The Dangers of Being Uninformed: A Wake-Up Call for Homebuyers

As buyer's agents, we’ve seen a concerning trend over the last few weeks: more buyers are rushing into property purchases without performing basic due diligence. This includes skipping building and pest inspections, failing to check comparable sales, and often entering bidding wars without fully understanding what they’re committing to. Unfortunately, this lack of research is leading to overpaying, discovering issues post-purchase, and inflating property prices.

‍

Skipping Inspections: A Risky Move

It’s shocking how often buyers forgo building and pest inspections to secure a property quickly. These inspections are vital, as they can uncover hidden issues like structural damage or pest infestations that could cost thousands in repairs. Without them, buyers may be left with unexpected and expensive problems once the property settles. A recent example: we looked at a building and pest report that reported evidence of termites. We requested permission to perform a further inspection on the property however the seller declined our request. This was a walkaway item for us and so we passed on the property. Someone subsequently purchased that property and when we called the agent to find out the sale price, we learned that the purchaser had not even downloaded the original building and pest report.

‍

The Cost of Ignoring Comparable Sales

Another issue is the failure to review comparable sales (comps). Without knowing what similar properties in the area have sold for, buyers often end up overpaying. We’ve seen many buyers rely solely on an agent’s recommendation or emotional impulse, which can lead to paying tens of thousands more than necessary. We run full competitive analysis on every property we pursue. We’ve seen properties where all of the comparable sales are $1.4-1.5, the seller wants $1.6, and the buyer pays $1.65 with no competition, costing them $50,000- $150,000 more than needed. Unlike what we saw during 2020-22, prices are not growing month to month. In fact, overall we’ve seen a drop in prices in the last year, so overpaying in this market can be especially costly. It’s crucial to research the local area to ensure you’re not overvaluing a property before you sign a contract.

‍

Market Inflation and Long-Term Consequences

When buyers overpay, it creates temporary price inflation in the market, which in turn leads to higher listings across the board. This cycle can result in an unsustainable market and eventual price corrections, leaving buyers with a home valued at less than they purchased for.

‍

A Call for Informed Decisions

We want to shout to buyers: Do your due diligence! Don’t let FOMO or an agent’s pressure drive you into a poor decision. With so much stock hitting the market, there’s no rush. Take the time to review comps, get the necessary inspections, and make sure you understand what you’re actually purchasing.

Buying a home is a huge investment—don’t let the frenzy of searching and negotiation cloud your judgment. Make informed decisions to protect yourself in the long run. We’re here to help you navigate the process and ensure you’re making the right move.

‍