Professionals Armadale Real Estate Hay Property Consultants managing director Peter Hay speaks of one such situation.
A young woman bought a three-bedroom home in Point Cook, in Melbourne’s outer-western suburbs, for $325,000. After her exhilarating afternoon of shopping and signing contracts she experienced what’s commonly referred to as buyer’s remorse. Something didn’t feel right. It all seemed too easy.
A few weeks later she approached Hay Property Consulting to get its qualified opinion on how much the home was worth. Hay’s estimation came back at a price range of $285,000 to $290,000. Try as they might they just couldn’t seem to get the valuation of $325,000 – the price she paid.
Peter’s advice was simple.
Don’t move into the house.
Once you’ve lived in it, it becomes second-hand stock and will be priced down accordingly by the market. She would be better to on-sell it, take the loss and learn a very expensive lesson.
Today, that same property is still on the market. Even priced at $265,000 (a $60,000 loss) she still can’t find a buyer. The tragedy is that at the very same time, young home buyers are travelling to the edge of the city to these developments, taking in the slick sales spin and getting sucked into a deal they’ll pay dearly for over the next 20 to 30 years.
The lesson is to always get independent valuation advice, and never ever be pressured into signing anything without seeking your own independent legal and financial representation.
Yet the real lesson should be learnt before you enter your first display home. Buying a home is something we should all strive for. But not at the expense of our sanity.
Committing to a huge mortgage is something you need to sit and think about.
You need to ask yourself some questions.
What happens if interest rates climb 2 per cent? Over a 25-year loan term it’s fairly likely – perhaps they could go even higher than that.
What happens if you want to have children? Suddenly two wages turn into one.
My critics may call me un-Australian for denouncing the Aussie dream, but the simple fact is that unless you have enough money to cover the upfront and hidden costs, and have taken the time to look at your budget now and into the future, you shouldn’t be buying a home, regardless of what real estate agents, financiers or our furry friend tells us.
Tread your own path!
source www.barefootinvestor.com