Factors to Consider When Buying a Second Hand House
Feb 11, 2020 01:20
Every day, the business environment is rapidly changing and things are not any different for the real estate industry. Over the years, this industry has experienced rising property prices, posing a great challenge for people who wish to purchase property since. As a result, buyers have to find other alternatives to buying a property.
Most people prefer buying a new home as opposed to an old one. They believe that a new house, unlike a used one that may have several damages, would be in good condition. The decision to buy an old home is in most cases a subjective one and is faced with a lot of hesitation. This should not always be the case.
Buying a second-hand house has many advantages when it is done right. One of the main advantages of buying a used house is that it’s VAT free. Also, second-hand houses cost less than the new ones. If you are considering buying a second-hand house, here are 5 factors you need to consider:
1.Location of the house
When you are buying a second-hand house, its location is key because it affects the value of the property. If you buy a house in a good location, it will depreciate at very low rates. Consider a location that has a good neighborhood. Also, check how accessible the place is and ensure that basic amenities such as water and electricity are available.
Ideally, the second-hand house should be located close to the main routes and should have many entry points. A location that only has one entry is less accessible and will affect your ability to commute to and from your place of work. Amenities such as schools and health facilities are also important considerations to make when buying a house.
2.Validity of documentation
Fraudulent deals are common in the real estate space. As such, conduct a thorough check of all relevant documents to ensure that they are valid before you buy a house. The documents you need to check include the occupancy certificate, possession certificate, no objection certificate (NOC), encumbrance certificate and the latest tax receipt on the property.
Also, read and understand the sale agreement before you sign it to ensure you are not caught up in fraudulent deals. The property's marketable title is also an important document to look at and verify before you buy a second-hand house. The deed will tell you the age and the historic ownership of the house. If you buy a used house without verifying each of these documents, you risk losing your investment.
3.Value of the property
It is impossible to tell the value of a used house by just looking at it. People have also become so dishonest; you cannot just take their word. To establish the value of a used home, you need to conduct background research and check the property’s market price. Also, find out the prices of properties in the surrounding area to get a rough idea of how much the second-hand house might cost. Find out the property’s Return on Interest (ROI) to determine any possible future benefits. Get rid of intermediaries and instead have direct contact with the owner of the property. Intermediaries and agents raise the price of the property by at least 30%.
4.Condition of the property
You cannot trust that the property is in good condition just because the seller says so. Sellers will tell you anything to get you to buy a house. If you buy a house that has defects, you will own the problems and will have to bear the cost of remodeling it.
This will increase the total cost of the second-hand property. As such, do not buy an old property without ascertaining its true physical condition. Have an expert conduct a Melbourne building and pest inspection on the second-hand house that you are interested in. This inspection will enable you to identify any defects that need to be repaired before you buy the house.
5.Existing loan on the property
Property owners take mortgages or regular loans against their property. For this reason, you need to check whether there are any pending loans attached to the house you want to buy. If there is an existing loan, it means the ownership documents are held by the bank and will not be passed to you until the loan is repaid in full.
This means the house can only be sold after the loan has been cleared because mortgage loans cannot be transferred from one person to another. However, assumable loans are transferable but banks hardly give these types of loans. If they do, they include a “due-on-sale” clause in the loan agreement, which limits transfer. If you still want to buy the house you can either wait for the owner to finish paying or refinance the loan. In this case, you will clear the loan in one payment on behalf of the owner then buy the house.
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