First home buyers ‘forget about due diligence’
An industry expert has blamed a lack of education for first home buyers not completing their due diligence before purchasing property.
“Buying a house is an exciting milestone, but people often get caught up in the negotiation process and forget about due diligence, which is equally, if not more, important than simply agreeing on price,” said GlobalX CEO Peter Maloney.
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“Buyers often try to entice sellers by eliminating building or finance clauses, or offering a faster settlement, but this is risky regardless of a property’s condition and people should always assess the local area and do their own research before entering into a binding contract,” he said.
Mr Maloney is pushing for greater education for first home buyers, so that they know not only which tests they should be undertaking, but also how the results of the tests they arrange affect their purchase.
“There is a common perception that conveyancers recommend searches to bring in additional revenue, when in reality searches cost a fraction of a sale and could save you thousands of dollars in the long run,” he said.
Some investors have the mindset that saving money during the due diligence portion of their purchase will help them overall, but it can result in costly repairs or nasty surprises.
“I received a buyer’s checklist and a general searches list from my conveyancer that was four pages long, so it was difficult to ascertain what was important or relevant for my property. I needed to complete some initial research to better understand my obligations and options to minimise risk beyond what the conveyancer may consider necessary,” said new home owner Simon Armstrong.
Once he had done his research, Mr Armstrong realised the property he was purchasing was more work than it was worth.
“I terminated the contract on a home after a termite inspection revealed significant infestation. I was relieved I’d received the results before the sale went unconditional and still had the option to renege,” he said.
“Be sure to research current and future plans for the area, because certain changes – for instance, future flight plans – can significantly influence a home’s value and tranquillity. Know if your property has connections for utilities such as gas and sewerage, as unconnected services could be costly to connect if unavailable,” said Mr Maloney.
“Understanding some simple processes and information available to you will reduce the stress of settlement and risk of a poor purchasing decision. You cannot have too much information when investing in a home or property, and a good-quality conveyancer should offer every home buyer insight into the process and regular updates on the settlement to improve the buying experience for their clients,” he said.
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