Everyone has figured out their plan for life, a car at 26, promotion at 28 and a house at 30 which you can call your home, where you can peacefully sip your tea in the morning while flipping through the daily news. There are a lot of things one wants for their new house, be it a verandah in the back or a classy view from the balcony. People fail to find a perfect place, not because they failed to research but because they missed very important aspects while buying house. Many things can go wrong for the first timers who have a checklist they want their new home to meet. It’s a package of fear, excitement, and exhaustion all in one. Shopping for brick and mortar is never easy and the list of minute things that can go wrong is endless. If you’re aware of those issues ahead of time, you can protect yourself from costly mistakes and shop with confidence.
Before buying a house you have to know what you can afford, you can’t just wipe away your entire savings on a house that may need more investments later. The home loans given by the banks also depend on how stable your income is and how high are your credit ratings. What more this process asks from you is the research, finalizing what you prioritize most and least, developments in real estate and also the compromises you would have to make to find that perfect place to chill.
- Getting your budget wrong
The expenses that come with buying a house can never be approximated; it depends on the market, the location and the condition of the house. Not knowing what you can afford can make this experience from bad to worse.
Joan, being a first time homebuyer, was troubled about planning a budget for his new home. He expected to get a home loan from a bank, and thought the loan would give him X. He kept that in mind and went ahead selecting a house, but bank considered him having a low credit rate and gave him Y for the loan, which was inferior that X. He had to scrounge his savings to pay for the house, making him insecure about the other expenses that were yet to come.
The biggest mistake one can make is failing to consider additional expenses. Calculate your monthly expenses, groceries, loan installments, retirement plan, credit card payments, electricity bills, rent and anticipate what you can afford. If you end up looking at homes that are outside your price range, you will be jaundiced by the one you have to live in.
- Not thinking about the future
Future matters too, ask yourself if you really need a new house at this moment. Prioritize your goals, paying monthly installments to repay the loan for the house guzzles down all the cash that you, maybe, would want to buy a new car with, or maybe go on a vacation. Look out for new up comings and their price on the market. Keep in touch with real estate agents about what property is yet to get in sale and if buying that property would be a profit.
The new house sets you back, way back, and leaves you fighting for the extra buck. Make sure you have enough savings to pay for that down payment and enough to keep on paying for the loan.
- Being too picky
Everyone has a dream house they want to live in, spacious rooms, high ceilings, marble flooring, a small garden. But when you are running on a budget and being realistic (of course), you won’t be able to find a house that meets your every whim. People who are first time home buyers often make a long list of things they expect in their new home, but fail to find a house that fits in their expectation, resulting into extension of contract of their current accommodation.
Naveen and his wife Kaveri were looking for a place to live in the west of Delhi near Naveen’s office. They visited a lot of places but weren’t able to form a decision. Sometimes the parking space was too small, or the apartment was a floor too high, or the kitchen was too small, they always had some excuse to look for the next house. At the end, they had to pick a house they already inspected at a price higher than it actually was.
First-time homebuyers often have to compromise on something because their funds are limited. Make a list about what you all want from your new place, make pointers to differentiate between the ones you can live without and the ones you can’t. Of course, you can always opt to continue renting until you can afford everything on your list but you’ll just have to decide how important it is for you to become a homeowner now rather than in a couple of years.
- Failing to inspect
Sometimes you are so swept away by the house that you turn blind eye to the inspection of essential parts of the house. What if the ceiling leaks? Or the ventilation is nowhere near the standards? What if there is a plumbing problem? You don’t want to get stuck with a money pit or with the headache of performing a lot of unexpected repairs. Polly was very happy when she found the perfect house. She was so swept away by the large windows and the large living room that she shifted as soon and possible. After sometime she noticed that the cable was pretty spotty and there was a “leak” in the wiring. The wires on the outside are the utility company’s responsibility but any of the wiring on the inside of the house is your responsibility. So, she had to bring an electrician in for 3 to 4 hours to rewire the home costing her around 65,000 INR.
The sellers often want to end the survey as fast as possible to camouflage the shortcomings. Even if you notice some faults, don’t ask them to repair it, Minor upgrades and cosmetic fixes are inexpensive tricks are a seller’s dream for playing on your emotions and eliciting a much higher price tag. If you are running on a low budget, look for a place whose full potential have yet to be realized.
- Short house sale mess
Sometimes the sellers try to pass a flawed house in a lower price to the buyer. The buyer, being desperate, buys it and spends a big chunk of money in repairing the house that was supposed to be repaired beforehand. This kind of sale is known as short house sale. There are many people who get stuck in this short house sale quicksand and they witness their savings, sinking hard and fast.
Not employing your own agent is the biggest mistake you can make. The agents have ethics that they have to worry about, both, the seller’s and the buyer’s best interests, but when you directly interact with your sellers they often try to make your seller and themselves higher profits. Research the market you are buying in, hire an agent, explore.
- Getting trapped in the contract
People generally don’t pay much attention to what the seller squeezes into the last clause of the contract, the small print. They are pushed into endless battle with their sellers due to unethical contracts that trap them into the cycle of anguish. Hiring lawyers is the best way to negotiate the ground rules with your seller. If running low, read the exit clause carefully, make notes on what you can improve, don’t get bamboozled by your seller. Reshma wanted to shift to her new home from her previous one, her family just got bigger and she was in search of a house with an extra room. But when she went to ask her security deposit back from her previous owners, she was reminded of her contract and how she needed to serve three month notice, to the owners, before leaving her current premises. She had to wait for three additional months before moving into her new house just because of a faulty contract.
People always dream of a place, which they can call their own. Paying rent sound painful to people, and they think that buying their own house will help them escape these monthly expenses. It’s okay if you want to continue paying rent and becoming more financially sound for that house you have in your mind. Introspect, ask yourself the right questions, how much do I make? Will I be able to corner out a loan, enough for a house that I have in mind? Which agent should I trust? How will afford the down payment? And the loan? Are there any future developments that can be better for my pocket?
Don’t panic and learn from the history, take one thing at a time. Set your budget right, finalize a loan before finalizing a place, make a payment plan and set aside money that can be used for renovations.
You don’t want to spend your life in penury just to please your eyes, adjust and compromise. Happy Shopping!