PNG: Myths in buying property
Acquiring real estate property is one of the most massive investment decisions that one can make. It requires knowledge of real estate basics. There are many misunderstandings which often lead to significant losses usually incurred by buyers. This article outlines various myths involved in the real estate industry.
Most buyers think that real estate agents are working towards their interests. This is not true as agents work for the sellers’ and their own interests. Agents will say anything to convince someone to purchase the property. Potential buyers should not rely on information given by agents as they tend to be biased to push a sale. Instead, they should seek independent professional advice from other persons.
Buyers think that the property purchase price quoted is usually the final cost of the transaction. This is not true. Such transactions incur a lot of other costs including stamp duty, legal fees and Ministerial approval fees (where applicable). Other additional costs incurred are garbage rents, NCDC land charges, and land rental fees. GST charged will also be applied if the buyer is registered under GST. A buyer should consult a lawyer on the possible total costs.
Most people assume that properties purchased come with insurance. Always check property insurance before buying by verifying insurance documentation.
Real estate agents do not set the property price. It is the property owner who sets the final price. However, in most cases, sales agents influence sale prices to gain extra money charged on top of the quoted price.
It is assumed that purchase price of a property is its market value. This is not the case as a seller can set the price independent of existing market valuation. However, it is essential for a buyer to know market valuation of a property. This will save him from paying a higher price for a property than its actual market value.
Not all properties have clear titles. A buyer should involve the Lands Department or lawyer services to find out if the transfer of the property title requires permission from the mortgagee.
Standard practices require a 10% deposit by a buyer for securing property. This is not a concrete rule thus parties may agree to decrease or increase the percentage.
Sellers prefer holding the property deposit, but it is not a must for the buyer to pay directly to them. One can deposit in a trusted lawyer account or real estate agent pending completion of the transaction. Always seek advice from a lawyer.
Buying property is not a one month process as it involves various people including banks, tax, and land departments. It can take from 3 to 12 months.
A buyer does not always get a clear title as mostly they are helped by bank loans. A bank will own the title until one completes paying such loans.
Property acquired with right procedures and within budget is a highly rewarding investment. Always seek more advice from lawyers before purchasing a property.