Real Estate: The Seven Most Common Mistakes Buyers Make & How To Avoid Them

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Unfortunately, for many it also ends up being frustrating and unnecessarily

expensive. I have heard too many stories from people who had a bad

experience buying their first home, something they could have easily avoided

by being better prepared for their first real estate transaction. I don't want

anyone to make these mistakes, so as a Realtor I work hard for my clients to

ensure that their real estate transactions go smoothly. For those who are

not my clients yet, I prepared this special report that outlines the seven most

common and most expensive mistakes buyers make. I hope you will enjoy it

and find it useful.

The very first step towards buying a home should be getting pre-approved

for the loan. This is an absolute must if you want to avoid major

disappointments later. Getting pre-approved is often easier than people think.

First you shop around and find a lender that you feel comfortable working

with. Your Realtor should be able to recommend a few. Once you decide on

one, you should meet with your lender and discuss your purchase needs.

You will fill-out a loan application, and your lender will check your credit,

verify your income and employment, and determine what kind of loan you

can qualify for. You will then know (1.) how much you will be able to borrow,

(2.) how much you will need for the down payment, and (3.) how much your

monthly payments are likely to be. Looking for your next home then becomes

easier since you will know that (a.) you can get financing, and (b.) what

price range to consider. The lender will also give you an important negotiating

tool - a pre-approval letter. This document will confirm to sellers that you

can obtain financing, and will give you a negotiating advantage over buyers

who do not have it.

Many buyers are so excited and anxious to get started with their home search

that they forget to do some planning first. Which area do you want to live in?

Are the homes in that area in your price range? How long of a commute can

you tolerate? How many bedrooms and bathrooms do you need? It is a good

idea to make two lists - one of the must-have amenities and one of the wouldlike-

to-have-but-not-that-necessary. For example, three bedrooms may be

on the first list, but that hot tub may better be suited for the second list. Also,

don't forget to check on the neighborhood's crime statistics, schools, and any

other information that may be important to you. A trusted Realtor can be a

great resource, and should be able to get you the information you need quickly.

Once they start looking at homes some buyers get overwhelmed and start

analyzing and over-analyzing even the most mundane aspects of every home.

The over-analysis soon leads to paralysis - they cannot decide which one to

buy. As a result, they miss out on many nice homes that someone else grabs

in the mean time. Remember, there is no such thing as a perfect home.

Even brand new homes have imperfections. Look at the overall picture.

Does the home fit your needs? Do you feel comfortable in it? Do you like the

neighborhood? Can you see yourself living there for a long time? Your musthave

list comes in handy now; does the home have everything on that list?

If not, move on. But if the home suits your needs and you feel comfortable

in it, don't be afraid to make an offer. If you hesitate too much, someone

else might snag the home that should have been yours.

Everyone loves a great deal, including yours truly. But for getting a good

deal on a home, there are good strategies and there are bad ones. One of

the bad ones is making very low offers. Some buyers even go as far as

making derogatory comments about the home in front of the seller thinking

that this will somehow cause the seller to accept the low offer. The truth is,

this only annoys the sellers, and an annoyed seller is less likely to work with

you. It is OK to offer less than the asking price, and in fact many sellers

leave some negotiating room in their price. If you are working with a Realtor,

your Realtor can help you determine how much to offer, and even negotiate

with the seller on your behalf. Be realistic and avoid antagonizing the seller.

The seller that likes you will be far more open to working with you than the

one who dislikes you.

This should go without saying - a home is the most valuable thing most of us

will ever buy in our lives, so inspecting it for possible problems should be a

top priority. Yet time and again I have witnessed buyers who are content to

have a relative "who knows all about that home stuff" take a quick look

before giving it his seal of approval. There is no substitute for a thorough,

professional inspection. It is not that expensive, and will reveal any defects

that may not be apparent, such as gas leaks, foundation problems, etc.

Spending a little bit of money on the inspection is well worth it in order to

have the peace of mind that your new home is in good and safe condition.

Real estate transactions are complex matters and there are many things that

can go wrong. The purchase contract is your main tool for protecting yourself,

and should at the very least contain two important contingencies (conditions)

- the inspection contingency and the mortgage contingency. The inspection

contingency allows you to have the property professionally inspected (as

discussed above), and request that the seller make any necessary repairs. If

the seller is unwilling to make the repairs, or if the problems discovered are

serious, you should have the right to pull out of the contract with no penalty.

The mortgage contingency is there to protect you in case something goes

wrong with your loan approval process. If you have gotten the pre-approval,

the risk of something going wrong with the loan should be minimal. But

there is still the appraisal that your lender will require, and the appraiser will

have to determine if the home is worth the price you are paying for it. If the

appraisal comes in lower than the purchase price, you should have the right

to re-negotiate the contract. If the seller is unwilling to lower the price, you

should have the right to cancel the contract and incur no penalty.

When buying a home many pieces need to fall into place in order to have a

smooth transaction. Wouldn't it be nice to have someone at your side to help

you along the way? Someone to help you with the loan process, help you

find the right house, negotiate on your behalf, and assist with all the

paperwork? Well, such person does exist - a Buyer's Agent. The job of a

Buyer's agent is to work for you in the real estate transaction, not the seller.

Your agent can not only help find you a home, but prepare your offer, negotiate

with the seller on your behalf, and insure that you are protected along the

way from any pitfalls of the complex process. And the best part is that the

Buyer's Agent is free for the buyer! That's right, you don't pay a penny to

have a professional help on your side. The Buyer's Agent typically gets a portion

of the Seller's Agent's commission, so you don't incur any additional expense.

How do you select a good Buyer's agent? There are a few conditions he or

she must fulfill. It must be someone who knows the area where you want to

live. Someone who knows how to negotiate to get you the best price.

Someone knowledgeable who can guide you through the complexities of

contracts and paperwork. Someone who will care about your transaction as

his or her own. To find such an agent you may decide to interview several

Realtors and quiz them a little bit. Is the agent a part-timer or committed to

the real estate profession full time? What kind of a track record does he or

she have? Can the agent provide you with references from happy past clients?

And there are a couple of questions you have to answer yourself: Do I feel

comfortable working with this agent? Is this someone that will care about

my transaction as if it were his or her own? Take the time to learn more

about the agent you are considering. Buying a home is a big step, so make

sure that the Realtor you choose is the right one for you.

NEED HELP?

This publication is for informational purposes only and does not constitute legal or financial advice. All information was obtained from sources deemed reliable, and while I do not doubt its accuracy, I cannot guarantee it. If your property is listed with another broker, this is not intended as a solicitation.

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