10 Common Buying Mistakes
... and how to avoid them
1 - not using a competent “Buyer Agent”
A Buyer Agency relationship requires the broker to work as your advocate. If your Realtor is not a Buyer Agent, he may legally only assist you with your purchase. There are countless opportunities for costly mistakes when buying a house. From shopping to negotiating, contract composition to communication (buyers, sellers, agents, title company, lenders, inspectors, appraisers), and contract execution to closing - you want someone representing your interests every step of the way. Having a good Buyer Agent on your side with the right attitude, knowledge and attention to detail is essential for an efficient, productive and pleasant transaction.
2 - making a decision based on Decor
Remember that you are buying the house, not the things inside it. This may seem obvious, but it is easy to be swayed by beautiful furnishings and art work. As often as I see buyers fall in love with a house because of the decor, I see people reject an excellent option because of a pink living room or decor that doesn’t match their taste. Make sure you focus on the features of the home - the floor plan, square footage, location. Try to see beyond color, clutter and cosmetics - those are easily changed.
3 - Not researching the neighborhood
Everyone knows the old real estate adage “location, location, location”, but many buyers get so caught up in evaluating the house, they forget to evaluate the neighborhood. Define the characteristics you want in a neighborhood the same way you list the criteria for the house. If you are interested in a specific neighborhood, it’s a good idea to use an agent who lives in or actively specializes in that area.
4 - Not seeing the house for the Walls
You can miss a perfect match if house hunting without the trained eye of a remodeler. Evaluating homes with a good renovator, who can “see” options which may not be apparent to the layman, introduces you to possibilities that can make a huge difference in finding the right home.
5 - Overlooking ongoing costs
The cost of a home encompasses much more than the purchase price. Remember to include property taxes, utilities, insurance, maintenance and repairs when calculating your monthly expenses.
6 - assuming appreciation
When the real estate market is “hot” and appreciating quickly, some view it like the stock market and think they can buy and sell quickly and make a profit. Another, similar mistake, is to buy beyond your means with the assumption the property will appreciate quickly, creating equity. One thing real estate and the stock market do have in common is that “past performance doesn’t predict future returns”. While real estate is a good investment, you should plan on it as a long-term investment.
7 - not getting Loan Pre-Approval
Get what is called a “pre-approval” letter from a bank stating that you qualify for a specific loan amount. A pre-approval letter is helpful when submitting an offer because it shows the seller you are a qualified buyer.
8 - Not Setting a Realistic Budget
The bank may say you qualify for a loan amount of $425,000, but that doesn't mean you can afford a house for that amount. Determine what you are comfortable spending on a mortgage payment before house hunting. A simple rule of thumb is no more than a third of your gross income.
9 - not interviewing Different Lenders
I shudder to think of the untold millions that buyers spend every year on mortgage fees they could have avoided had they only shopped around. Ask your agent and friends for references and interview at least three lenders before settling on one.
10 - Not using a good home inspector
A thorough inspection by a good home inspector makes your purchase a far more educated one. Not all home inspectors are created equal, ask your agent for references and make sure the inspector is a member of the National Association of Certified Home Inspectors and provides a detailed report with color pictures.