First-time buyers must beware the hype

In the current property market, buyers are kingpins heavily courted by developers and estate agents alike - but first-time buyers in particular should take care not to be seduced into serious and potentially costly mistakes.

So says Berry Everitt, MD of the Chas Everitt International property group, who notes that in the excitement of hunting for a first home, many buyers become over-enthusiastic and run the risk of succumbing to “hype”, particularly in new developments where they may be subjected to high-pressure sales tactics.

“And signing an agreement to buy before they have done their homework properly, may quickly take the gloss off owning their own home.

“Therefore, they should keep basics in mind, such as studying the market and finding out what implications fluctuating interest rates hold for them and what the relative advantages of different types of properties are, such as sectional title as opposed to freehold ownership.”

Writing in the Property Signposts newsletter, he says it is always a good idea for buyers to visit as many show houses as possible and to consult estate agents about the state of the market in areas where they would like to settle. “And they should never be afraid to ask questions and have them answered to their satisfaction.

“Above all, though, they should resist temptation to over-commit themselves financially in the hope that a bonus at the end of the year or an expected salary increase will make up any temporary shortfall. Also, of course, all related costs such as transfer duty and legal fees should be taken into account when they draw up their budget and decide how much to spend on a home.”

It is far better, Everitt says, to under-spend rather than overspend on a first home, and to put any spare funds into the bond to reduce interest and to build equity. “In this way buyers will be in a better financial position when circumstances dictate it is time to upgrade to a bigger property.”

Article from: www.chaseveritt.com