Real Estate Development 101: Mistakes Home Buyers Make

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Ever since we were children, many of us have fantasized of having our own homes and living the life that we desire. As an African and a Ghanaian, some of the major ideas put in your mind from childhood is the need to own a home. It is more pronounced in your subconscious than owning a business; which is what can make you financially resourceful to own a house.

With the rising cost of living and cost of rent, especially in city centres, many people are beginning to appreciate this subconscious counsel of owning a home even better. Hence, the start of your home owning journey may be an exciting one.

However, there are times where the reality of this dream becomes a curse rather than a blessing. This is because the excitement, anxiety and rush in getting the process over and done with make many people overlook a lot of things and end up making the wrong decisions and mistakes in purchasing a home.

Other times these errors come as a result of nativity, ignorance and lack of proper guidance or counsel on what the process entails.

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Today’s article will delve into some of the key mistakes buyers make and how to end that cycle.

Not Choosing the Right Real Estate Broker or Agent.

In my years of experience, I have come across situations where people were duped because they trusted the wrong person to acquire a home for them. There have been cases where people trusted their family members to acquire a home for them and they ended up absconding with the money. All this can be avoided if the right real estate dealer is chosen.

 

Real Estate dealers can also help with advice, inspection and even negotiation of prices. Be sure the person is accredited and certified to deal with real estate issues before you speak to them about what you want. This can curb fraudulent acts and also help you acquire the right house for your needs. You can get them through research and even referrals from people that recently acquired a property. Make sure you are convinced enough to let them help you through your journey of acquiring a home.

 

Ghana’s Real Estate Industry is still young and hence, has a lot to do in terms of regulation. Thankfully in December 2020, Ghana passed its first Real Estate Agency law; Estate Agency Act, 2020 (Act 1047). Until last Tuesday, November 9, 2021 there was no regulatory body nor statutory certification body for brokers or agents. Based on the requirements of the Real Estate Agency Act, the President through the Minister of Works and Housing Inaugurated the Board of the Ghana Real Estate Agency Council. The first time in history.

 

The Board is among other things expected to implement the Estate Agency Act, regulate Real Estate Agents and Brokers, sanitize the industry and guide the growth and development of Real Estate in Ghana.

 

Even as this Board is yet to operate fully, there are well registered, recognized and organised Real Estate associations that you can deal with. I know of Ghana Association of Real Estate Brokers (GAR) who have a data base of all its members, their expertise and listings.

 

You can also talk to the Ghana Real Estate Developers Association (GREDA) who are the ones who build most of the properties that is sold or managed by Real Estate Brokers or Agents. Their activities put them in close contact with brokers and agents, hence they can recommend to you some good brokers or agents should you need their services.

 

Finances

Carefully plan your finances before you purchase a home or build one. There are people who make purchases out of excitement and end up regretting because they do not have enough savings to cater for other expenses.

 

Acquiring a home is a blessing and a dream come true for many. It is also the single biggest investment one may make in their lifetime. However, buying a home when you don’t have enough in your savings or incurring a debt above your capacity to pay back could make it more of a curse than a blessing.

 

Before you purchase a home, you should be financially unencumbered. In other words you should be financially stable. It is not about having all the full cost of the property, however it is about having a financial record that can support the purchase or building process. For instance although Mr. A can take out GHC500,000.00 to buy a house outright, Mrs. B can go for a mortgage based on his salary or earnings (from business or investments) and pay for the same house over a period of say 10 to 20 years. At the end of the day, the two will be living in the property, the only difference is that Msr. B will be paying in installments even as she lives I the house till she clears her payment.

 

Same principle can go for those who want to build their own property. One may have all the money and build within a year or two. The other can also start in phases, move in even when it is not completed and finish while living in the property. It is all about your financial situation and what works best for you.

