First-home buyers risk confusion by viewing too many properties: buyers’ agents

Buyers’ agents have cautioned first-home buyers that viewing too many properties can create confusion rather than help them make the right first purchase.

This follows the latest Mortgage Choice First Homeowner Survey, which found that on average first-home buyers look at 21 properties as part of the home-buying process.

Almost one-quarter (23%) of respondents said they had looked at somewhere between 21 and 50 houses before making a purchase, and 8% looked at more than 50 properties.

The survey also found that more than four out of five first-home buyers (82.3%) said they had no regrets about their final choice, with those in WA the most satisfied (90%) and those in Victoria the least satisfied (79.4%).

Despite the overall high satisfaction rating, the survey found that the biggest regrets among first-home buyers was wishing they had bought a property in a different area (27% of respondents), followed by more than a quarter of first-home buyers (26%) wishing they had shopped around more for a property.

One-fifth of first-home buyers wished they’d either waited until they could afford a different property closer to their idea property, bought a different property type, waited until they were in a better financial position to buy or bought a less expensive property.

Fewer than one in 10 (8.2%) expressed regret at their choice of mortgage provider.

Catherine Cashmore from National Property Buyers tells Property Observer it is very fine balance between viewing too few properties and too many and getting confused, which is where most first-home buyers go wrong.

“It comes down to experience, knowing the area you want to buy in and the property you want. You need to filter out the rubbish," she says.

There is some evidence for this in the survey with WA first-home buyers the most satisfied despite viewing the fewest properties on average – 17.8 compared with a national average of 21.3

Cashmore says the number one regret highlighted in the survey – first-home buyers wishing they have bought a property in a different area – is “absolutely correct”.

She says many first-home buyers fall into a trap of wanting to buy, for example, a two-bedroom apartment in South Yarra but only have $300,000 or $400,000 to spend, when they need $500,000.

“It’s a balance between the three “Ps” – price property and position.

“You usually can’t comprise on price, so you must compromise on the other two. If you want a two-bedroom apartment, you might need to be more flexible on the location."

She also says that first-home buyers have to approach their first property purchase with something of an investor’s mindset.

“It’s your first property purchase… You won’t live there you whole life.”

Paul Osborne, founder of buyers’ advocacy group Secret Agent, makes a similar point about the number of properties first-home buyers should inspect.

“In terms of amount of homes inspected.  It works a couple of ways.  Those that have purchased the first place they've seen are taking a risk, while those that look at a huge amount of homes tend to get more confused with the more they view,” he says.

Osborne says buyers his agency advises often have remorse about buying something that is too common and has limited scarcity.

“These include new construction apartments and generic housing estates,” he says.

Another regret he says first-home buyers have is buying too far out from the city.

“Buyers often have remorse about getting something bigger – but located further out.  They find they don't really need the extra space but truly value the convenience of being close to the city. “

Lastly he warns of “emotional buying”.

“Many purchasers who engaged in emotion-filled auctions in 2009 and 2010 find themselves sitting in negative equity.  Some buyers regret how they bid at auction for their property,” says Osborne.

Commenting on the findings, Mortgage Choice spokesperson Belinda Williamson says the fact that people are viewing so many properties before making a purchase is a positive – “it makes sense to invest the appropriate amount of time into researching and viewing potential properties to make sure you are happy with the final decision.”

“If home buyers spent an hour viewing each potential property, the time can quickly add up. However, the hours spent planning and properly considering all your options upfront, can save you from the heartache of making a hasty decision that can either cost you financially or leave you dissatisfied with your decision.”