fbpx
  • Home
  • /
  • Blog
  • /
  • Top 6 Melbourne Property Buyers Mistakes Revealed:

Top 6 Melbourne Property Buyers Mistakes Revealed:

Top 6 Melbourne Property Buyers Mistakes

In this article, we’ll reveal the top six Melbourne Property Buyers Mistakes that can hinder your success in real estate.

When it comes to property buying, making informed decisions is crucial to ensure a successful and profitable investment. However, many buyers unknowingly fall into common pitfalls that can impact their financial gains.

In this blog post, we will explore these pitfalls and provide valuable insights that will empower you to make wise choices and avoid these top 6 property buyer mistakes.

1) Neglecting the True Cost of Prolonged Purchasing Duration

According to a survey by realestate.com.au, the average time spent actively searching for a property before making a purchase is 8.6 months.
 
However, with clarity, solid selection, and due diligence criteria, this lengthy process is not necessary.

Time is money, and the cost of being an average property investor or home buyer can be significant. In a rising market, an 8.6-month delay can result in losing tens of thousands of dollars in opportunity cost.

Top 6 Melbourne Property Buyers Mistakes

For instance, let’s say you’re looking to buy a $800,000 property in a suburb with 10% annual capital growth.
 
If property buyers delay their purchase by 8.6 months, the property’s price could increase by approximately $57,000. That’s a significant amount of money that could have been saved by acting quickly and using a streamlined purchasing process.

Top 6 Melbourne Property Buyers Mistakes

2) Emotional decision making

Buyers can often waste precious time searching for properties in suburbs that are outside their budget or by negotiating poorly, which can result in missing out on desired properties.

Many property buyers who miss out on a property they really wanted may buy the very next available option out of desperation, without conducting proper due diligence on the suburb or property.

Top 6 Melbourne Property Buyers Mistakes

As a result, they end up purchasing a property that doesn’t truly suit their needs. This impulsive decision can lead to disappointment, frustration, and stress. Additionally, it may involve unexpected costs such as high maintenance fees, unforeseen repairs, or holding costs that strain the buyer’s budget.

Therefore, it is strongly recommended to base property purchases on thorough due diligence and factual analysis rather than succumbing to emotions.

3) Overpaying or Missing Out On Desired Properties

The inability to accurately determine the true value of a property can lead to costly consequences such as overpaying or offering too low. Buyers who are unaware of the seller’s agents’ tricks, emotional games, and negotiation strategies may end up offering more than necessary, resulting in tens of thousands of dollars wasted in the purchasing price.

Top 6 Melbourne Property Buyers Mistakes

Conversely, offering too low due to a lack of understanding the property’s true value can potentially lead to losing the property to competition and restarting the purchasing process with even more frustration.

If you want to know the true value of a property using professional property valuers, we highly recommend Local Valuers Australia. They can accurately and professionally assess your property’s value. They provide clients with detailed property valuations, accompanied by easy-to-understand information and advice for reliable and quick decision-making.

It is essential for buyers to develop the knowledge and negotiation skills necessary to make informed offers and secure properties at fair prices.

4) Buying The Wrong Property In The Wrong Place At The Wrong Price

Anyone can purchase a property, but buying the right property in the right place with the right price is significantly harder.

Many property buyers lack the necessary skills and market knowledge to holistically analyse market trends and conduct solid due diligence on suburbs and properties to ensure they make a sound investment.

Purchasing a property without proper due diligence can lead to future regret. There are numerous factors that need to be considered, and often, property buyers are unaware of what they don’t know.

Ignoring even one crucial factor can result in a significant increase in holding costs or limit the potential for capital growth.

For instance, according to the Insurance Council of Australia, purchasing a property in the wrong “zone” has incurred an additional annual cost of $30,000 for property buyers. Ouch!

Therefore, it is vital for buyers to conduct comprehensive due diligence to avoid such costly pitfalls.

5) Getting A Wrong Advice From The Wrong People

One common mistake made by home buyers or property investors is relying on advice from the wrong people. Many individuals base their purchasing decisions on advice from friends, family members, colleagues, or even gym trainers!

It is crucial to recognise that there is no “one-size-fits-all strategy,” as each person’s financial position and needs are unique. Just because a particular strategy or purchase worked for someone else does not mean it is the best option for another person.

Friends and family members often have limited knowledge and experience in the property market, and their advice should not be considered sufficient for such a significant investment. While they may know a bit about taxes or property market, it doesn’t make them accountants or property consultants!

Top 6 Property Buyer Mistakes

By relying on their advice and limited knowledge, property buyers expose themselves to significant risks or limit their potential for maximum capital growth or yield. It is essential to consult with property professionals to make well-informed decisions.

Therefore, engaging experienced accountants, mortgage brokers, financial advisors, solicitors, investment consultants, building and pest inspectors, and so on, is highly recommended before and during the purchase process.

6) Settling For The Average

The cost of being an average property investor or home buyer can be significant. Property buyers can leave substantial money on the table if they fail to select high-growth suburbs within their budget and instead purchase a property in a low or medium-performance suburb.

This can potentially result in the loss of hundreds of thousands of dollars in the long term. Additionally, selecting the wrong property in a good location can also hinder property buyers from maximising their return on investment.

Let’s assume that, by employing a solid suburb and property selection system, a property buyer achieves just 2% additional capital growth and/or yield. For instance, by considering the compounding effect on an $800,000 property, having an additional 2% capital growth and/or yield equates to approximately an extra $110,000 in 5 years or an additional $320,000 in 10 years.

This represents the potential opportunity that would have been missed by settling for average choices, following the crowd, relying on friends’ advice, and not seeking professional guidance and assistance.

Conclusion

Avoiding these top 6 Melbourne property buyers mistakes is crucial for property buyers who want to maximise their investment potential. By recognising the true cost of a prolonged purchasing duration, making decisions based on emotions, accurately valuing properties, conducting thorough due diligence, seeking professional advice, and aiming for above-average choices, buyers can position themselves for success.

Each mistake carries its own risks and consequences, but with proper knowledge, research, and guidance, buyers can navigate the property market with confidence and achieve their financial goals.

Remember, when it comes to property buying, knowledge and informed decision-making are key. So hopefully, you will be in a better position for your next purchase by avoiding these top six property buyer mistakes.

We highly recommend you to engage a Melbourne buyer’s agent before making any investment decisions. This ensures you thoroughly analyse your situation and select an option that provides the best financial outcome for you and your family, preventing future regrets.

About the author

Amir Sehat is the chief property adviser and buyer advocate at Property Demand, known for his data-driven approach to researching 15,000 suburbs across Australia to identify booming suburbs as investment destinations.

A fun fact about him is that his deep knowledge and enthusiasm have earned him the nickname 'Property Nerd'.

He provides expert advisory and advocacy services to a wide array of clients, including:

- Property investors seeking to purchase high-growth and high-cashflow properties.
- Home buyers looking to avoid costly mistakes and save time
- Property sellers aiming to achieve the highest selling price


{"email":"Email address invalid","url":"Website address invalid","required":"Required field missing"}
>