13 Common Mistakes Home Buyers Make – and how to avoid them


Buying your next home can be a daunting task, especially if it’s your first home.first home buyer dreaming house

It’s exciting but full of complexities.

While it’s likely to be the largest financial transaction you will ever make, we’ve found that many home buyers are poorly prepared to ensure they make a good purchase decision.

And it’s not their fault.

The system is stacked against them, with much of the power being on the side of the seller.

To help guide you, let’s look at 13 Common Mistakes made by Home Buyers – ones that you should avoid.

1.  Not doing proper research and preparation

Understand your family’s finances and needs.

The wise home buyer will analyse assets, decipher debts and get pre-approved for finance before plunging into the house hunt.

Get to know the neighborhood – remember you’re not just buying a house; you’re also buying a location.

It’s important to find out about the quality of schools, the crime level, transport, and possibly upcoming zoning issues.

Not all parts of every suburb are ideal spots to live.

2.  Choosing the wrong mortgage

To put you in the best negotiating position, it’s critical to have your loan preapproved (not just pre-qualified) before going house hunting.

Find out how much house you can afford – but you can’t simply go to a bank’s Internet site, use the calculators to see how much you can borrow and assume you’ll get a loan.

There’s a big difference between what the banks indicate they can lend you and what they actually will.

It’s important to pick your finance package carefully.

Don’t just go to one bank; instead use an independent finance broker who has access to a range of lenders and finance products.

3.  Being influenced by “The Market”target house property market success goal hot

Don’t be influenced by “the market” more than by your own needs.

Sure the property market moves in cycles and there are times when they suit buyers and there are sellers’ markets when prices are booming.

However, waiting for the “right time” or prices to go down is gambling with your family’s future.

At times the mixed messages in the media may confuse you and you’ll be tempted to put off the decision to buy.

If you know your budget, have your finance organised and think about your current and future needs, then you should rarely let short term market conditions influence what will be a long term lifestyle decision.

4. Going beyond your budget

Every homebuyer knows the feeling – you’re looking for a home that fits your budget, but that much more expensive property just looks that much more appealing.   property mortgage finance money

However buying a home that’s way out of your price range could well derail your finances in the future.

It’s human nature for us to want a little more than we can afford, and there’s always a real estate agent who’ll talk you to the next level.

But don’t be tempted – the bank has usually offered you a borrowing limit for good reasons based on your ability to repay the loan.

Spending more than you can sensibly afford leaves you exposed to potential financial shocks, including rises in interest rates.

You must also allow for changes in your future circumstances.

5. Falling in love

If you think a house is ideal, don’t let the seller’s agents know.

Agents are good at reading emotions and negotiating the last cent out of prospective purchasers.

A wise home buyer knows there’s lots of houses – and there’s one out there that’s the right house at the right price.

If you can’t afford it, move on and keep looking.

6. It’s not all about price

We all know you make your money in property when you buy, but that doesn’t mean you must buy cheaply.

You make your money by buying the right property not a cheap property. property investment

Price is what you pay, value is what you get.

This means you don’t make your buying decision purely on price.

You can always buy cheap properties in secondary locations or on main roads, but you’ll be stuck with a secondary property – not a good idea.

However, when you’ve found the right property – it’s important to make a proper offer.

One that secures your home, but that does not overpay.

Don’t base your offer on the seller’s asking price.

Instead, get a comparative market analysis from your buyers’ agent.

This analysis will reveal recent asking and sales prices of similar homes in the neighborhood.

With this type of knowledge, a wise home buyer can make an offer that is appropriate.

7. Not having the right protection clauses inserted in the contract of sale

Don’t sign anything until you are sure your interests are protected.

While the standard contract to purchase a property will give you a “3 day cooling off period” (this varies in different states) smart purchasers request additional clauses to protect their interests.

Don’t be fooled by an agent who says you can always ask for changes or an extension later. That’s not the way it works.

The only way to get changes to a contract once it’s been signed is to end the existing contract and renegotiate a new one. And the seller doesn’t have to agree to your requests.

8. Underestimating the full costs of buying a home

Many homebuyers fail to budget for the full costs associated with buying a house.

Firstly there’s the acquisition costs.

Things like stamp duties, rates, valuation costs, loan application fees and mortgage insurance.

Apart from budgeting for moving costs, be prepared for the unexpected when you move into your new home.

It’s funny how things that have been working for years seem to break down, as if they knew there was a new owner.

Set aside a budget for those irritating and sometimes costly breakdowns.

Then…don’t underestimate the ongoing costs of owning your property.

Owning can cost much more than renting with expenses like rates, insurance and maintenance.

9. The “Fed Up” Purchase

You’ve been looking for a few months but haven’t found your dream home.

The agents are misleading you; you may have been out bid by someone who had deeper pockets than you.

You’re Fed Up! stress emotion buying house

One big mistake home buyers make is to buy a property in desperation.

They buy something reasonable rather than something that really suits their needs because they’re sick of the emotional rollercoaster of home buying.

This is a decision you may live to regret for a long time.

Rather than buying out of frustration, stop looking for a while, or better still get a buyers’ agent on your side to save you time, to look in nooks and crannies you wouldn’t have thought of and to find those silent sales for you – the off market properties.

10. Not organising a professional building inspection

It’s important to engage a competent and independent (not one recommended by the selling agent) professional to check your potential new home.

Remember… these inspectors are trained to find faults, so don’t freak out when they produce a long list.

Look out for major faults but don’t let minor faults that are easily repaired trouble you too much.

