Naivety When You Are Buying Your First Property is Your No. 1 Enemy

buy house ireland

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

  1. Assessing where to buy your new property-the location
  2. Assessing the physical condition of the property
  3. Negotiating the deal with the vendor or, more likely, the auctioneer
  4. 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.

Conclusion

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.

3 Easy Ways to Be Penny Wise and Pound Foolish in Relation to Legal Services

legal-services

It never ceases to amaze me.

There are 3 simple ways to be “penny wise and pound foolish” I encounter frequently in my solicitor’s practice:

1.      “I don’t want a big long agreement/legal document; I just want something simple”

This potential client is no fool; he recognises that he needs a legally binding contract to protect his interest, but wants something “short” because he doesn’t really want to spend any money.

He even mentions that a “one pager” should suffice as relations with the other party are good.

And I explain that the only time that this document/agreement will be looked at closely will be if there is a dispute between the parties. If there is a row, the agreement will be scrutinised closely, especially by his legal advisor, and will need to stand up to close inspection.

This is the problem with the “one pager”-if there is no dispute the agreement will probably not be referred to again, and it doesn’t matter if it is inadequate.

However, if there is a dispute you don’t want to experience that sinking feeling when you look over your one pager and discover that it is either completely silent on the problem that has arisen, or has dealt with it inadequately and failed to protect your interest.

2.      “I would like you to review my potential employment related case but I am not prepared to pay a small fee for a consultation”

If I am to review the circumstances surrounding, for example, your dismissal from your job, or any other issues you have in your employment, I am going to need to do a few things. These things will require

  • My time
  • My expertise

The things I will probably need to do will be to

  1. take full instructions from you to get your version of events;
  2. review any relevant documentation such as correspondence, contract of employment, and staff handbook;
  3. check any relevant legislation/regulations.

Now, if you also consider that the maximum amount you could be awarded for a successful claim would be two years’ salary you might think that the few bob spent getting your case reviewed would be money well spent, especially if it is less than €100.

Let’s be honest: if you have a good claim the consultation fee will be well spent because of the chance of a successful outcome.

If you don’t have a good claim are you not better off finding this out at the beginning rather than embarking on a costly claim or legal proceedings with little prospect of success.

3.      “I’m buying a house but am not prepared to spend €300 for a structural survey-it’s a waste of money, especially if the sale does not go ahead”

This person sees the spending of €300, or thereabouts, on a structural survey on their target property because the money will be “wasted” if the purchase does not go ahead.

Let’s consider this closely: you are about to make probably the biggest investment of your life with massive money at stake, a decision that will affect you for life, and you don’t want to blow €300 of a survey.

If your survey prevents you from making a bad investment for the rest of your life, for example a pyrite affected house, surely it is a no brainer that the cost of this report is a great investment.

The same principle applies to any property related purchase or lease-there are certain professional fees that come with the territory. If you are not prepared to pay these fees you might be better off steering clear of property investment.

Because the consequences of getting one wrong can be catastrophic.

Conclusion

Think carefully about the consequences of skimping-weight up carefully what can go wrong versus what you are saving.

Do You Make This Mistake When Buying a House or Apartment?

costs of buying a house

Yes, you’re excited.

But there is no excuse for making this stupid mistake when you are buying a property.

One of the most important things you need to do is to have a structural survey of the property carried out.

And when I say “structural survey” I mean a proper survey by an engineer or surveyor who has professional indemnity insurance.

I don’t mean a well intentioned friend or relative who does a bit of building having a look and telling you, “yes, it looks fine”.

Don’t confuse a structural survey with the valuation report/survey which the lender will want carried out either.

Your surveyor needs to do two things at least:

  1. Give a professional opinion on the structural integrity of the building and flagging up any issues which might occur later; this would include any signs of further investigation being required to establish that there is no pyrite in the building
  2. Check that the property on the ground corresponds with the map of the property with the title deeds/on the Land Registry folio. In other words, that you are actually buying what you think you are buying.

Declaration of Identity

There is one further thing your surveyor should be able to do for you as part of his survey and this applies to one off rural properties only.

That is, provide a Declaration of Identity if necessary. This declaration that all of the necessary services-for example septic tank and water well- for the property are located within the boundaries of the property.

You don’t want to discover that your septic tank is located in a neighbouring field after you have moved in.

A surveyor’s report will probably cost you up to €500 plus VAT but you will get them done for cheaper.

It is money well spent however which can help you avoid a much more costly mistake which could come back to haunt you in later years.