Depression after buying a house
How to Avoid Panic Buying a Home
Before you head out to another open house, it’s time to educate yourself on the dangers of panic buying. Do you know what panic buying looks like? Do you know how to avoid it? By learning to recognize the signs of panic buying, you can avoid ending up owning a property that you’ll regret.
If you’re in the process of looking for a property to buy, you will probably have felt the stress and pressure that the process of house hunting can cause. The level of competition among buyers can lead to some people moving at lightning speed when placing an offer on a house. If you haven’t taken the time to consider the property, the area and the price before making their offer, you put yourself in danger of getting in over your head or buying a property that isn’t suited to your needs.
What is panic buying?
When buyers are afraid of missing out on a property in this competitive market, they may panic and make irrational decisions. In their state of panic, they may place offers on homes that are unsuited to their needs. This could include:
- Placing an offer on a home that is too small/big for the buyer’s needs;
- Making an offer on a home that requires more building work than the buyer can afford to take on;
- Bidding on a house located in an area that isn’t suited to the buyer’s needs (such as not near public transport or too far from work);
- Placing an offer that far exceeds the value of the property; or
- Offering too high out of the buyer’s price range.
The pitfalls of panic buying
Overextending their capacity to make repayments
When someone panic buys a house, they are subject to overextending themselves financially. While the buyer may have been approved for a specific loan amount, they might not have taken the time to consider future circumstances that may affect their ability to make the high repayments their lender has approved them for. Such circumstances may include:
- A partnership purchase (such as a couple) who may one day split, affecting one partner’s ability to carry the mortgage alone;
- Future family commitments such as having children which may not only take one of the partners away from work for a time but will also add to the household’s cost of living;
- If the house needs repair, overextending themselves with mortgage repayments now may mean they are unable to afford renovation costs on top of that.
Panic buying can also lead to buyers waiving contingencies, such as their right to a building or pest inspection before making an offer. This means that new homeowners could need to deal with expensive repairs or issues like termites as soon as they move in. When they panic buy, they may decide against those time-consuming tasks like conducting building or pest inspections, meaning they aren’t away of a home’s issues before buying. It’s a good idea to know exactly what a home needs so that repairs and maintenance can be budgeted for before moving in.
Choosing the wrong area
People moving away from familiar areas, such as to the other side of the city or a different part of the country, should take the time to get to know the area they are moving to. If they need access to public transport to get about but move to an area with little access to transport, they could find your lifestyle greatly affected. It’s also a good idea to consider environmental factors of the area, such as moving to a bushfire risk zone or an area prone to flooding. These environmental factors can add costs to homeowners in preventative measures, repairs and insurance premiums.
How to avoid panic buying
Your first step to avoiding panic buying is to get your hands on a copy of the sale documents of any house you are considering buying. Then find an experienced and reputable conveyancer to work with you during the process of considering which home to bid on. Sale documents will always be available as soon as a property is listed, so you can either pick them up at an open house inspection or by visiting the real estate agent’s office.
By involving a property conveyancer as soon as you are ready to buy, they will be able to look over the contracts and find any issues which may not be apparent to you in a short minute inspection of the home. They can find issues such as easements, liens or boundary issues. If you choose a conveyancer local to the property (and you definitely should!), they can also advise you on any local issues, whether environmental or legislative, which may affect your purchase.
The second thing you can do is make an effort not to rush. Though you may be desperate not to miss out on a property, even taking an extra day to size up the house and the area can save you buyer’s remorse.
And though you are not required to conduct an inspection, you would be wise to remember that this purchase is likely the most significant financial decision you will ever make. Have a qualified building and pest inspector assess the property for potential issues so that you can budget for any repairs that may be needed immediately.
The consequences of overbidding
Bidding above a property’s market value might give you a better chance of securing the sale, but overbidding can lead to you paying more than you can afford. Worse, if you decide that the property isn’t right for you in a year, you may be unable to recover your costs and end up selling at a loss.
The only way to avoid overbidding is to establish your budget before you start looking. That way, if you get swept up into the panic of outbidding other buyers, you’ll have an exact number in mind that you know you can’t go over, no matter what. Carefully evaluate your circumstances, loan amount and other factors such as lifestyle costs and make sure you stick to it! You can be sure that even in the heat of a frenzied auction, you will know exactly what you can afford to bid and, more importantly, when it’s time to stop.
Consider buying a starter home
If you can’t find your dream home within your price range, you might consider buying a starter home. That is, something more affordable, whether because of undesirable size or condition. Remember, property is a commodity that keeps rising, so your investment into something you don’t particularly like could earn you the equity to buy your dream home in five years.
If you’re overwhelmed by the housing market, take a step back before you rush into a purchase. Figure out your budget early and make sure you stick to it, only look in areas where you actually want to live and involve the services of a property conveyancer as soon as you find a desirable property. That way, you won’t end up panic buying and living in a home you regret.
Are you in the process of buying a house? For more information about Jim’s Property Conveyancing in Melbourne, or here for information about Jim’s Property Conveyancing in Brisbane. Or for expert advice on property conveyancing services in Australia, don’t hesitate to get in touch with our friendly and experienced staff on 13 15 46.
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