HOT MARKET WARNING TO HOME BUYERS

by Neil Jenman

Reading time: Apx 90 seconds (worth it)

With the property market so hot in so many areas, some agents are telling buyers not to bother making ‘conditional’ offers.

In their hurry to buy – and fear of missing out – many home buyers are now agreeing to forgo basic safety measures such as a Building and Pest Inspection Report. Or not checking with a lawyer before signing a legally binding contract. Or not having finance 100% approved.

Such an attitude is both foolish and dangerous.

It’s one thing to be keen to buy, but it’s another thing to be trampled in a stampede. If you are a home-buyer and you do not use safety checks, you could strike serious trouble.

How much trouble?

As much as hundreds of thousands of dollars.

Does that make you stop and think?

I have seen it. Many times. The price of recklessness or over-confidence when buying property can be horrendous.

For example, years ago, an RACV roadside mechanic (who advised people to get an RACV check when buying a car) decided he didn’t need to spend a few hundred dollars on a building report when buying a lovely two-storey home. It looked perfect. What could go wrong?

Plenty can go wrong when buying property. It’s a minefield for the unprepared, inexperienced and the easily-influenced.

After this mechanic moved in, he noticed the cracks.

With a sinking feeling (excuse the horrible pun), he contacted a reputable builder. The home was in danger of collapse. The cost of fixing it nearly ruined him.

A real estate boom should not be a reason to lose your sanity. Beware and avoid the madness of crowds – do not join them.

Always ask yourself the seven-word safety question: ‘What is the worst that can happen?’

And remember, in a boom, it seems like any property can be sold – at ever-increasing prices.

And maybe that is true

So, if something goes wrong, you can always re-sell it. Or so you think – now.

But what happens if you discover you have bought a dodgy property? And what happens when the music stops – as it always does – and you have not re-sold?

When the boom is over, dodgy properties are no longer easy to sell. Indeed, some are almost impossible to sell unless the owners are prepared to take what agents call a “massive bath”.

If you check Australian property records, you will find thousands (yes, thousands!) of cases of people buying property in a boom and selling in a gloom – for massive losses.

Property losses rarely attract much publicity. There are too many vested interests in the real estate world, and they need to keep spreading the myth that property is the sure-fire way to get rich. All you need do is wait for a boom, close your eyes, ignore safety protocols including the advice your parents (or grandparents) gave you about safety and believe in, yes, guess who – any real estate agent who tells you to buy, buy, buy, fast, fast, fast.

If you have the cheek to ask for a few days to check things out – or, worse, think things over – then, forget it. We have other buyers waiting.

Ignore safety and buy now or miss out.

Is that really the message or the conditions under which you want to buy such an enormous asset as a home for up to – or over – a million dollars?

And place yourself at risk of buying a dodgy property?

The one sure time that sellers and agents can sell a dodgy property is a boom. That’s when buyers, encouraged by the agents (don’t you just love their caring, empathic natures) urge you to throw caution to the wind.

So, if you take this mad advice and you forgo basic safety checks and buy a dodgy property – and the boom stops, it will be like musical chairs. You will be left holding a dodgy property – and waiting for the next boom so you can sell the dodgy property to someone who will be as foolish then as you are being asked to be now.

Is that what you want?

If not, don’t be reckless.

Safety first. Like you teach your children.

Booms come and booms go – and then come back. But the pain caused by the misery of making a rushed and reckless decision during a boom will last a lot longer than the boom itself.

So, right now, while some owners, encouraged by agents, see this boom as a great chance to off-load dodgy properties, please try not to be one of the buyers who will be left holding a bad property when the boom is over.

If you’d like a copy of the 13 Worst Mistakes Made by Home-Buyers, please click here.

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