Report shines a light on buyers’ list of worries

FORGET a housing crash or risk of defaulting on mortgage payments – the biggest worry for property buyers is getting a home with unforeseen damage and hefty maintenance requirements.

This is according to a new report which revealed the fear of owning a problematic home is so strong that home buyers consider foregoing building inspections as the biggest mistake they could make.

More than four in five respondents of the ME Bank survey of 1000 Aussies viewed failing to pay the $500 to $1000 typically required for a building inspection as a major gamble.

This was a greater number than those who saw buying off the plan or regional property as risky. Buyer’s agent Nicole Jacobs said the concern was warranted.

"You wouldn’t buy a car without a roadworthy, so why wouldn’t you want to know the health of a property before buying it?" she said.

"A building inspection gives you knowledge on what needs to be done and what costs there will be. If there’s nothing wrong then you will have the confidence to go forth with gusto." Some of the other survey results were more surprising. Buying property with friends and family was considered the second biggest mistake buyers could make, with 62 per cent of respondents viewing it as a risk.

Just under half of respondents considered getting an interest-only loan as a risk, while 45 per cent thought there was a danger in selling an existing home before buying the next one. Only a third of respondents thought there was a risk in buying their home via auction.

Few respondents saw a problem in buying their home during winter, with just 14 per cent labelling it a risk.

Financing a purchase with a lender outside of the big four was considered risky by 23 per cent.

However, buying off the plan was one factor that weighted more heavily on buyers’ minds.

Just over half of respondents considered it a significant risk and a third thought it was an average risk.

ME Bank’s head of home loans Patrick Nolan said one of the trickiest parts of buying off the plan was having a good feel for how the home would look once built.

"You do need a healthy dose of imagination to picture how the finished product will look," he said.

"Do your homework into the developer and builder and seek independent advice on the contract of sale."

Mr Nolan, referring to the 62 per cent of respondents cautious about buying with family or friends, said co-ownership agreements were probably viewed unfavourably because they restricted people’s ability to sell down the track.

"It can be risky if one person wants to sell or situations change," he said.

"Co-buying offers valuable advantages because it means you can pool financial resources but I would suggest you have a formal co-ownership agreement in place drafted by a solicitor."

Ms Jacobs agreed the arrangements required caution.

"I view this as risky," she said. "We are emotional beings and emotion can often lead to poor decisions."

Ms Jacobs advised that friends and family needed to enter contracts, even if they were close, otherwise it would ruin relationships.

"You don’t want a house to be the death of a friendship or family relationship," she said.