Buying a house or land can be very exiting but one should always keep in mind that it is a lifelong investment. The road to this dream is paved with many mistakes, which can all be avoided if the process is approached with caution.
Due to lack of knowledge, most first time property buyers, more so, homes make mistakes that cause them to relocate after a short while and the hustle cost of buying a new home all over again.
Following the crowd blindly
Unfortunately, some people choose where to live based on the affiliation of where their tribesmen or people of same economic class live.
Considering that this could possibly be one’s lifetime residence, the home should be planned in tandem with what is important in the life of the buyer, be it proximity to work, proximity to one’s kin or friends, available amenities such as schools and hospitals, to name but a few.
Address and functionality tradeoff
Tradeoff is referred to the fact that budgeting inevitably involves sacrificing some of X to get more of Y. As much as getting a piece of real estate within a renowned address or neighbourhood is recommendable, this should not be a priority. Many people lose sight of the value for money and buy.
To avoid the blind lure of crowd choices, list what your ideal home should be like as well as the ideal location.
Getting one mortgage quote
Different mortgage providers charge varying fees, like closing costs and loan processing fees.
Your financial provider charges several fees to finalise your mortgage processing. These could be around 3 to 5 percent of your total purchase price and include:
• Stamp duty fee: between 2-4% of the value of your property.
• Loan processing fee: approximately 1% of your purchase price.
• Legal fees: between 1-2% with a minimum fee of Kshs 35,000.
• Valuation fees: between 1-2% of the purchase price.
Ensure to apply for loans with different providers to get a holistic picture into the rates and costs. You can use the different quotations to negotiate for a lower interest rate as long as it’s within the Central Bank of Kenya approved rate of 12-14%.
Depleting tour credit before final loan approval
When applying for financing, your mortgage provider first pre-qualifies you for a loan. This means that they give you an estimate of how much they will lend you based on the information you provided on your finances.
Solution: Do not make large purchases or do anything that will deplete your financial status, e.g. getting into more debt before you get an approval confirmation from your mortgage provider.
You can use the pre-approval letter to start negotiating for lower prices with a potential seller as this gives you a competitive edge.
Not checking the credibility of the developer
Does your developer have a track record of quality finishes or finishing in time in case I buy off plan? The buyer should make a point of visiting their previous developments to assess the quality of work and maintenance of communal areas once the project is done.
This will give a clearer idea of the actual product and answer questions such as if the developer takes up the role of facilities management.
Waiting for the Perfect Home
We understand. You are looking for a home that you will live in for a long time if not forever—so you want one that is perfect. However, expecting to find a home that ticks all your boxes can be unrealistic.
Waiting for a perfect home could mean passing up good homes in a great location and great pricing.
Solution: Have a list of your must-haves, deal-breakers and compromises. This will help you to be flexible and keep an open mind. Remember that you also can upgrade your home later.
You can get a home that matches most of your needs and make improvements later when you are more comfortable financially.
Underestimating the costs of homeownership
Since you may be moving from a rental or living with family to owning a home, your usual costs could go higher. Additionally, there could be costs that were previously taken care of by your landlord or parents.
These include:
• Higher utility bills
• Property taxes
• Homeowners insurance
• Homeowners association fee
• Equipment maintenance and repair
• Outdoor maintenance (e.g. a backyard)
• Additional furniture to fill more space
Solution: Work with an estate agent who specialises in the neighbourhood. He/she will have information on property taxes, insurance estimate cost and homeowners association requirements.
Sources; Cytonn, Buyrent Kenya
