5 mistakes first-time home buyers must avoid – expert advice

Buying a home for the first time can be exciting. It’s a momentous milestone, and it’s a proud moment when you finally have a place you own.

Buying property is also one of the best ways to invest money, but without the proper knowledge, it can easily turn into a loss.

Here are five mistakes first-time buyers should avoid:

Not knowing the true bond cost
“First-time property buyers often don’t do enough research. When you are a first-time buyer, you need to find out how much the value of the property is, all the costs that will be involved in the purchase, what will your bond charges be and other expenses that come with that property e.g. levies and rates. You also need to find out if you may need to pay a deposit upfront and how much the transfer costs will be,” says Tselane of Ndaka Property Group .

Although the deposit is not always compulsory, Ramaila says estate agents often advice buyers to pay it as it increases the credit score and chances of them qualify for the loan.

“The deposit is determined by your credit score. We check how much you are earning and your credit score. A person with no debts is a high risk, a person with too much debt is a high risk. Other people have cleared the debts but can still be considered high risks if they were once blacklisted,” Ramaila adds.

Not doing price comparisons
“Another mistake the first-time buyer makes when it comes to costs is that, when they see property which they like, they just go ahead and buy. There are properties which are overpriced. Most of the time we price them a bit higher because people who have bought properties before knowing that you can negotiate. We give a period for negotiation. Someone can buy the same property, in the same area and pay less because she or he negotiated. Later if the one who bought the property that was overpriced might want to sell it at a higher price, he or she might fail to get buyers because of the high cost. This might lead to them running into a loss,” she says.

Thinking bigger is better
Stand-alone house vs. flat? “For first-time buyers who are still young, I’d advise them to buy a unit in a security complex or flat. The reason for this is that in future they can use it as an investment because they can rent it out. It’s not easy to buy a stand-alone house and rent it out, because stand-alone houses can be more expensive that units. A unit has more security, while a stand-alone house, you need to have your own cameras and security,” says Ramaila.

“Once they have checked out areas and decided which area they want to settle in with their family, then they can buy a stand-alone house, but it will also depend on how much they earn because stand-alone house cost slightly higher than flats”.

Buying property with friends
Ramaila cautions against buying property with friends.
“It is not always advisable to buy property with a friend or partner if you aren’t married. If you end up breaking up or having disputes, you will need to sell the property, and if you sell the property in a hurry, you might run into a loss. For instance, if you buy property now for R1 000 000, and try to sell it after a year, you would still be expected to pay that R1 000 000. Sometimes you even find that our currency was not good, and the cost of the property has decreased. You end up losing because you have to add more money to sell that property, while you were supposed to make a profit out of it. Property increases after a period of time, not after a short period of time,” she adds.

Not knowing your rights
“Another mistake first-time owners make is not being aware of their rights. If you buy property and a seller didn’t disclose things like leakage etc, even though he or she was aware of it, the buyer has a right to ask the previous owner to fix the damages,” she concludes.

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