Expert’s Top 10 Real Estate Blunders

By Robert Jenson

Buying and selling real estate in today's tumultuous, highly demanding marketplace is not for the faint of heart.  While tricks of the trade abound to give buyers and sellers a leg up on the competition, there are also a number of basic pitfalls buyers and sellers should be aware of lest they commence their real estate venture on shaky ground.

First and foremost, do your homework before hiring a REALTOR®, either as a listing or buyer's agent, as not all are created equal.  Interview at least 3 real estate professionals, and come prepared with a list of questions you plan to ask.  What is their track record?  How do they market listings?  What services do they provide as a buyer's agent that their competition does not? Due diligence is key to finding a representative prepared to work not just hard - but smart - on your behalf and who will be available to answer your questions along the way.

For Sellers

It's also wise to have listing paperwork and disclosures completed at least one-week before your house officially goes on the market.  This way your agent can have photos complete, flyers ready, Internet ads up and running, etc. on the very first day your listing hits the market.  Also be sure to get a copy of your home's MLS listing from your agent so you can avoid a costly error.  It's entirely possible a bedroom was missed, or something was overlooked. Work as a team to make sure our home's listing is accurate...and that the description is inspiring!

Those whose homes have languished on the market for longer than anticipated should start thinking outside of the box and contemplate making a "Reverse Offer." Consider that one buyer who has been back for a second or possible 3^rd look, but hasn't pulled the trigger.  Make them an offer!  Yes you, as the seller, should put something in writing and submit it to the buyer's agent.  This will create an opportunity for the buyer's agent to sit down with his or her client and potentially help close the deal.

House still for sale 4-weeks later?  It's time to take a hard look at the price.  Your greatest number of showings will happen within the first 3-4 weeks of a listing hitting the market.  This is because there is already a pool of qualified buyers waiting for new homes to come on the market that might match their criteria.  So, if you've had no bites by week 4, it's time to increase your exposure by making a price adjustment.  Repeat again every 4-weeks, or sooner depending on how urgent or motivated your situation is.

For Buyers

Also early on, if you intend to secure a mortgage loan you'll want to get pre-qualified, which determines how much you can afford. It allows you to move swiftly when you find the right home - especially when there are other interested buyers. It also indicates to the seller that you are serious and can afford to buy the property.  If you plan to cover the transaction in cash, you'll then need to provide advance proof of available funds.

Buyers should also spend the time needed to shop for the most favorable rates and terms. A difference of even half a percentage point can mean a considerable savings over the life of a loan. For example, the difference in the monthly payment on a $100,000 mortgage at 8 percent vs. 7.5 percent is about $35 per month. Over 30 years, that's $12,600.

Once the finances are in order, there are many other things to consider when buying a home, including its resale potential.  For example, in neighborhoods with attached three-car garages, a two-car or detached garage may adversely affect the home sale and future value.  Number of bedrooms, floorplans, location, and proximity to noisy streets are among other factors that can prove problematic for a future sale.

The bottom line?  Take a macro approach to evaluating homes before signing on the dotted line.

What blunders should buyers and sellers avoid at all costs? Consider these all too common property pitfalls:

Buyer:

1. Not Getting Loan Pre-Approval:  Many buyers want to find the "perfect" home before having their credit pulled, which can backfire when an offer is on the table and time is of the essence.  It's wise to get pre-approved for a loan even before you view your first home. Your credit report may contain inaccurate information that you were not aware of, which can be a time consuming process to rectify.  Or, you might not like what loan program you qualify for, or you might qualify for a higher loan value than you thought.  Ultimately, you will need a pre-approval letter with your offer, so do yourself a favor and do this in advance. It's free, after all.
   
   
2. Having Unclear Goals - Create a realistic idea of the property you'd like to buy. What features are most important to you? Make two lists: one of the items you can't live without and one of the features you would enjoy. Refine the lists as the house hunt progresses, but remember that no place is going to be 100% perfect.  It is going to be up to you to put the finishing touches on and call it home.
   
   
3. Forgoing Home Inspections - After your offer is accepted, set up a home inspection. It's not uncommon to find problems, including leaky roofs, cracked walls, insect infestations and foundation problems. Hire a reputable inspector, and negotiate to get you the most for your money once the inspector's report is final. If you negotiate repairs as part of the purchase, ask for a "walk through" before finalizing the paperwork to assure all issues are resolved to your satisfaction. Also inquire about home protection plans as part of the purchase, which may save you money in the short and long-term future.
   
   
4. Not Shopping Mortgages - A difference of even half a percentage point can mean a considerable savings over the life of a loan. For example, the difference in the monthly payment on a $100,000 mortgage at 8 percent vs. 7.5 percent is about $35 per month. Over 30 years, that's $12,600.  Be a smart consumer and comparison shop for the most favorable mortgage rates and terms.
   
   
5. Not Using a Buyer's Agent - Purchasing a home could be the most important and complex financial transaction you engage in, and going it alone is risky. Indeed, a buyer's agent can save you time, hassle and thousands of dollars. Take time and care when selecting a real estate buyer's agent - find someone you can trust, and that you have a good rapport with.

Seller:

1. Overpricing - Every seller naturally wants to get the most money for his or her product. The most common mistake that causes sellers to get less than they hope for, however, is listing too high. Listings reach the greatest proportion of potential buyers shortly after they reach the market. If a property is dismissed as being overpriced early on, it can result in later price reductions, which reflect poorly on the listing. Overpriced properties tend to take an unusually long time to sell, and they end up being sold at a lower price than they likely would have had they been priced properly in the first place. 
   
   
2. Limiting Showings - Are you serious about selling your home?  Then you need an open door policy and to ensure the home is ready to be shown at the drop of a hat...even if you're not around. Pack up your valuables and provide an outdoor lockbox that real estate agents may access at their discretion.  Most showings are fairly spur of the moment, and you don't want to miss out on any qualified prospect.
   
   
3. Failing to Stage:  When attempting to sell your home to prospective buyers, do not forget to make your home look as pleasant and fresh as possible. Plant flowers, wash the windows and screens, put on a coat of new paint, lay new carpet, add furnishings and décor items, eliminate clutter and remove personal photographs from around the house.  It's time to show off your beautiful home and make someone else feel completely at home in it.  First impressions are critical, so ensure the junk is packed in boxes, and all boxes are put in storage vs. the garage so the prospective buyer can properly evaluate and appreciate that part of the house, too.  Clean out the closets, so they look bigger.
   
   
4. Offering Repair Credits - Would you buy a Ferrari with bent rims, stained rugs and cigarette burns in the seats, even if the seller was offering a "repair credit"?  Doubtful, as the buyer would have an understandable poor impression of how the vehicle was treated and assume the worst. When selling a home, eliminate any need for such credits in advance. Even before you list it for sale, hire professionals to inspect the roof, pool, and other structural elements, and for termites and other important buyer considerations.  Make ALL repairs before you list the house on the market to thwart anticipated objections in advance.
   
   
5. Being Ill-Informed:  It is extremely important that you are well-informed of the details of your real estate contract. Real estate contracts are legally binding documents, and they can often be complex and confusing. Not being aware of the terms in your contract could cost you thousands for repairs and inspections. Know what you are responsible for before signing any contract. Can the property be sold "as is"? How will deed restrictions and local zoning laws affect your transaction? Your real estate professional should ensure you know the answers to these kinds of questions, which can save you a considerable amount of money

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Please contact me, Robert Jenson, for more information on this or any other real estate related matter at Rob@TheJensonGroup.com or through my Web site located at www.TheJensonGroup.com.