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Top 8 hidden costs to buying a new home

  1. ​Buying a ‘renovator’s dream’. Beware of the hidden costs. It’s not always possible to add true value or equity to every property-you still need to do your homework. You could easily over-capitalise on a property if you buy in the wrong location. The worst house in the best street is, contrary to popular belief, not always such a great idea, especially if it comes at an expensive price ticket before renovations have even started. You really need to take into account all costs associated with renovation.
  2. Lost opportunity. I.e. buying the wrong type of house for the area. For example, buying a unit in an area mostly sought after for its three bedroom detached homes. Expect low future capital growth due to low future demand.
  3. Noise, noise, noise! Buying a house in a busy street, noisy area or with noisy neighbours, close to arterials, sub-arterials or through roads is not a great idea. Low demand for these type of houses will affect future profits when you want to sell.
  4. Not doing thorough due diligence, especially if you don’t check on potential development around the property of interest. Check council’s long term development vision for the area. You don’t want a high rise popping up close to your home or worse, next door to your home. Check development applications to see if there will be any over-shadowing and/or overlooking issues to consider as well as increased traffic in the area. This will undoubtedly affect the capital value if you try to sell or use the asset to leverage into your next property.
  5. Building and pest investigations are not just a formality. Get them done with your own independent Building and Pest professional. Get references, check them and remember, the cheapest quote is not necessary the best one. Ask questions when you get the report back and, if necessary, get a second opinion from a trusted source. Know when to walk away. Walking away from a good, economically ‘salvageable’ property because of the wrong advice is as bad a buying one based upon bad advice. 
  6. Check the drainage, or get a professional to do it for you. This is mostly, but not exclusively, an issue with older houses. Remember that if your property is lower-lying, water will flow your way from the neighbours. This may not be an issue, but be aware of it when buying.
  7. Trust your instinct. Don’t let your emotions dictate your decision and don’t bite off more than you can chew! If it doesn’t seem right, it normally isn’t, and it’s better to walk away.
  8. There is no such thing as a bargain property. Sometimes it’s worthwhile paying a bit more to secure a really good property. The market will determine what a property is worth and you are essentially part of that market. You could miss out on a good property and easily find yourself paying more for a comparable property next time around. Conversely, beware of paying too much for a property. This is where homework on real comparable sales in the area you’re looking, comes in handy. Ensure you are comparing apples with apples. This is something a buyer’s agent with years of experience in acquiring property is an expert in.
There are many other things to consider that could lead to costly mistakes when buying, such as block size and shape; high side or low side of street; natural light through the house/unit; easements; strata fees/levies/sinking fund balance/health of body corporate/insurance; privacy; future maintenance; proximity to amenities; security of the area; orientation of the home; stairs; parking; outdoor space; demographics etc. 

How can a Buyer’s Agent help?
When you are spending hundreds of thousands of dollars purchasing your dream home, you don’t want to make any of the mistakes outlined above, which could potentially cost you thousands of dollars over the lifetime of your ownership of the property. We help you to get ahead in the property game by applying our expertise and acting exclusively in your best interest at all times. 

About the author:  Louis Fourie is an Associate Director at JLL; the world’s leading property services firm with over 200 years’ experience. Louis is part of the JLL Buyers Advocacy division, specialising in the search, negotiation and acquisition of investment grade property (to live in or for investment) for clients to maximise capital growth. Click here to get in touch with Louis.

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