4 Common First Home Buyer Mistakes you Ought to Avoid
Updated: May 27, 2021
1. Not Seeking legal advice prior to signing a contract
Whilst it may appear obvious a law firm stating you should seek sound legal advice prior to signing anything, reigns true as the golden rule, we understand it can be easy to get caught up in the excitement of finally securing that elusive first property. However it cannot be emphasised enough that you have key documents reviewed by a competent solicitor. These documents often include the contract of sale and section 32 vendor statement. Unfortunately, these documents are rarely written in plain English and require expert review to ensure you not only understand what you are contracting to purchase, but also understand the risks the transaction may bare.
2. Not making your offer subject to a loan if you are obtaining finance to fund the purchase
In the vast majority of cases first home buyers will be obtaining a loan from a financier such as a bank to assist financially in making the purchase. Thus, it is prudent to make your offer to purchase the property subject to you obtaining approval of your loan. Whilst you and even perhaps your broker may have every confidence in turning that pre-approval to an unconditional approval, it is not guaranteed. If you are to make an offer without it being subject to approval of your loan you could be left with hefty financial implications if your finance is rejected such as the vendor suing for breach of contract.
Your solicitor will be able to assist in identifying if your contract is subject to finance and negotiating this condition with the vendor if necessary.
3. Making your decision to purchase the property based upon marketing materials
Buying what many refer to as a ‘house and land package’ in a brand new estate can be an exciting prospect. Purchasers are often drawn to the enticement of getting their foot in the door in an up-and-coming suburb in the hope of achieving strong positive equity. However, it is important to look further than the glossy marketing materials. The reason being is it is standard for contracts of this nature to contain terms that no warranties or representations are made in marketing materials whether written or oral as to future development in the estate. You may be asking what does this mean for me? For instance, let’s say the estate says there is a proposed development of a supermarket, medical centre, greenspace and primary school. You must be prepared that these proposed amenities may never come to fruition and thus it is not wise to base your decision to purchase a property in the estate solely on these potential amenities. If these amenities are never made you will not have recourse to rescind (meaning withdraw) from the transaction or seek compensation from the vendor and or its agents.
4. Relying on information conveyed to you by the real estate agent/ land sales agent
Whilst it is unkind to state any agent has bad intentions as many of course do not, you must recognise they work for the vendor and not you! Similarly, to the exceptions of marketing materials, agents will indemnify themselves against any action for information that has been given to you.
Therefore, it is recommended that you verify information given to you from the agent with your solicitor who will be equipped to make further necessary enquiries.
If you are considering purchasing property, please speak to one of our expert property lawyers today who can tailor and strategically plan your next transaction.
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The contents of this post are general in nature and do not constitute legal advice. Please seek legal advice prior to relying on this information.