A Guide to Buying Your First Home in Today’s Market

BlogsA Guide to Buying Your First Home in Today’s Market

Over the past few years, real estate has emerged as the top investment option for most people as it helps them build equity and financial security. Most importantly, real estate serves as a hedge against inflation, through which investors can save their money during tough economic conditions.

However, for first-time property buyers, real estate investment can seem like a complicated process. Property prices have also surged to an all-time high during the past few months.

According to a report by Pakistan Credit Rating Agency, “From December 2018 to December 2021 residential property prices have surged by 42.7%; housing prices by 43.8%; and plot prices by 30.2%”.

The current rupee-dollar disparity has also stressed the property market in Pakistan, with housing prices rising by 24.4% during April 2022. Hence, buying a suitable property in these conditions will require careful planning.

Tips for Buying Your First Home

Most first-time buyers do not study market trends before investing, which results in a loss in most cases.

The following tips can help them in making informed decisions:

  • Secure your finances
  • Do a comparative market analysis
  • Determine your budget
  • Explore mortgage options
  • Consult a professional real estate agent
  • Make a feature list for your desired home
  • Negotiate the final price

Secure Your Finances

Buying a house is a big investment, which requires streamlined finances. If you do not have enough money on your credit and do not have a stable job, it will be difficult to manage property financing. A secure mortgage also plays a crucial role.

After choosing your desired property, you will have to pay a down payment and various other expenses, so those should be taken into account as well.

Do a Comparative Market Analysis

Comparative market analysis (CMA) gives an estimate of a property’s value based on the recently sold, similar properties in the same area. It will help you choose the right property according to your budget.

During CMA, you should consider the following factors:

  • Style, construction, finishes, upgrades, and updates of the property
  • Location
  • Total square footage
  • Number of bedrooms and bathrooms
  • Amenities
  • Facilities around the property

Determine Your Budget

After securing your finances and doing a thorough comparative market analysis (CMA), you need to determine your budget according to the following:

  • Inspection costs
  • Appraisal costs
  • Title services
  • Mortgage payments
  • Property insurance
  • HOA (Homeowners Association) Fees
  • Moving charges
  • Renovation and maintenance
  • Government and local body taxes
  • Agent fee

It is important to allocate a specific percentage of your total budget to these beforehand as it will make the home-buying process smooth and efficient.

Explore Mortgage Options

One of the important factors when buying a property is a mortgage. It is a legal agreement between a bank or a lender, which lends money to an individual in exchange for the title of his/her property.

Different mortgage lenders have different conditions according to which they prepare the payment plans. So, explore all of the mortgage options available in the market to secure a good deal.

The following are types of mortgages available in Pakistan:

  • Simple mortgage
  • English mortgage
  • Mortgage by conditional sale
  • Deposit of title-deeds mortgage
  • Usufructuary mortgage
  • Anomalous mortgage

You should choose a mortgage plan according to your needs and requirements.

Consult a Professional Real Estate Agent

Most first-time investors are unaware of market trends and property prices. Hence, in most cases, real estate investments lead to loss without a real estate agent to provide guidance.

However, finding a competent real estate agent can be tough. The following might help you in this case:

  • Ask for a proven track record
  • Stick with local expertise
  • Get referrals
  • Research the market
  • Conduct multiple interviews
  • Look for organisational and technical expertise
  • Look for licensed real estate agents
  • Review local ads

Make a Feature List for Your Desired Home

Prioritise what you want or need in your home before shortlisting or checking out any potential properties. In this way, you will know what to look for when you go through listings, and it will also help you make a final decision.

Keep in mind that amenities like close distance to schools, hospitals, offices, parking spaces etc. should be considered bigger priorities than aspects like the interior, as those can be updated or renovated later on according to your preferences.

Everybody wants their home according to their needs and wants. Therefore, when you are touring properties to choose from, look for everything that you might want or need in your property. The inside features of any property can be updated and renovated according to the needs.

However, the factors such as lot size or location of the property cannot be updated according to the needs once you have purchased the property. So, when you are buying a property look for its location and availability of facilities such as schools, hospitals, employment areas, parking, parks, and others around it.

Negotiate the Final Price

After thorough consideration and comparative market analysis, it is now time to negotiate the final price. In most cases, property sellers keep a certain margin for negotiations, so you can easily get the best deal on your budget.

Make an appropriate and realistic offer; if the amount is too low, the deal will most likely be cancelled. The above-mentioned tips can help first-time property buyers, but considering an expert’s opinion is also important. In this way, you will be able to secure the best that your money can get.

Mati-Ullah is the Online Editor For DND. He is the real man to handle the team around the Country and get news from them and provide to you instantly.

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