Are you a first-time buyer, or has your current lifestyle convinced you that you’ll forever be a renter? Or have you made up your mind that you are an investor and you simply want to expand your portfolio with a new property? Whatever the reason, real estate is still one amongst the most popular forms or investment vehicles. However, like all vehicles, if you use it in the wrong way you may permanently damage your financial future. Worse, it may cost you more money that you ever imagined. As such, utilising real estate in its weakest, most common forms is generally a bad idea. A first-time buyer is most likely to overspend, or to just blindly use an agent, or worse still, use one repeatedly who thinks faith is a huge part of the deal. Here are our top five reasons to avoid.
Overpaying interest
Where many buyers find themselves spending interest payments along the way on loans, in the form of pre-payment penalties, or inflated returns. However, often times, buyers get so excited about the prospect of buying real estate for the first time and rush into making deposits in a bank account, rather than using their real estate investment knowledge to work out whether the deal is right in the first place
Being ignorant about a current property market
Hopefully, when you purchase your first home you will have done your homework, know the property values in your area, and have had time to identify and familiarise yourself with the more important aspects of managing and owning a property. However, by using your emotion rather than your knowledge you may oversee that the market has shifted and by effect, wind up paying a higher interest rate than is required. Now, while knowing that a mortgage is a good thing, you may find yourself extended for months longer than you would like. You will have not only paid more, but you may also find that many lenders refuse to provide you with loans, when you consider only the minimum payment is due each month. Most people sit back and don’t notice, until they are smack in the middle of a growing problem – whom they don’t know.
The ‘clued-up’ Buyers
So you have saved up now, and are familiar with how a local property market works. And suddenly the buoys and your expectations have dropped. Some salespeople, are suddenly calling you one day, wanting their interior design Philadelphia business. However, one thing that many property developers, especially in a slow market, just seem to forget, is that you may never have bought your home at a ‘what you think it is’ price. You could have paid a premium of ten, fifteen, even twenty thousand dollars more. Why did you accept the price that was given to you?
The fear of rejection
Now, I am not saying that all properties that are a little unhappy are overpriced. But it just may happen that there are not enough buyers in the market for your property. This is especially the case if the home you are trying to market is a little prospect players in comparison to other properties in the area. Rejection is very common when properties sit in the market for long periods. Yet if you are in your house waiting for the perfect buyer, there may be an element of fear that causes you to accept the first buyer that comes along. This action of yours is called buying the emotion. And the only thing that you have to do now, is in the next few paragraphs, avoiding the emotion, and seeking the right buyer in the right place.
Buying a Bad Deal
Now that your house has been sitting in the market for several months with no real offers, you may feel that you have missed out, and you are going to be stuck with the property forever. You have made the necessary monthly repayments, and you are happy, but this doesn’t mean, that you are out of the woods yet. They say that the contract is the best of the three poor solutions. It is not good to accept the first offer, but in all probability there is someone out there who is ready to pay a lot more than what you can expect, and the real estate property industry will provide you with plenty of deals
In the current climate, real estate takes on a whole new feeling. Remember, always consider the real estate agent’s opinion, and take note that no good can come from following the crowd. You may find something better, and it is always the path to success.