5 Factors to Evaluate Before Buying a Property
Purchasing property is a major decision. Whether you are an investor and are expanding your portfolio or are planning to occupy the property, it’s a huge investment of your money and a decision you’ll live with for several years or decades.
So it’s important to ask a few questions before you dive in and buy a property. These are specific factors that, despite the condition or cost of the home, might impact your decision to buy.
Why is the Property Being Sold?
The answer to this question can impact a number of things, including the amount of time it takes for a home to get to auction and the final cost you end up paying.
For example, if an owner has already purchased a new home or is moving soon, their goal is to sell and not lose money. Time is of the essence so they will be more likely to move fast at a cost slightly below market value. If the home is an inheritance or second property, that urgency may not exist and will likely go to auction.
What Issues with the Property Have Been Reported?
There are a number of sometimes hidden factors that can impact the value of a property. A building inspector will pick up most of the major structural and visual issues with a property, but what about the land itself or the properties of neighbours?
If there is a problem on someone else’s property or a historical problem that isn’t currently an issue but historically was, then it could come back to haunt you later.
How Long Has It Been Available?
In the current Sydney property market, homes shouldn’t stay on the market for very long. The average selling time for a home in Sydney at the end of 2015 was 47 days, about 7 weeks. If it takes longer than this for a home to sell, assume there is something wrong with it.
Even with lower auction clearance rates to start 2016, properties are not remaining available for long.
Suburb Changes and Updates
At any given time, the local government may be discussing changes to the suburb – either good or bad. Perform thorough research about the nearby area, ensuring that no major construction will be occurring nearby or that changes won’t occur that could impact the value of your property in the near future.
At the same time, are there changes pending that could positively impact the price? This might affect just how much you are willing to pay.
What Will Maintenance Cost?
An incredible deal on a home might quickly unravel if you’re saddled with extensive maintenance each year that balloons your investment. Older homes in particular can be costlier to own, simply because they require more regular maintenance, updates to aged equipment, and other changes.
Even a perfectly maintained home that an inspector signs off on can be costly in the short term if the equipment is old.
Before you invest in a property, be sure to do your research, spending time evaluating the full cost, future potential of the property, and the exact circumstances under which the home is being sold.