How to avoid a bargain-hunter’s property nightmare

Everyone wants to believe they’ve found a great deal: a half-price cardigan, a home entertainment bundle you’re only locked into for three years, an internet coupon for a romantic dinner.

But sometimes a bargain isn’t quite what it seems. If you’ve found a great first home with a strangely affordable price tag, it might be hiding hefty future expenses.

Take a step back you’ll recognise these classic bargain buys that are anything but.

A “renovator’s delight” that’s actually a horror show.

There can be lots to like about a fixer-upper: original fixtures, high ceilings and possible friendly ghosts. With a bit of imagination, that ‘development opportunities (STCA)’ listing can quickly become your dream home. After all, how hard can it really be to slap on some paint and pull up old carpets to reveal the floorboards beneath?

Ditch the fantasy. Buying a house that needs renovating is rarely a bargain, especially if the property is older. Actually, they’re often more expensive than you might expect – each wall that comes down is a potential trove of old wiring, rotten wood and busted foundations. Even if everything goes exactly to plan, turning a former beauty into a show-stopper can take a serious cash injection.

Ask a trusted builder for a ballpark idea of what’s it’s going to cost to bring the place up to scratch. If he reaches for smelling salts, scratch this one off your list.

Right home. Wrong location.

What’s that old saying? Buy the best house on the worst street? No, of course it isn’t! When it comes to making a good real estate choice, location often drives the price.

Issues with the spot don’t have to mean the deal is off. Plenty of buyers are happy to compromise on road noise, proximity to transport and cul-de-sac mazes for the sake of a lower list price. Just make sure you do the research. If the money seems too good to be true, look at local amenities, crime rates, easements, flood and fire risks, upcoming developments and gelato shops or lack thereof.

And remember, this house isn’t just for you. When it comes time to sell, is there another buyer out there who’ll see the same potential you did?

The seller mysteriously doesn’t know how much their place is worth.

Bzzt – wrong. We have access to more information than ever. Buyers can download apps to tell them how much a property should cost, so you’d better believe the seller knows, too. Before you invent a secret language to say “this house is undervalued” without the vendor knowing, look harder.

There are plenty of legitimate reasons why they might want to drop the price, but it’s never because they don’t know how much the market says it’s worth. Find out if they have already purchased elsewhere, have an interstate move coming, or are selling the house on behalf of an estate. If not, you might be signing up for some unpleasant surprises after auction day.

You can buy it – but only with an overpriced home loan.

You’re wearing out plenty of shoe leather finding the right home. But are you investing time checking out home loans to see which offers the best deal?

Home loans can be teeming with hidden costs. If nabbing your dream home means signing up for an expensive loan, it may become a commitment you regret. Watch out for high establishment and account-keeping fees, extra features you just don’t need and early exit penalties.

It pays to track down a competitive rate. Snaring a rate saving of just 0.5% can slash tens of thousands of dollars off the overall cost of your loan. Using a home loan comparison calculator can help you choose the one that’s just right. Speak to your ME Mobile Banking Manager for details of the loan that’s right for your first home.

Before you sign on for a bargain, take off your beer goggles. Find out the real reason it’s so cheap, and make sure you can still afford it if it all goes wrong.

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