Are you thinking about buying your first property? It is an exciting, and terrifying, time.
One of the biggest dangers you need to guard against is naivety.
It’s not your fault, and everyone has to start somewhere with their first purchase. But you need to ensure it is a sound one. And you must guard against your inexperience and naivety.
I have bought and sold properties in Ireland since 1986 and you can learn from what I have learned, and my mistakes.
Let me explain my thesis that naivety is one of your biggest dangers in the process. There is a number of ways you can be naive, and, quite frankly, taken advantage of. This is because there is a number of specific but diverse activities you will engage in before you successfully move to your new home.
These activities include
- Assessing where to buy your new property-the location
- Assessing the physical condition of the property
- Negotiating the deal with the vendor or, more likely, the auctioneer
- Organising the finances.
Each of these four areas is a potentially tricky area on its own, but combine it with each of the other three areas and it is easy to see how you can make costly mistakes through naivety, and the fact that this is your first time.
The best approach to take is to ensure you have good advice every step of the way, don’t cut corners, and engage the help of professionals where you can.
The Structural Soundness of the Property
For example, don’t take chances with the structure of the property, and its physical boundaries. Have these checked out by an engineer/surveyor/architect who should also carry out a structural survey on the property to ensure the structural integrity of the property and no evidence of pyrite.
Ensure, too, that the surveyor had professional indemnity insurance and ask him any questions that are bugging you after he has given you his report; for example, a) is the property structurally sound? and b) do you recommend further investigation be carried out?
Negotiating the Deal
Negotiating the deal-always remember when you are buying the property that the auctioneer has only one client: the vendor. Don’t rely entirely, or at all, on representations or blandishments made by the auctioneer.
The likelihood is that when the contract is issued there will be a special condition in it which states you understand that you cannot rely on any other representations or warranties made prior to the issue of the contract. This, therefore, legally rules out you relying on what may have been promised by an enthusiastic, friendly auctioneer.
Organising the finance
Shop around for the best deal and be aware that the person in the bank who is selling you the loan will not be the person who stipulates the conditions set out in your loan offer. In the same way that you take what the auctioneer has told you with a pinch of salt you need to also understand that the front line person for the lender who is sending applications up the line has little or no influence over the loan conditions which will ultimately emanate from the bank’s legal and/or securities section.
A mortgage broker or advisor might be a useful tool in your toolbox provided that he/she is providing you with independent financial advice and has only one client: you.
Be cautious about advisors or brokers who have agencies with specific institutions or have some type of commission arrangement for selling a particular loan.
Through the whole process when you are dealing with someone-auctioneer, bank, vendor,engineer- always silently ask yourself: who is his/her client. If it is not you, be vigilant.
My advice to protect you against your inexperience and the fact that you are a “virgin” at this:
- Use your head and get advice from those who have been through the experience of buying and selling property
- Don’t be afraid to pay for professional advice, as buying property is a big investment and commitment
- Keep a cool head and always remember who is acting for you, and who is not on your side.
These same fundamental principles also apply if you are buying a commercial property.