps to provide a starting point.

     

    b. Rushing viewings – we mentioned it briefly but the average viewing time is 8-10 minutes. Even with a second viewing that means your making a purchase on a property having spent 16-20 minutes looking round. Ok, the second viewing may be a bit longer whilst you get answers to questions about fitting all your furniture in and asking reasons for selling but can you really say you are sure that you have fully understood the condition of the property? To get the most of your viewings use our viewing checklist. It will make sure you consider if you even have mobile phone coverage in the house.

     

    c. Not researching the area – it is always easiest to go to viewings at the weekend or after work. But have you taken the time to see what the area is like at different times of day. How hard is it to get parking in the evenings? How noisy are the neighbours in the day? How bright is the street light outside the house at night? You are going to be living in your property for a long time. And, if you don’t ask these questions, there is nothing to say the people buying from you in the future won’t.

     

    d. Giving too much away – remember the selling agent (generally know as an estate agent) will take you around the property on viewings and will answer all of your questions. However, this isn’t to benefit you. They are doing this because the seller is paying them too sell the house… and for the best possible price. Selling agents will be looking for signs that you have fallen in love with it so they know how far they can push you to the top of your budget. On the other hand, the other mistake buyers often make is saying they would like to make an offer of £x but that they could stretch to £y if they had to to secure the deal. The selling agent is working for the seller and so will, of course, advise the buyer they can get £y (and possibly beyond).

     

    e. Negotiating the price yourself – you may be work as a retail buyer or car salesman and know exactly how to negotiate. But if you are like most people you won’t. Negotiating is a skill (there is no negotiating on that point!). If you are a first time buyer or, as the average goes, buying after 9 years of ownership you will not be clued up on what price you could really achieve if you push. On top of this you are emotionally involved and not negotiating directly with the seller who is also emotionally involved as they are keen to sell. Being emotionally invested makes negotiating hard that much more difficult. The seller has an agent negotiating for them.  Why not pay a buying agent to negotiate for you? It pays for itself as most buying agents charge a percentage of the saving they make you. Nothing saved, nothing lost.

     

    f. Grabbing the first mortgage deal – you are keen to ensure you can guarantee your funds and you find an offer through an agent, directly from your bank or somewhere you have seen online and grab it. You really want that house. But this can cost you thousands. Have you considered using a mortgage broker? Many buyers reaction to a broker is that they don’t want to use a broker – after all, if they are making money out of it then it is costing me money. Quite the opposite – if they can’t better your deal then you take the deal you have found. Brokers often take their fee from the lender, not you, and have access to rates that are often not advertised online or directly from your bank because of the volume of deals they can broker for a lender. A mortgage broker can save you thousands over the course of your mortgage deal.

     

    g. Getting a cheap conveyancer – you want to put as much money into the asking price and redecorating. Sometimes, but of course not always, you get what you pay for. There are benefits to different types of conveyancer (national, local etc) and paying a little bit more money can mean you have direct contact with your conveyancer and someone who gets things done in a more timely fashion. A good conveyancer will prevent delays in the process and reduce the chance of the seller getting frustrated and walking away from the deal.

     

    h. Relying on a mortgage valuation and not getting an independent survey – again, remember who the mortgage valuation is being produced for. It is not produced for you so that you can get your mortgage offer. It is produced by a surveyor acting for the mortgage lender to ensure that there is enough room for the lender to recover their loan if you happen to default on it. A mortgage valuation will look at any major structural issues that affect the value but will not consider general maintenance issues or possible hidden defects that could be present. A mortgage valuation is often as long as your viewing. An independent survey lasts from an hour and a half to half a day depending on the size of complexity of the property. Significantly more time invested into searching areas of the property you won’t even have looked at such as the roof space as well as having access to tools you won’t have on you (to check for damp and other issues). The average cost of not getting a survey is £5,750 (RICS survey by ComRes). Get survey quotes now.

     

    i. Pushing your budget too far – failing to budget at the outset and getting carried away with making sure that house is yours can push your budget to its limits. This can make it difficult when you move in to redecorate or even rectify any maintenance issues. Plan your budget at the beginning of the process before you even start searching for properties. It is not as simple as I have £x in savings and at 10% deposit I have this much money to spend. Take time to establish and remove the costs of conveyancing and surveying from your budget, find a better mortgage deal and use a buying agent to keep yourself in a good position and leave a buffer for a rainy day!

     

    j. Assuming prices will go up – you can’t assume that prices will keep going up and up and that any mistakes you make on the purchase price will disappear with capital appreciation. You never know when the next dip in market confidence will occur and when you may need to move because of a change in circumstances. Keep yourself in a good financial position by paying a fair market price now. If a market dip and your need to sell come at the same time, you can find yourself in negative equity.

     

    Overall

    How do you ensure you avoid making the basic mistakes? Simple, take your time when going through the process, do your research and consider if investing in professionals will more than pay for itself.

    1. Are you a skilled negotiator? Consider getting a buying agent
    2. Are you trained to understand construction methods and specific structural issues? Invest in a surveyor to do a full check of the property and advise on the cost of repairs
    3. Do you have an FCA recognised qualification such as a CeMAP or Cert MA? Consider speaking to an independent mortgage broker to find the best details not advertised online
    4. Do you know all the legal checks you need to do and paperwork you need to file? Instruct a conveyancing solicitor