First-Time Home Buyers: Here Is How To Avoid These 6 Rookie Mistakes

A first-time home buyer is prone to many disasters that could turn real estate investment into the best lesson of his/her life. However, there is no way all the troubles can be avoided - your investment in a property in India can turn into a disaster if a few basic aspects are ignored.

Make sure you do not make these common mistakes by home buyers:  

Lack of self-assessment: Have you imagined how much a home purchase can cost? Not only will you have to make a large upfront payment, you will also have to back it up with regular monthly payments in the form of EMIs. Going ahead with a real estate investment without a long term vision of finances may take you to bankruptcy.

Plan your finances for the next few years before you get into it and ensure you have a proven record of financial discipline. Make sure you have your savings in other forms like shares and FDs, which are liquid enough to cover you in emergencies. Do not put your last dime into your home. Remember that it will be in brick and mortar, and not come to your immediate rescue in times of need.

Trusting your realty agent: A home agent or a broker is as honest as a used car salesman. He may be hiding good properties from you, pushing not-so-good projects that few are interested in. Employ the services of two or three agents while looking for a property in India. Make sure that your agent has good referrals from someone, who recently bought a home and do the background checks. A number of agents tend to cartelise an area; make sure that you do not fall into these traps.

Skipping home appraisal: It might look like a very good investment while you are making it. That might make you want to skip the process of getting a professional to appraise the property. This can turn out to be a costly mistake in future.  This expert is the only impartial party to the transaction who can give a correct view. All others involved, like builders and agents, might paint a green picture which may not be true. A home appraisal will also come in handy while selling property and ease the process of a bank loan. It can also help you negotiate better with your builder.

Forgetting about hidden costs: Real estate investments have hidden costs. They can be very expensive starting from registration fees to moving costs to stamp duties or the cost of delay of a project. In many cases, these costs tend to add up to at least 10 percent of the value of the home. Make sure you work all this into your finances before making an investment.

No idea of resale value: A home is an investment and is as good as its ability to fetch money. Though option of a sale might not be exercised by you, ensure that you check the value that it might fetch when selling it. Enquire similar property values in the area and match your home purchase cost to it. Without this number in place, you might end up overpaying for your home.

Less research on market trends: Housing markets are changing much rapidly than there were a decade back. Earlier, it was safely assumed that a home will always appreciate in value. Rapidly emerging suburbs, 'direction of growth of a city' and infrastructural developments have changed this assumption. Competing new satellite towns as well as failure of a project launch can drastically change the value of a property. Make sure that you have enough research on the locality in which you are buying a home.

(Katya Naidu has been working as a business journalist for the last nine years, and has covered beats across banking, pharma, healthcare, telecom, technology, power, infrastructure, shipping and commodities)