How many buyers have felt remorse and have not been able to sleep peacefully after making a purchase? Many first-time house buyers, partly due to enthusiasm, partly due to ignorance, have made costly mistakes during the house buying process. Take Mani for example, after signing his Sale & Purchase Agreement, he has been having sleepless nights and every weekend he has been to the site of his new purchase to see if there is any progress on the building. However, sadly for him, the project is stalled and he is at a loss of what to do next.
To help you keep your sanity and your cash, become an educated consumer and avoid the mistakes that others have made before you. To not educate
yourself and learn from the mistakes of others only sets you up to be at best disappointed and at worst finding yourself living in the wrong house. We have listed some of the most prevalent mistakes made by first time house buyers.
Mistake #1 Not planning ahead
Once a decision has been made to purchase a home, often buyers start rushing off looking for houses and strata units at exhibitions, surfing the internet, calling on advertisements and visiting show houses before doing some up-front preparation. We at HBA has been receiving many emails from buyers wondering if they can get a refund on the initial deposits for one reason or another but mainly because they have rushed into paying a deposit before they are ready.
We have to state this loud and clear - once you paid a deposit to purchase a house and "change your mind," the chances of getting a refund are almost non-existent. More damage financially, if one has signed the sale & purchase agreement. The penalty clause is 1% of the purchase price if the buyer is unable to get a loan. If it takes 1% of the purchase price to test whether one is eligible for loan, it makes sense to do research before hand.
Also, think about how long you plan to own the house. Would it be difficult to resell? List the negatives. Could you eliminate or reduce them?
Mistake #2 Not understanding the different types of purchase
Very few house buyers do bother about the legal side of the housing process and prefers to leave it to their lawyer or lawyers from their Vendor's panel to assist them in the process. Many house buyers are surprised to find out that their purchase is not protected under the laws. House buyers should be reading up on the different types of properties and whether or not these purchasers are covered under the Housing Development (Control & Licensing) Act 1966 (revised 2002) or not.
Mistake #3 Fail to understand the home buying process
First-time homebuyers need to ask questions. Lots of questions. So, who do they go to, to ask these questions? So choose a real estate agent or a lawyer who has experience working with the uninitiated and is willing to explain the entire house buying process in detail, and explain it again until you understand it.
Mistake #4 Finding out too late that you have no representation.
This can be a real nasty surprise when the buyer assumes that the lawyer recommended by the vendor or a developer represents him when they actually represent the vendor and owes complete allegiance to the vendor. Until such time that the law makes it illegal for vendors to advertise 'free legal fees', buyers learn the hard way that 'free' means no representation. Some buyers argue that since such sale & purchase agreements are standard documents, a couple of thousand ringgits saved is worth it. Here, we would like to point out that although the documents are standard, they are forms and every unit, project & concept is different. For strata properties, there are documents like 'Deed of Mutual Covenant' & purchase of car-park bays, are not standardised.
Mistake #5 Not reading what they have signed
This is true of a majority of first-time buyers. Most do not read their agreements and have no inkling of what they have signed. Many put their complete trust in their lawyers and think that blindly that all the lawyers will be looking out for their interest whether or not they are represented.
Mistake #6 Not prepared in case of delays
Delays in handover of vacant possession are so common, that buyers are wise to make provisions for them. If you are renting a house, make sure your landlord is flexible with the extension otherwise moving to another accommodation for an indefinite time will certainly cost you more.
Mistake #7 Buying into an unknown location.
Don't stop your inspection at the property line. Examine the surrounding area. Is it safe, well maintained and moderately quiet? Is it convenient to work, schools and shops? Ask about zoning and that lovely forest of vacant land across the street. Could the highway nearby be widened in a couple of years? Within ear shot? If you're not familiar with the area, ask friends and colleagues about it.
Mistake #8 Buyers' Remorse
No one likes to admit they bought the wrong house. But, it happens. Some have had their deposits forfeited for last minute changes of mind. This is an expensive way to learn what they needed in a home. To ensure that this doesn't happen to you, do your homework well before you part with your hard-earned money.
Learn from the mistakes of others. It's the best way to ensure a first-time homebuyer a good night's sleep.