Buyer Mistakes “The Dirty Dozen”
1. Not Communicating with your spouse, Realtor, Lending Agent, Insurance Agent, etc.
In any relationship communication is key. Agents want your unfettered feedback. If you ever have questions or concerns don’t hold back, feel free to express them directly and without hesitation.
2. Not getting pre-approved for a loan.
Be a smart consumer. Learn financing basics before you start shopping. Explore your options and clean up any derogatory credit issues. These simple steps take very little time, save you money, and let you know the price range that fits your budget.
3. Not evaluating your Needs versus Wants.
Discuss with your Realtor what your housing needs versus wants are and what monthly payment you are comfortable with.
4. Making big purchases, career changes or marrying without investigating the financial implications in advance.
Don't make major purchases until after you buy your home. Pay down debt and don't apply for new credit. Your total monthly house costs shouldn’t exceed 28 percent of your gross monthly income. Lenders want a stable job history and independent contractors often need a 2 year track record. If you live in a community property state, marriage can have major financial implications.
5. Taking too much time to decide.
Even in a down market homes can sell quickly (sometimes even the first day on market), so be ready to make fast decisions (this is why you prepare before you start your search). Be accessible to your Realtor, because quick communication can mean the difference in purchasing the property of your dreams or losing out.
6. Disregarding Market Value
Everyone would like a “steal”, but you are shopping in a worldwide market not a vacuum. The market recognizes quality and value. Once you find the property you want, you must act decisively. Submit a lowball offer on your ideal property and you’ll likely lose out to a buyer offering something closer to market value.
7. Ignoring Seller’s situation or being inflexible during the search.
Fewer purchase contract contingencies mean a stronger offer perceived by the Seller. Even owners of custom built homes often find themselves not completely satisfied. Understand the “perfect” house probably doesn’t exist, but your Realtor likely knows of contractors that can perfect a satisfactory house.
8. Thinking Short-Sales, Foreclosures, Tax-Sales, Auctions are always a good deal.
Late night infomercials provide an incomplete depiction of the process and create unrealistic expectations. These types of purchases are often paved with pitfalls and have considerable risk. Don’t think books or videos can truly prepare you. These types of purchases are best suited for highly experienced investors with plenty of cash on hand to satisfy liens and perform sometime extensive repairs. Thinking FSBOs are a always a good deal or negotiating with one without your Realtor. Homeowners do not have access to historical MLS data and often cannot objectively evaluate their own property. Often times FSBOs are overpriced and most homes that start of as FSBOs are ultimately sold by Realtors. Unrepresented sellers are often unfamiliar with or sometimes ignore their obligations regarding disclosures and “good-faith” negotiations.
9. Not investigating what you are buying or checking property survey.
Hire a professional building inspector. An inspection is the cheapest insurance policy against a bad decision. Make sure there are no easements, encroachments, or unrecorded property modifications.
10. Making Assumptions.
Check zoning regulations, covenants, and Homeowner Association restrictions. Sometimes these issues are only discovered during title search. So if you have concerns, your Realtor can put a contingency in the contract just incase something is discovered by the title company.
11. Not finding out what stays or goes.
Your Realtor can explain what items are considered “non-realty”.
12. Not getting it in writing.
Avoid "misunderstandings” and “faulty memories” by getting all the terms in writing ASAP.
Avoid these pitfalls, and you’ll be ahead of the game.
1. Disregarding market value or overvaluing improvements.
Price too high and your property will languish on the market. Price to low and you will miss profit potential.
A Realtor can evaluate the historical sales comps and your property improvements in order to “right price” the property for a timely and profitable sale.
The average buyer often looks at more than a dozen homes before making a decision. That means buyers have the advantage of comparison shopping. If your house isn’t reasonably priced, you may lose that perfect sale.
2. Thinking first impressions don’t matter
First impressions are lasting! De-clutter, clean, and perform visible repairs otherwise you may lose the sale before a tour even begins.
Buyers respond to your home emotionally. If the house is messy or smells, they’ll likely strike it from their list of potentials.
It may take some elbow grease and money on your part, but any effort you invest into preparing your home will pay off in the long run.
3. Making the property difficult to Show.
The more showing restrictions you impose with severely limit the number of potential buyers that will even tour the property. This will likely result in fewer and lower offers. Sellers should vacate the premises during the showing; no matter how personable you think you are, your presence will likely make the buyer uncomfortable.