This mistake that 80% of real estate buyers make and that costs a fortune

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Buying a property is a bit like playing poker: you have to master your cards well, otherwise you risk ending up with a bad hand that costs you dearly, very dearly! And there is a mistake that 80% of buyers make and that can really put them in a difficult situation. Don’t worry, we’ll dissect it together and give you tips to avoid falling into the trap.

The classic trap: underestimating financing

You’ve spotted the house of your dreams, you can already imagine yourself preparing barbecues in the garden, but before signing anything, financing must be solid! Yes, many buyers underestimate their borrowing capacity or don’t bother to get their mortgage pre-approved. Bad idea, because a nasty surprise can hit you when you least expect it. Imagine: you make an offer, but the bank rejects your loan because you didn’t meet certain conditions. Result: not only do you lose the house, but also the money you had advanced as a deposit.

Here are some mistakes to avoid:

  • Not consulting a real estate broker for personalized assistance.
  • Requesting a loan higher than what your budget allows you to repay (especially with the increase in interest rates in recent years).
  • Not taking into account additional fees such as notary fees, property taxes, and future repairs.

The sales agreement: a contract not to be taken lightly

The sales agreement is like the warm-up before the match. If you rush through it, you may end up paying the price. This document, which binds the buyer and the seller, defines the sales conditions, including the famous suspensive clauses. In essence, these clauses protect you in certain cases (for example, if you fail to obtain your loan), but they can also work against you.

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Why are suspensive conditions essential?

It’s simple: they allow you to set conditions for the sale. You are buying land and you want to make sure that the building permit will be granted? Boom, a suspensive clause on that, and you’re covered. But beware, if you do not strictly adhere to what is written, such as requesting a loan that does not align with what was set in the agreement, the seller could keep the down payment and cancel the sale. That hurts, doesn’t it?

Table of errors and their consequences

ErrorConsequence
Requesting a loan higher than what is specified in the agreementSale cancellation, loss of deposit
Not including suspensive clausesNo protection in case of loan rejection
Not adhering to the maximum interest rates specifiedObligation to accept an expensive loan

Pre-sale inspection: don’t overlook it!

Another big mistake that 80% of buyers make is neglecting the pre-sale inspection before the final signing. You may think you don’t need to do a walkthrough, that everything is fine… but think again! How many stories have I heard of people discovering afterwards that radiators or door handles had mysteriously disappeared between the visit and the handing over of keys!

Give yourself a gift: always take the time to do one final walkthrough. This will allow you to check that everything is in order, and avoid unpleasant surprises, such as additional costs for things you thought were included. Moreover, this visit also enables you to check the overall condition of the property after the seller has moved out.

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Beware of underestimated renovations

Ah, the infamous renovations… If you are buying a property that requires renovations, you’d better make a realistic estimate of the costs before committing. Many buyers are dazzled by the charm of an old building, without realizing that renovation work can swallow up a good portion of their budget. And don’t even get me started on the new regulations regarding energy-inefficient properties that make some properties unsellable or uninhabitable without work.

Here are some tips to avoid surprises:

  • Walkthrough with a contractor for a precise cost estimate.
  • Anticipate new laws, like the prohibition of renting energy-inefficient properties.
  • Get a quote for urgent repairs (roofing, electricity, insulation).

Best practices to adopt

Now that you know the mistakes to avoid, let’s see how you can play your cards right to succeed in your real estate purchase.

  1. Prepare your financing in advance: consult a broker or your bank to obtain a loan pre-approval. It’s quick, and gives you a clear idea of your budget.
  2. Read the sales agreement carefully: don’t rely on your real estate agent to do everything for you. Take the time to read the documents thoroughly and include suspensive clauses that will protect you.
  3. Don’t overlook the inspection: always do one final walkthrough before signing the final deed of sale. It’s your last chance to spot defects or issues you may have missed during the initial visits.

In conclusion

If you don’t want to fall into these costly traps, be smart and carefully prepare your real estate purchase. Feel free to share this article with your potential buyer friends or check out our other guides to best prepare yourself to become a homeowner. And if you want even more practical advice, download our free guide to successfully navigate your real estate purchase without stress!

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