21 Nov 8 Mistakes Not to Overlook When Buying a New House
Buying a new home is exciting and scary, isn’t it? It can get stressful if you have some deadline before you need to vacate your current property and move into another. To add to the pressure, searching for a new home in a city like London where the house prices and interest rates are sky high. Especially if you are a first time buyer trying to get on the property ladder, it can be a daunting experience.
Many people overlook crucial factors when finalising a deal only to realise later that they haven’t made the right choice or ended up paying more than what’s necessary.
In this blog, we deal with the common mistakes you should not make when buying a new house in the UK or abroad and to help you understand the home buying process.
Not establishing budget and closing costs
First and foremost, you need to ensure you know your budget for the purchase price plus extras, ensuring you can afford the monthly mortgage payments and get an agreement in principle for the value.
Factors can vary based on location, so you should always speak to local estate agents to ensure you get correct advice and direction. In the UK, you need to consider that you will potentially pay out on stamp duty, deposit, conveyancing survey fees, land registry costs, mortgage valuation and broker fees, estate agent fees, life insurance, buildings insurance, moving costs, and solicitor legal fees. All before you get the keys to the door. Even for a £300k house purchase your outgoings could be over £36k including a 10% deposit payable on the completion date.
In the USA they call these closing costs, and they include appraisal fee, attorney fee, credit report fee, down payment, early payoff fee, escrow fee, inspection fee, lender fee, outstanding balance, prepayment penalty, property taxes, property title search, recording fee, survey fee, title insurance, transfer tax. For comparison, the average for a house purchase closing cost in Alabama is around $3500.
So to get it right to avoid extra expense, please heed our 7 mistakes not to overlook when buying a new house.
Not Talking to Other People
Buying a new build property allows you to customize the home with tiles and fitting of your choice. However, there are certain things you should not ignore.
When you visit the property, don’t just see the prospective house and go back after a tour. Stay around, observe the surroundings, and talk to your would-be neighbours. People who are already living in the development are a great source of information. They don’t need to sugar-coat or hide the shortcomings of the place.
Visit at least a couple of them and ask about their experience. Know how much the property is worth. Ask about what elements of the contract need extra emphasis.
The Internet is Not Everything
As much as it seems like the internet has everything you’d want to know, it’s not true. There are limitations, and these could work against you when buying property. It’s always advisable and safer to hire a real estate agent to guide you throughout the process.
At the same time, make sure that you talk to at least one of the agent’s previous clients before you hire them. The agent’s portfolio on the internet may be glossier than what it is in real life.
Forgetting the Hidden/ Unseen Costs
This is something most first-time buyers do. Not all costs are mentioned on paper. Some are implied and presumed understood. Since many of us have a firm budget in mind, we assess the property’s value in comparison to our budget. Doer-uppers may seem great value for money, but what does it cost for a new driveway?
But what about stamp duty, insurance, any removals and renovations, the solicitor’s fees, etc.? Wouldn’t these add up to a substantial amount? Your budget should accommodate the cost of the house as well as the additional charges and be available before you exchange contracts.
Not Making Provision of Snagging in the Contract
New homes often suffer from snagging. It is the cracks you see on the walls that appear soon after you move in or even before you do so. Snagging is usually caused by loose guttering and can be fixed. But if you have to get it fixed with your money, it doesn’t make sense. Not when you’ve paid the developer a hefty amount to buy a new home. Make sure to include these in the contract so that it becomes the developer’s responsibility to get the repairs done.
Relying on Mortgage Valuation
It sure is necessary to consider the valuation of the mortgage lender. But it’s no way enough. You should not rely on the assessment of one person/ entity when you are committing to long-term mortgage payments.
Take a look at other properties in the area that are similar to the one you liked. Compare the prices. But also compare the defects. Get a specialist to survey and assess the property. Many companies offer property valuation services for a price.
Love at First Sight
The emotional side of us relates very much to this, doesn’t it? We see a house and just know that it’s meant for us. But is it really so? Things are not always as they seem. While you do need to emotionally connect to a place, putting it on priority and not considering the practical issues can result in making the wrong decision. The last thing you want is develop a dislike the same home you loved.
Not Negotiating the Price
We have seen how hesitant first-time buyers are when it comes to negotiating on the asking price. Don’t hesitate at this point. The idea of looking for a better deal and saving a few hundreds of pounds is nothing short of great. But to know how to negotiate and ask for the right price, you need to have a comprehensive idea about the property. This comes when you hire third-party surveyors to assess and evaluate the property.
Take time to search for a suitable home in a region that would be comfortable to live in. Don’t rush through the process, and don’t buy the first house you see, no matter how perfect it appears. The buying process is long, arduous and not impervious to collapse.