Given how huge a financial investment property buying can be, even in a hot property market it’s amazing to hear about buyers not only purchasing properties well above its reserve but foregoing essential pre-purchase checks purely due to FOMO.

An experienced renovators or builders might be willing to gamble and pay a premium on a block that has redevelopment potential.

But for everyone else, paying a premium on an impulse has big risks; the house may have significant problems or even negative features that you could miss at a quick glance. Before you sign on the dotted line, consider these:

Pre-purchase checks

Termites? Asbestos? Rising damp? Illegal renovations? None of these are insurmountable problems, but you would sure want to know about them in advance so you can factor them in to the price you pay for a property.

Getting a building and pest inspection from a licensed inspector will help you identify potential problems and is a must in most cases.

Check how your home loan compares

New build issues

Many buyers may assume that new homes will have no problems. But then they haven’t heard of slab heave, a problem that has landed some builders in Melbourne’s west in court and resulted in them receiving hefty fines for building defective house slabs built on inadequately compacted soil.

Fire and flood zones

It pays to learn whether you are buying into an area at significant risk of flood or fire and whether the property is built to withstand any future issues.

Don’t assume a contract will alert you to potential problems – not all states and territories require this. Some take the view of “buyer beware”, so you need to do your own research.

Orientation

In Australia, it’s best to have living spaces to the north to catch the winter sun. Eaves or overhangs should also be on the north face to shade the summer sun, which is higher in the sky. Check which way a property faces when you inspect it – or look closely at its floor plan.

Some houses don’t have eaves or overhangs, so it’s worth running a critical eye over the exterior.

Neighbourhood outlook

Spend some time in the neighbourhood to understand what it’s like at various times of the day and week. Don’t look just in the street but further afield. And talk to council and locals about any future developments that could impact your potential new home.

By doing your due diligence before signing the contract of sale, you’ll save yourself a lot of anguish down the home-ownership track.

Tell us: Enjoyed this article? Don’t forget to like and share.

And while you’re here, take our mortgage shredder challenge and discover how much you can save on your home and investment loans by using loansHub technology as your personal mortgage manager. To discover why loansHub and what we do, click here.

This article does not constitute advice; readers should seek independent and personalised counsel from a trusted adviser that specialises in property, a tax accountant and property design specialist.