 

It is worth looking at how much you have coming in and how much goes out on other expenses. You should also consider how much you will have in your savings after acquiring a home. This will help to cater for other expenditure in your everyday life and that of emergencies after acquiring a home. Make sure you tackle all your loans and have enough in your account before you decide to purchase or build a home.

 

It is best if it is money you have saved over time towards acquiring a home and not just money from your account. In home purchases, Impulse buying will cause you a great harm. In simple terms, do not buy a house you cannot afford or do not need. Not being financial stable can make you acquire a house or build one in a way that ends up costing you three times what you actually have to spend.

 

Getting Just One Rate Quote.

 

One of the common mistakes people make when purchasing a home is getting one price or deal and making the decision based on that. Although it may seem that it is that particular property you want, exploring other options will help you make a firm decision and perhaps find something else that will suit your needs better.

 

You also need to explore the options that come with buying a house such as mortgage, loan or whether you want to buy the home outright; before you make the decision.

 

Buying a house is like buying a car.  You need to compare prices as well as specifics that will work for you. Do not get too excited about what you want and lose sight of what you need. Mortgage fees vary and so does closing cost and discount prices.

 

If you really want value for money on the home you are acquiring, you need to compare buildings, prices and the specifications to be able to choose the one that works best for you before you make any down payment on a house. Note that closing fees are fees and expenses you pay in finalizing your home purchase and they vary from one agent to another.

 

Home Inspection

Before you decide on the house you want to buy, it is important to do a home inspection. It informs you of the perks and pitfalls the house has to offer. First, you even need to know if there are any issues surrounding the home you want to purchase. Issues like, ownership, disputes, documents, boundaries etc.

 

You also need to check if the place is livable and how best it will suit your needs (and that of those you are moving in with). It also informs you of the major and minor issues (if any) in the house before you make a purchase. It will also inform your decision for remodeling where necessary, especially if you are the type the like to acquire, remodel and sell for capital gains (profits).

 

During home inspection, you can check for wiring, space, mold, insects etc. This will help avoid future problems. It will also help you to know if the person is selling you a brand new house or a renovated house which can sometimes be a deal breaker.

 

Home Insurance

As mentioned earlier, your home is likely one of the most valuable assets you will have. To this end, it will be a treasure you will hold dear to your heart. Holding it dear should not just be in words, but should also show in deeds. You have to protect that home from all kinds of risks that will collapse it. One way to protect a valued asset like a home is by insuring it. This will protect that investment and you as well.

 

In our part of the world, one of the things we overlook is insurance. It is important to insure your homes so that in the case of a fire outbreak, or any other disaster, you can safeguard it and avoid incurring financial loss. Although it is not required by law, it will be in your own interest to insure your home against future occurrences.

 

Not only does it cover your home, it covers other structures that may be affected by such unfortunate occurrences. For example, in a case of a fire outbreak that spreads to your neighbor’s house, the insurance will cater for your house and that of your neighbor’s house. This will help prevent the burden of financing the restoration of your house and that of your neighbor. Insuring your house is important and must not be left out when acquiring or building a home.

 

Dealing without Expert Counsel

The building a house or acquiring a house is like going to your banker to buy an investment or investing on the stock market or a business venture. It requires meticulous planning that is grounded on sound expert advice.

 

You may not be a civil engineer, architect, surveyor, mason, carpenter, plumber or even a horticulturist. However, you can still have the inputs of all these people in your decision to ensure you get the best deal; whether you opt for acquisition or building it yourself. Do not feel too shy or big to ask. When you ask make sure you understand thoroughly what options have been laid before you before making a decision.

 

Money is hard to come buy these days, and so it better to be prepared; which may cost you something than be sorry; which is usually a huge loss than can destabilize you for a greater part of your life.

 

The writer is the CEO of CBC Properties Limited, a member of Ghana Association of Real Estate Brokers (GAR) and Ghana Real Estate Developers Association (GREDA); Email: [email protected] Cell: +233-20-422-5002

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