Most common mistakes most homebuyers make

Don’t look back in regret – these are the biggest mistakes homebuyers make when looking for their dream home and how to avoid them.

Hindsight is great but foresight is better when it comes to real estate.

Anyone who has bought or sold property would likely look back and see things they’d have done differently. A lacklustre location choice, a poor floor plan, listening to the opinions of friends or family, or simply not acting on a purchase sooner – even savvy property gurus have real estate regrets.

We’ve tapped into some switched on real estate minds to discover what they wished they’d known from the first rung of the property ladder.

The professional buyer

Buyer’s agent Frank Valentic, of Advantage Property Consulting, remembers buying his first house in 1995 at age 25 in Melbourne’s Brunswick East for $168,000.

“I wish I knew then that south-facing properties weren’t ideal. For five years I had a property where the living area and backyard weren’t very light and bright,” he says, adding he still wishes he’d looked into subdividing the home to get more bang for his buck.

Building inspections are fundamental, not optional. Picture: Julian Andrews

“It was a corner block and I could’ve put another townhouse at the back of the original front home while extending the house to a double storey. That’s what the brothers who bought my house did. If only I’d considered a building inspection to be fundamental and not optional. The property had major sinking issues and needed to be underpinned and restumped. I had to make do as best as I could when selling it to get it presented for sale.”

Fortunately, after five years the house more than doubled in value, allowing him to buy the first of what would be three homes in Elwood for $552,000.

The commentator

Effie Zahos, Canstar editor-at-large and money expert, wishes she’d checked strata fine print.

“My first home was a New York-style warehouse in inner-city Sydney in need of some serious renovations. While we budgeted for the renovations, we didn’t take into consideration the ongoing strata fees. We also neglected to read the books and records of the body corporate,” she says.

“We jumped into the property blindly, not knowing if there were any structural defects or major works completed. Fortunately, the building was structurally sound – we dodged a bullet there.”

Zahos says many first home buyers don’t understand the complexities and expenses of renovating apartments.

“We bought it with one goal in mind: to renovate it from a one-bedroom to a two-bedroom apartment and then cash in on what we believed would become a trendy suburb,” she says.

“The location certainly became a hot spot, but the trouble was the renovations took much longer than we’d hoped and were far more stressful than we expected. Not only did we need council approval but approval from the owners corporation for the strata scheme. That wasn’t easy.”

MORE: Aussie home prices hit record high – PropTrack

The luxury agent

Even simple things can slip the minds of first-time house hunters, says Nicole Gleeson, director at Kay & Burton real estate.

“At my first apartment I didn’t think to check the water pressure. You had to practically run around in the shower to get wet.”

Another thing she learnt was to get educated so to never miss an opportunity.

“Trust your instincts. Many people say ‘I’ve only just started looking, I should probably keep shopping around’.

“But if you think you’ve found the one, that’ll be your benchmark moving forward. Don’t live with regret and spend another two years trying to buy. I bought my second place quite quickly because I fell in love with it,” Geelson says, adding that budget must be carefully considered. “One big lesson we all learn in hindsight is if you miss out on something by $10,000 because you set a very conservative budget (when you can afford a little more) you’ll end up kicking yourself over it. That extra $10,000 at the time might seem like a huge amount, but if you’ve got a 10-year plan then in a decade you’ll probably ask ‘What was I thinking?’”

Don’t be kicking yourself after the auction is won and lost. Picture: NCA NewsWire / David Swift

The investor

Author and buyer’s agent Chris Gray, who started buying real estate at 22, says there is no time like the present.

“Do it today, tomorrow never comes. You’ll never have 100 per cent knowledge, or perfect timing, and you’re not going to live in it for the rest of your life,” he says.

Decades on, he understands the importance of location.

“Buy the worst property in the best street in the best suburb you can afford. You can always renovate at a later date,” Gray says.

Holding onto property is also an important strategy.

“Compounding is the eighth wonder of the world. Buying as much property as you can at the earliest age possible means you could reap tens of millions of dollars if you hold for the long term,” he says, noting it makes great financial sense to listen to investors.

“I learned to get advice from those who are actually making money from investing in property.”

The economist

PropTrack economist Anne Flaherty says budget is typically a constraint for first properties, so understanding what is most important and where compromises can be made is essential.

“Careful thought should be given to whether property size or location is more important,” she says.

“(Don’t) be blindsided by superficial details, but focus on a property’s fundamentals. A building inspection is key, as is understanding whether any significant expenses are likely to be incurred over the coming years.”

She says many first buyers realise later they should have spent just as much time shopping for a home loan as a home.

“Navigating the world of financial products can be daunting. Rather than defaulting to the bank you already have a relationship with, shopping around can result in significant savings,” Flaherty says.

Originally published as Most common mistakes most homebuyers make