JUST say you won the Lotto or a kindly relative left you a sizeable inheritance and, hooray, you have a deposit for a bedsit in a far-flung corner of Sydney.
It’s time to hit the listings with your chequebook and your shock-and-awe auction tactics.
What could go wrong?
Lots, in fact.
“First home buyers are often at a disadvantage because you have inexperience combined with the intense emotion of buying your first home,” said co-founder of Cohen Handler buyers’ agents, Simon Cohen.
“It’s a recipe for disaster.”
Here are some of the most common traps to avoid.
TELLING THE AGENT TOO MUCH
The agent may be a great person, charming to boot, and you really like the way they spare you the hard sell. But it’s important to remember their loyalty is not to you.
“The selling agent works in the interests of their seller and it is their job to sell their house for the absolute maximum the market is willing to pay,” buyers’ agent at Property Mavens, Miriam Sandkuhler, said.
In order to work out your budget, they will either ask you how much you think the property is worth, gauge whether you have missed out at nearby auctions to determine your ceiling price or even inspect your cheque on auction day.
“They might take a look at your cheque to see if it’s all correct and they can then gauge from your 10 per cent deposit what your maximum is,” Ms Sandkuhler said.
“At home viewings, the selling agents will ask you seemingly innocent questions about your likes and dislikes, what you’re looking for and how much you’re willing to spend.
“This is done to see how much money you have and work out if you are a serious buyer, but they are also gleaning information should they need to use it during the negotiation phase.”
So the less information given to an agent, the better.
NOT KNOWING THE VALUE OF A PROPERTY
First home buyers waste months — sometimes years — attending auctions and missing out to other buyers. Meanwhile, property prices are increasing at a rate they cannot possibly keep track with through saving.
“If you have never done it before then you won’t know how to price property properly and that can cost you a lot of money,” said Ms Sandkuhler.
“The quote range of property often does not relate at all to the buyer’s budget.”
Not only is the market going up while first home buyers miss out at auctions, but they’re also having to pay hundreds of dollars on pest and building inspection fees for each auction they wish to bid at.
Mr Cohen recommended first home buyers research what similar properties have sold for (not listed for) in a particular area before buying — and that doesn’t mean relying on what the agent says.
“Go to auctions in the area you’re hoping to buy in and look at what homes are selling for and search for similar properties online,” Mr Cohen said.
“You want to get a good understanding of what a bargain would look like in those suburbs and then, eventually, what the home you want to buy is worth and why it’s worth that amount.”