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Tips While Buying a Home

Buying a home is not just one of the major financial decisions in an individual’s life but is also a very emotional one. Thus, it is essential that the decision be taken only after thorough research and analysis.

Buying a home is not just one of the major financial decisions in an individual’s life but is also a very emotional one. If you allow emotions to get the best of you, you may fall prey to a number of common home buyer mistakes. Since homeownership has far-reaching implications, it’s important to keep your emotions in check and make the most rational decision possible. Thus, it is essential that the decision with respect to buying a home be taken only after thorough research and analysis. There are certain mistakes that investors tend to make while buying a home. In this article, we intend to list down the common mistakes, in an attempt to forewarn you about falling into the trap.

The following points, if noted, can help one avoid certain mistakes while making an investment in a home:

Be realistic

Before you start house shopping, be realistic about what you can afford, and tailor your search accordingly. The decision should be taken after giving thorough consideration to one’s future needs such as marriage, job shift, etc. 

Do the quality check

Downplaying flaws could be a costly mistake, as could overestimating them. Before you close on the sale, you should know what kind of shape the house is in. You don’t want to get stuck with a money pit or with the headache of performing a lot of unexpected (and potentially expensive) repairs. At the same time, you should not reject a deal for just having to make some basic cosmetic changes or upgrades before you move in.

Seek help from an agent

It is necessary to choose an appropriate agent who is an expert and is well acquainted with the area. Agents are held to the ethical rule that they must act in both the seller and the buyer’s best interests. But you can see how it might not put you in the best bargaining position if you start dealing with a seller’s agent before contacting one of your own.

Do a thorough research

A thorough research should be done by examining different properties so as to analyze the pros and cons before arriving at the final decision. The layout of the property, number of rooms, size of bathrooms, servant area etc. should be considered to ensure that it meets your key requirements.

Seek opinion 

The people living in the area or immediate neighbourhood can also be consulted to know about the significant problems faced by them, if any.

Check the social appeal

One should consider the profile of the residents in the vicinity so as to capture the social appeal of the area being considered. Don’t just focus on the residence alone but also look at the surrounding area. It’s impossible to perfectly predict the future of your chosen neighborhood, of course, but inquiring about or researching its prospect now can help you avoid unpleasant surprises down the road.

Consider the resale value

The resale value of the house should also be taken into consideration.

Take timely decision

In a hot market, it may be necessary to make an offer fast if you find a home you like. However, you have to balance the need to make a quick decision with the need to make sure the home will be right for you.

Study the terms of the contract

The contract related to the purchase of the house should be thoroughly read and then signed. Doubts, if any related to the property or the agreement should be clarified before the deal is closed so as to avoid any inconvenience later. 

Make arrangements for a bank mortgage

What you think you can afford and what the bank is willing to lend you may not always match up, especially if you have poor credit or unstable income. Make sure to have a pre-approved loan in place before placing an offer on a home or even better before you go house-hunting in earnest. If you don’t, you may end up wasting the seller’s time, the seller’s agent’s time, and your agent’s time if you sign a contract and then discover later that the bank won’t lend you what you need or that it’s only willing to give you on terms that you find unacceptable. The pre-approval process can also help you locate the aforementioned financial neighborhood for your house-hunting expeditions.

Perfection lies in the details!

Dr Swati Dhawan
Dr Swati Dhawan

A SRCC & FMS alumni, Dr. Swati Dhawan has a rich teaching & training experience of more than 17 years in the area of Accounting and Finance with institutes of repute like IIM Rohtak, IIM Raipur, IIM Sirmaur, Faculty of Management Studies, Shri Ram College of Commerce, IMT Ghaziabad, TERI University, etc. Also, she has been an academic consultant & corporate trainer in management development programmes at GAIL and Alchemist. Her book on Merchant Banking & Financial Services has been published by McGraw Hill.

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