If you’re not sure how to interpret the report, have a chat with the building inspector and ask questions like – would you buy this property?

11. Misunderstanding the real estate agent’s role

Real estate agents are friendly people and in the course of shopping for a house, you will spend a lot of time with various agents.

However, the wise home buyer understands who’s working for whom.Couple meeting real-estate agent to buy property meeting

Unless you have engaged an exclusive buyers’ agent, then the agents are working for the sellers.

Don’t be mistaken – a selling agent can’t work in the interests of both the buyer and the seller.

In fact they’re legally and morally obliged to work for their client the seller.

However wise home buyers know how to level the playing field by engaging a buyers’ agent to represent their interests.

12. Going Solo

The sellers have an agent protecting them, looking after their interests and advising them, but most home buyer’s go solo.

Sure you’ve read some articles and done your research on the Internet, but this is likely to be your largest purchase ever.

And those emotions will cloud some of your decisions.

You wouldn’t go to court without a solicitor on your side – would you?  inspect property

You probably have a good head on your shoulders and may even have a good working knowledge of the home buying process.

What you probably don’ t have, however, is perspective.

If, how and when you buy a home are all decisions that will have major consequences.

That’s why it’s important to have the same protection on your side that the seller has.

That’s why it’s critical to engage a professional buyers’ agent to represent your interests.

For more information on buyers’ agents, read the article “The home buyers’ secret weapon.” 

13.  Thinking this list is exhaustive

It’s not. There are many other issues to consider.

But, hopefully, this will help you avoid a few common mistakes as you contemplate buying your next home.

If you want all your questions answered consider buying a great book “The Australian Guide to Buying and Selling Your Home” or consider engaging Metropole Property Strategists to help level the playing field and acting as your buyers’ agents


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Michael is a director of Metropole Property Strategists who help their clients grow, protect and pass on their wealth through independent, unbiased property advice and advocacy. He's once again been voted Australia's leading property investment adviser and one of Australia's 50 most influential Thought Leaders. His opinions are regularly featured in the media. Visit Metropole.com.au

'13 Common Mistakes Home Buyers Make – and how to avoid them' have 16 comments

    Avatar for Michael Yardney

    December 10, 2021 Joseph

    Choosing the proper neighborhood and a reliable real estate agent are two of the most important factors to make when purchasing a house.


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    August 10, 2021 Lauren Smith

    Great tips!
    I must add one more point that is hiring the wrong real estate agent. Choosing the right agent is the most important part of the buying process.


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    May 13, 2021 greencityestate

    Thanks for sharing such an informative blog about those 13 Common mistakes .home buyer makes. Your information is really helpful to all the persons who want to buy properties. Please provide more information about real estate.


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    April 28, 2021 Joquim

    These are all important issues one must take into consideration irrespective of whether you are the first time buyer or not.


    Avatar for Michael Yardney

    July 16, 2020 Pankaj

    Great article. Thanks for sharing this amazing piece of information. I just love the tips that you have shared. Keep Sharing


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    August 13, 2019 Priyanka Patel

    Not to forget the location of the home the buyer wants to buy if we are not clear where we want to buy our home the agent will show the place of his choice and if we don’t like the place it will turn into a long waiting time to get the best place. Great piece other than that, thank you


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    June 24, 2019 Jagriti Singh

    Typically, first-time homeowners are not able to put 20 percent down on a home, and are – therefore – more likely to pay PMI. However, not enough people know to contact their lender once 20 percent of the home has been paid off. At that time, the PMI will be discontinued. Your lender will automatically cancel your PMI when you owe 78 percent, but you don’t want to pay a month more of PMI than you have to.


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    April 2, 2019 Maria Nathan

    Hi Michael,
    Great guide and all the points that you made in this list are valid. Most of the time real estate agents misguide you about the property. I had a bad experience once in London 2017 when I was totally fed up with such things and didn’t buy any home. But thank God I found my dream home in Dubai and it’s awesome. Thanks for sharing such information.


    Avatar for Michael Yardney

    February 28, 2019 Idir Aiko

    This is a great article regarding purchasing a house. I need more knowledge and guides on what and where to buy a house. It will be your biggest investment in life.


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    August 19, 2018 Steph Sadatmand

    I think it’s really important to understand the contract like you mentioned. Since I have little experience with that, I definitely would hire a real estate attorney. They can walk you through the process and make sure you’re not overlooking anything.


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    March 9, 2018 bobjames

    Very interesting topic. I like it, thanks for sharing this.


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    November 10, 2017 Carl Smith

    I completely agree with you that building your first home can really be a daunting task. It would really take a lot of research and finding the right people to help you in order to be successful. Thanks for sharing this.


    Avatar for Michael Yardney

    December 20, 2012 Riley Parisian

    Hello there I am so glad I found your website, I really found you by accident, while I was researching on Yahoo
    for something else, Regardless I am here now and would just like to say thanks for
    a marvelous post and a all round thrilling blog (I also love the theme/design), I don’t have time to read it all at the minute but I have bookmarked it
    and also added your RSS feeds, so when I have time I will be
    back to read a great deal more, Please do keep up the great b.


    Avatar for Michael Yardney

    December 19, 2012 Amee

    I love reading through an article that will make
    men and women think. Also, thank you for allowing for me to comment!


    Avatar for Michael Yardney

    February 13, 2012 Tony

    1. Purchase investments first
    2. Purchase ‘home’ paying cash – generated by investments (do not barrow)
    3. Investment is lifestyle, a comfortable one. Takes a changed mindset
    4. There is always deals out there, some time they just harder to score



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