Buying and selling a home is a stressful process, and it’s easy to make mistakes that could jeopardise the best outcome for you and your family.
Jim Parke, Managing Director of Conveyancing.com, has outlined the common pitfalls to be wary of to maximise your returns during a property sale and ensure you get the best outcome during a purchase.
Common mistakes when buying
1. Getting too emotional during negotiations.
After wandering through the corridors of your dream home during the inspection, all your meticulous requirements can fly out the door. Too many home buyers end up over-leveraged because they’ve become too attached to a potential home.
Avoid these traps by making a checklist including everything from settlement periods to renovation requirements. If a home doesn’t fulfil your checklist requirements, it’s not for you, even though you may still love it.
2. Purchasing a home requiring renovation without reading zoning restrictions and covenants.
Purchasing a home with big dreams of expansion is exciting but fraught with restrictions. Before you make an offer, ensure you understand all zoning restrictions and building covenants associated with the property, as they will limit what renovations and expansions can be done. A conveyancer can access all these documents for you, and is the best person to help you understand the fine print.
3. Forgetting to include mandatory fees in your budget.
When setting a budget for a new property, don’t forget to include mandatory fees for professional services and stamp duty. You’ll likely enlist the services of mortgage brokers, solicitors and insurance brokers. These professional fees and duties can change your budget significantly, so they must be accounted for, otherwise, you can find yourself overstretched or drowning in debt.
4. Changing jobs when applying for a home loan.
Changing employment when applying for your loan can undermine your home buying goals as you look unstable to potential lenders. Make changes at least six months before you apply, or long after you’ve secured your new home.
5. Showing up to an auction without pre-approval.
Auction day is nerve-racking and thrilling, and it’s easy to get caught up in the bidding. If you make the winning bid without pre-approval for a home loan from your nominated lender, you may need to pay fees to get out of buying the house your just bid on. As a general rule; if you don’t have pre-approval, don’t make a bid.
6. Making an offer without conducting inspections.
After finding your dream home, it can be tempting to rush through the process so you can move in as soon as possible, without doing your due diligence. Always enlist a professional to conduct a building inspection, and potentially plumbing and electrical inspections for older homes. You may discover your dream home is riddled with water damage the seller has painted over or covered up. Slow down, get the property inspected, then decide if it’s still worth your precious money.
Common mistakes when selling
1. Being too busy to de-clutter the home before inspections.
Allowing potential buyers to inspect your home when it doesn’t look its best is a bad mistake. Decluttering is essential to help buyers imagine how their own furniture and homewares would look in your space. General cleaning is important too; clean sinks, window sills and carpets help your home look more valuable. You could consider hiring a professional cleaning service or a property stylist to assist with getting your home camera ready.
2. Selling with no motivation.
Gauging the market by listing your property for sale is a bad idea as you’ll waste money on the listing and you’ll likely overvalue your home. Spend your money on a valuation of your home to gauge the market instead, and only sell when you’re ready.
3. Overvaluing your home.
You love your home as it’s attached to meaningful memories, but potential buyers only see a property. Overvalued homes turn away potential buyers immediately and they’ll scroll straight past your listing. Enlist the help of a recommended agent who knows the local housing market in your area to avoid this common mistake.
4. Posting low-quality interior photos.
Poor quality photos are an immediate turn off for potential buyers, even if your home is beautiful in ‘real life.’ Unless you know how to both take and edit interior photos, hire a professional property photographer. This simple service could increase the offers you receive as it makes your property look more valuable.
5. Not being flexible.
Motivated sellers know you need to be flexible when it comes to open home schedules and some aspects of settlement and pricing. Don’t be a pushover, but do be flexible to accommodate potential buyers. Ask a conveyancer about which aspects of your contract can allow for flexibility while maintaining the outcomes you and your family want.
6. Dismissing the first offer.
It’s always tempting to wait for the best offer, but if the first offer you receive fulfils all your requirements, take it. Too many sellers wait too long for the perfect offer which never comes, and they eventually have to yield on too many aspects of the contract.
Avoid falling into the common traps involved in buying and selling a home by preparing yourself properly for the process.
Jim Parke from Conveyancing.com is a lawyer and certified practising accountant. He is an accredited specialist in business law and currently serves as Mayor of Boroondara.
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