Not having a clear purpose, overestimating your knowledge and regretting missed opportunities are the biggest mistakes made by property buyers, according to Cate Bakos.
Award-winning buyer’s agent and successful author Cate Bakos has experienced her fair share of pitfalls and triumphs in the property market, especially when dealing with her own clients.
On a recent episode of the Get Invested podcast, she told KnowHow’s Bushy Martin some of the worst mistakes you can make as a property buyer or property investor.
She firstly explained that not making a clear distinction on why you’re purchasing a property – whether it be to live in or for investment purposes – can lead to the wrong decisions and mindset in the long term.
“The first [mistake] is getting the two confused. You’re either buying a home or you’re buying an investment, and as soon as you try and do both, you blur the lines and you risk stuffing it up,” Cate said.
“Too many people get hung up on trying to get investment elements in their home purchase and ultimately buy something that they’re not happy with long term because they’ve compromised on their wish list in an effort to try and chase something that they think represents capital growth.”
Another barrier to overcome is overestimating your knowledge or rushing in to a purchase without knowing all the risks involved or understanding what you really want to achieve.
“The other thing I think people make a mistake with is assuming it’s easy and anyone can buy a property. Anyone could go and buy one tomorrow, but buying a property and buying a good property are two different things,” she said.
“So, people that oversimplify it or don’t do any planning, people that buy a property like they’re buying a pair of shoes, I just shake my head and wonder what’s going through their mind because (for example) I know nothing about the share market, and I would never just go and spend $500,000 on a parcel of shares. I’d get advice.
“A lot of information can be a dangerous thing, and so many people can research this and feel like they can get their head around it. But I think the most important thing to canvas when you’re about to do something significant is to sit down with a professional and have them ask you why? and again, why? Every time you have an answer, ask why to get to the very heart of your why. And it has to be a good firm reason for doing so. There are many people jumping to property without understanding their why, and an experienced person can talk through that very easily.”
Cate also explored two key lessons that have emerged from the paralysis that gripped many property and share market investors when COVID-19, and the missed opportunities that have followed. The first lesson – take a risk if you’re truly passionate.
“We just have one life, you get one crack. You can try and protect yourself from taking risk, you can try and take the easy path, and you can do things that might not be stressful at the onset. But if you’re not grabbing an opportunity that might excite you and you’re not just giving it a go, you’re potentially missing out on some really amazing things,” Cate said.
“Risk and reward, they go hand in hand. This is a really important thing … often when people are remorseful or wistful about what they didn’t do, it’s because they didn’t take that risk or go and do something really exciting when the opportunity was there. And if you can take a risk and give something or several things a crack, you know, if it goes wrong, it goes wrong. You pick up the pieces, you’re more resilient and move on. But if it goes right, oh my gosh, how awesome would that be?”
But whether your decision turned out poorly or you missed a chance altogether, Cate said the second lesson is to not think of what could have been and instead move on.
“We have had a year of opportunity, and sadly a lot of people felt more fear than a sense of wanting to grab that opportunity. So, the time to buy was when it hit and everyone was terrified and didn’t want to buy. And I don’t need to keep talking about that because there will be so many people who are remorseful that they missed the opportunity,” she said.
“You have to wipe your own sense of personal risk and financial risk and make that decision and not lament it, not look back over your shoulder and not let it haunt you. You have to pick things up and move on and deal with the market conditions that we now find ourselves in.”
Finally, Cate stressed the importance of working with professionals to develop your own strategy tailored to your needs, rather than copying someone else who was successful.
“Just because they’ve had success, doesn’t mean that that path for you will spell success. Every single person’s journey must be different because we all have different lives. We have different incomes. We have different financial demands. So, assuming that you can replicate someone else’s strategy is one of the biggest mistakes that can be made,” she said.
Listen to the full interview here.
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