Whatever angles are considered, the purchase of a property is a major investment in your life. For many buyers, it could be a process that will be more expensive than it should because many of them will get into it head first and will fall into traps such as:
- Paying too much for the property they want;
- Losing their property to the hands of another buyer;
- And (this is the worst), buying a property that does not correspond to their needs.
Buying a property using a systematic approach will help you avoid falling into these frequent traps. Not only it will save you money but also you will buy the property that really meets your requirements. This rubric presents the 9 most common and expensive traps. It will inform you on how to identify them and how to avoid them.
What price should you offer when filling an offer to purchase? Is the asking price too high or does it seem to be a good investment? If you did not do any research on the market to assess the value of similar properties, you will make an offer blindly. Not knowing the market conditions might lead you to offer too much or you might miss an opportunity to make a competitive offer on a property that is a really good deal.
Buying the wrong property
What are you looking for in a property? A simple question that might lead to a complex answer. Too often, buyers get excited and overwhelmed when buying a new property and become an owner of a building with too many apartments or commercial premises and a lot of management. Maybe more important repairs than expected are needed. Take the time to define your needs and your expectations. Write everything and use your list to assess each property you will considerate.
Make sure that you will obtain the irrefutable proof that the sellers own the property right from the beginning of the negotiation process. Make sure also that the property is not mortgaged and free of any other type of legal lien and that a title search will be performed. The last thing you need to discover is that there is a legal hypothec on the property or other type of priority lien, or you find out there are other owners in the picture or leases were already garanted.
In your offer to purchase, make sure you request a current certificate of location that describes accurately the limits of the property. If this document is not the exact reproduction of the actual reality, for example, if the expansion of the balcony or a garage is not there, this certificate will not be accepted by the bank. Be very clear and firm on these issues.
Repairs not mentioned
Don’t expect the seller will provide you with a comprehensive list of everything that needs to be verified or repaired. Make sure you perform a thorough inspection of the property quite early in the process. Consider hiring an independent inspector who will examine the property objectively and ensure the purchase contract is conditional to the results of the inspection.
Not being pre-qualified
A pre-qualified mortgage is fast and easy to get. And free. When you’re pre-approved for a mortgage, you take the stress away while you shop and you feel more secure knowing that you will be ready to do a promise to purchase.
If a seller does not comply strictly to the contract by neglecting to do repairs he/she promised to do, or by changing the nature of the contract in any way, this can lead to the postponement of the signature. Agree on a compensation amount ahead of time if, for example, the repairs are not completed as expected. Prepare a list of items both parties agreed on and follow up closely on each of the items.
Make sure you identified and found all the costs resulting from the sale – small or big – as early in the process as you can. When a transaction is concluded, sometimes unexpected fees suddenly “appear” after the total amount has been established: discharges, contributions, etc. Ask the seller to indicate in writing the total costs and charges for which you are responsible.
Rush the signature
During this step, it is crucial you take your time and insist on analyzing all the documents the day before the signature. Make sure the documents reflect your understanding of the transaction perfectly, that nothing was added or removed. Is the interest rate exact? Everything has been covered? If you rush through it, you might end up in a dead end at the last minute and with no solution at hand, you might compromise the transaction.