Being a first-time homebuyer comes with its challenges as one might get blinded by excitement of owning a new house at the expense of paying attention to the nitty-gritty of the process.
Nonetheless, there are a number of questions that an individual needs to ask to avoid some of the common pitfalls that befall first time buyers.
Felix Onyango, the chief executive officer of Dominion Valuers, a real estate firm, says most first-time buyers tend to look at the property first before deciding on their budget rather than the other way round.
Having a budget to work with will ensure that one does not run the risk of buying a property that they cannot afford, ending up saddled in debts.
The budget might factor in one’s salary vis-à-vis the disposable income or whether it will be financed through a mortgage.
“Ask yourself whether the purchase aligns well with the budget having considered all the costs pertinent to a sale including stamp duty, conveyancing fees, valuation fees, bank charges, and legal fees, among other charges,” says the real estate expert.
Involve of a professional in the purchase, even though it is an additional cost, but it always saves a lot of pain in the future.
Simon Ng’ang’a, the managing director of Granite Capital Kenya, a real estate agent adds that the first time buyer buying a home in a gated-community should also plan to pay service management charge.
The charge is paid by the leaseholders to the freeholder (or the property management company that is party to the lease) and can vary considerably depending on the building.
He also points out that there are other costs like stamp duty which in Nairobi is charged at four percent of the property’s value but is at two percent in most satellite towns.
Simon says that this is a key consideration since it is an upfront expense.
“It is therefore important that the individual knows how much the charge is a month so that it does not catch one out with one’s monthly budget. There can also be large bills for unexpected structural issues. Other costs include valuation, disbursements, handling charges, management company formation,” says Simon.
Felix further advises that an individual should ask him or herself whether the property is an investment property (for rental returns) or owner-occupation.
If it is the former, then they have to make arrangements for effective management of the asset so as to realise their objective.
“If one is considering buying property off-plan, it's advisable to deal with developers with a proven track record to avoid some of the pain investors have recently have had to bear. There is also the issue of lease for leasehold property. One needs to check the exact term of a property to be clear on the same,” he points out.
Simon adds that the individual needs to look at the pricing of the property as it is always important to understand the upside of a neighbourhood.
Similarly, it is important to know how much the rent will be and how much this will increase in the future.
This, he explains, will reveal more on the chances for capital appreciation, and what kind of return on investment to expect in the future.
“For example, in most instances, infrastructure developments lead to a higher return on investment due to ease of commute,” he states.
The real estate expert also recommends that before buying a property, especially a home, one needs to be appraised on security issues in the neighbourhood and any security arrangements that the other individuals close by have.
He advises that one needs to ask whether there have been any key security issues in the past that one needs to be careful about and is there a nyumba kumi initiative in the neighbourhood as well as how far one is from the nearest police station.
“There is also the issue of amenities such as how far are the schools from the new house? The distance to school is a key determinant of where they invest. Most homebuyers are willing to commute long distance to churches and work places but will not comprise on schools. The closer the school, the better for them.”
Experts cannot overemphasise why due diligence is one of the most critical step that a first-time buyer should not ignore while shopping for a property.
Felix points out that without due diligence an individual can easily buy property that had been prior reserved for public use or could be on riparian reserve, be prone to flooding or a myriad other issues.
“Have they done their due diligence well enough before the purchase? Due diligence helps deal with majority of these issues and safeguard one’s investment,” says Felix.