Ricochet News

Six traps to avoid as a first-time buyer

Feb 27, 2018
Six traps to avoid as a first-time buyer

Being sorry that you bought the wrong shoes or the wrong smartphone is one thing; being sorry you bought the wrong property is quite another, because of the potential impact on your finances and lifestyle for many years to come.

However, says Gerhard Kotzé, MD of the RealNet estate agency group, there is no need for first-time homebuyers to be overwhelmed or intimidated by the home-buying process, especially if they deal with a reputable agent working in their chosen area and try to avoid the following novice mistakes:

*Relying totally on the Internet. “Browsing the Internet is common practice when it comes to searching for homes and finding out about your desired location, but it should not be your only source of information. A good estate agent might be able to show you properties that haven’t been advertised yet, and should certainly be able to help you find the listed home that most closely meets your requirements.”

*Getting too emotionally attached to one house. Setting your heart on a particular property too early in your home search could blind you to other homes that would have been a better choice in the long run. “This is very likely the most expensive purchase you’ll ever make, so you need to stay calm and make sure you are getting the best value for money as well as a home with an ambience you like,” says Kotzé.

*Not being prepared for ownership. “First-time buyers are often attracted to the idea that home-ownership brings freedom, but being an owner actually comes with many new responsibilities, including all maintenance and repair work, the provision of security and the payment of homeowners’ insurance as well as municipal rates and taxes. You need to be mentally and financially ready for these.”

*Not saving enough. Kotzé says many prospective buyers will save just enough for a decent deposit, not realising that they will also need cash to cover the “hidden” costs of buying a home, including the bond registration fee, legal fees, and transfer costs. “And on top of that, we usually suggest that you should save your moving costs and an amount equivalent to two to three months’ home loan repayments as an emergency fund.”

*Not checking your credit score. You should always do this at least three months before you start house-hunting so that if there are any black marks or errors on your credit record you can address them or get them fixed. If you are seen by the banks as a bad credit risk, your application for a home loan may be turned down – and at the very least you are likely to be charged a higher rate of interest. (Go to www.clearscore.co.za for a free credit report and score.)

*Not getting pre-qualified for a home loan. This is easy to do through a reputable bond originator like BetterBond and establishes how much you can afford to spend on your home. The double benefit of that, says Kotzé, is that you won’t waste time looking at properties you can’t afford, and that sellers will be more willing to negotiate when you do make an offer to purchase because they can see that you’re a serious buyer.