Dubai: If a new home costs higher than other nearby homes with no justifiable reason to support the price, it’s clear you are overpaying for it. But what else do you look out for when looking to buy a house? Here are a few such mistakes UAE experts see among inexperienced property buyers.
“Buying a house can be daunting, as the price you pay will dictate the length of your mortgage, and also your financial health. This is apart from the initial dread of paying too much for the house you’re about to bid on,” said Prakash Bhat, a real estate and mortgage consultant based out of Abu Dhabi.
If you’re concerned about paying too much for a house there are measures you can take. Bhat explained that among property buyers in the UAE, most often the solution lies in primarily checking if the home is listed at a meaningful amount higher than other homes in the neighbourhood.
“Homes in the same vicinity are usually similar. Some may be a little bigger than others, but generally are the same based on style, build year, overall size, and features. A sign you are overpaying for a house is when it is listed significantly higher than other nearby homes,” he added.
Mistake #1: Looking for houses in one area, don’t just look for properties on sale
When comparing house prices in one area, don’t just look for ones that are up for sale, suggested Stephanie Myrtle, vice president of a Dubai-based real estate research firm. “Instead, consider comparing those which have been sold recently, and particularly look for ones sold within the last month.
“While making these comparisons, it’s also important to observe trends. There are certain times of the year when the market is slow and there’s less competition. So you may want to think twice about comparing two houses when one of them wasn’t available during a peak time.”
If a home is significantly more or less than comparable with homes in the nearby area, make sure to ask your realtor or real estate agency why. Depending on their answer, Myrtle opined that you may be able to negotiate a price more in line with the area's present market value.
Buying a house can be daunting, as the price you pay will dictate the length of your mortgage, and also your financial health
Mistake #2: Overpaying for a house that’s been on the market for a long time
There is a common saying among veteran real estate buyers: If a house has been on the market for a long time, there’s probably a hidden reason to it. “One reason the house was overpriced may be because the seller decided not to change their mind on pricing from the start,” added Bhat.
“In some cases, it just may have gone up at the wrong time. If the property hasn’t been listed during a peak time for home buyers then maybe it will fare better during the warmer months of the year. But don’t let a big price put you off.”
Also, Bhat noted that there have often been times that after a property is enquired about, the seller may be willing to negotiate a lower price. This could happen especially if they have had the house on the market for too long and are looking for a fast and easy solution for selling, he added.
Mistake #3: You’re in a time crunch, and you’re overpaying for convenience
If you desperately want to get into a certain neighborhood, you may end up paying the price. But often times, Myrtle warned how it eventually turns out to be a mistake for many newbie home buyers.
“Many home buyers end up overpaying for a house simply because they’re in too much of a rush. It’s an increasingly common mistake to overpay for convenience. If you have to move to a specific area in a short amount of time, make sure you're still setting aside time to research,” added Myrtle.
“It’s widely recommended to spend time comparing homes to save yourself from overpaying. Also, an agent can help inspect the property and do the research for you – albeit at a cost. This can help you not only when you have a shortage of time, but the costs will outweigh the price of overpaying.”
Aside from avoiding the above mistakes, both Bhat and Myrtle agreed that when determining if you're getting a fair price for a home, the first place to start is by looking at the price estimates of similar homes in the same area, as flagged earlier. This is where freely available online tools can come of use.
“Keep in mind the terms of your offer can be worth more to the seller than they are to you. Every seller is also trying to solve a problem. Offer terms to help the seller such as buying the home as-is or offering post-closing possession and a closing date, which works best for the seller,” added Bhat.
“Many home sellers will forgo some money on the purchase price in exchange for terms which meet their needs. So while it’s easy to get caught up in the emotion and momentum of a home purchase and end up overpaying for a home, knowing the signs you are overpaying for a house can help you.”