19 Buyer Mistakes
Although there is no substitute for doing your homework (start by asking your family and friends who have recently moved for their experiences) the following list of common mistakes Most Buyers make may be helpful
1. Thinking You Get A Lower Price By Buying A Home Through The Agent Who Is Listing The Property
The commission is pre-set between the agent representing the seller and the seller. In an exclusive right to sell agreement the commission is the same no matter who sells the property. The fact is the listing agent is obligated to disclose all information received from conversations with a buyer to the seller. Your buyer agent can save you money by disclosing to you, information that a seller agent can not. Your buyer agent can also give you advice on market conditions and comparable homes. A buyer agent owes the buyer his loyalty and is paid by receiving part of the seller agent's commission. There is no cost to the buyer.
2. Thinking You Don't Need An Agent To Buy A New Home
Builders love buyers not represented by an agent for many reasons: 1) the builder then controls the sale; 2) buyers generally do not possess expert knowledge of the market or insider information, so critical in negotiating an offer; 3) builder sales agents are not required to be licensed Realtors and therefore not required to follow a code of ethics; 4) builder contracts are written to protect the builder, buyers do not have an agent to help explain and amend the contract; 5) buyers are not receiving advice from their agent on option pricing vs. cost, financing options, or construction quality. Hiring an agent will not cost buyers additional money because agent commissions are built into builder pricing and are a condition of offering properties through the multiple listing service. Not using an agent only saves the builder money.
3. Not Having A Great Realtor
It probably goes without saying, a great Realtor knows of properties available in addition to the traditional MLS selection. They network with other top agents; send direct mail to target neighborhoods; and maintain contact with past clients in their database, providing you with the best home, at the lowest price, with the best terms, in the shortest amount of time.
4. Buying For Immediate Needs And Not Future Needs
Buying real estate in our area is a large investment, you must make certain you think ahead to what your needs will be over the next 3-5 years. A slightly higher investment today may save you thousands in the future. Even if it seems the investment is a stretch at the time, spend just a little more for that extra bedroom, room for an in-home business, or enough land for an addition or improvement. The extra investment can save money in the future.
5. Failing To Move Fast
There are two parts to this: first, the best properties on the market move quickly so if you want one of the best properties, you need to set up a system that will keep you immediately informed when homes become available; second, don't wait to make your offer and make counter offers quickly. Taking too much time is to the seller's advantage, and gives the seller more time to solicit offers from other prospective buyers who might make a higher offer on what could have been your home.
6. Getting Financing To Match Your Ownership
Regardless of your purchase, your financial terms must be consistent with your ownership. If you are not going to stay in the property long, then it may be to your advantage to get variable rate financing, so you can have the lowest interest rate during your time of ownership, plus it will probably be an assumable loan, which is a good selling point, when you want to sell. If long-term ownership is ideal for you, get a fixed rate loan so you can lock in on today's low market rates for the next 30 years. Your Real Estate professional can help you explore the many financing options available for the best match.
7. Don't Let Decorating Make Your Decision
Paint, carpet, spit and shine are great, but don't turn down a home with lots of potential just because of a little dirt, decorating not to your liking, or some needed handyman repairs. Sometimes "sweat equity" adds the most value to your home.
8. Making Too Low Of An Offer
We are not saying to offer full price, we want you to get a good deal. Circumstances may dictate that a low offer might be the best strategy. Sometimes people think that a large reduction in price necessitates a good deal. That is not always the case. If a property is priced right, the full price can be a great deal. Market knowledge is more important than a low offer. Too many homes are lost over the buyer's unwillingness to move a little on price, terms, and concessions. Think about this; $5,000 in today's loan market increases your monthly investment by only $31.60. This is a small price to pay for getting a home that is perfect for you. Follow good professional advice if you really want the property.
9. Not Using Real Estate And Mortgage Professionals
Everyone knows a friend, relative, or even a friend of a friend who is a licensed real estate agent or loan officer. Most are not top professionals in their field. In today's litigious marketplace if you are not using experienced professionals it can cost you thousands of dollars. Problems can often be avoided with precise attention to details that only a full-time, experienced real estate professional understands. Your real estate professional will also assist you in finding other top professionals in their respective fields; all are necessary to facilitate a smooth transaction.
10. Not Getting A Professional Inspection
Your real estate agent can point out obvious defects, the appraiser, whether FHA, VA, or Conventional can also point out some defects. You should always hire a certified home inspector who puts on overalls and crawls below, in, and above your future investment to write a complete report. The home inspection not only ensures that the home you are buying is sound, but also educates you about preventive maintenance and general care of your home; saving you dollars in the future.
11. Not Differentiating Needs, Wants, and Dreams
First, write down the minimum requirements for your next home, then write down those items you would like to have but could live without. Last, write down those items that you would be surprised to find. Once they are written down, it is easier to communicate them to your real estate professional, making it easier for him to help you find the perfect home. In most cases, an experienced real estate professional familiar with the homes for sale (market inventory) can help you get the basic requirements, and also some of those exciting hard to find features.
12. Not Seeing Enough Homes
Many times buyers will see one home they like and buy it. There is no way to have a thorough understanding of the market by looking at only one home. It is suggested that if you find a home you want, take a little more time to understand the market, using comparable's and visiting a few similar properties. Using that first property as a benchmark, compare it to the others. If you still like that property, then you can discuss making an offer with your real estate professional. However, it is possible to see too many properties, confusing yourself and making your search more complicated. If you have properly identified the items you want your home to have, it is easier to narrow down the search and make the right decision.
13. Looking for a house without getting pre-approved by a lender
When you are pre-approved, you are effectively a cash buyer. This makes it much easier to negotiate with the seller. Do not mistake pre-approval with pre-qualification; pre-qualification is only the first step in gaining pre-approval. Ask your Banker or Casey for details.
14. Failing to check out the neighborhood thoroughly before buying
How do traffic patterns change depending on the day, or even the time of day? Are there any future developments in the works? Is that nice green space down the road actually zoned for high-rise development? Ask around - check it out first.
15. Not Wanting To Get Tied Down With One Agent
This is one of the largest mistakes, however getting tied down with the wrong agent is even worse. If you try to use too many agents, the top agents won't spend their full time giving you their expertise. The agents that you are left with don't have the skills and resources. Agents are in business to earn a living, and if they don't have your full commitment, they are less motivated to give you 100% of their efforts. If an agent feels you are not committed to them, they may try to push you to make a decision quickly, thus they are selling you, not assisting you in making a smart decision. If an agent knows that you are comfortable working with them and that you are loyal to them, the pressures are removed from the process of finding a home. The agent you decide to work with should have specific performance standards that coincide with the way you want to find a home. Just be sure that any agreement you enter into gives you a way to terminate the contract if you and the agent can't work together effectively. It really doesn't matter if you are looking to buy in 6 days, 6 weeks, or 6 months, if you and your agent have a good working relationship, a top agent will make your home finding and buying experience a smooth one.
16. Not shopping for home insurance until you are ready to move
If you wait until the last minute, you will be rushed in finding insurance. Allow time to shop around and get the best deal.
17. Signing documents without reading them
Do not wait until the last minute before reading the documents; there probably will not be time. Try to get copies of all documents early on in your home search so that you can peruse them at your leisure. Many buyers, even when they read everything, do not understand all the meanings and that is where a good Realtor can help you understand what it is that your getting into.
18. Making verbal agreements
Not only are they harder to enforce, but any written contract you sign will override a verbal agreement. Contract law says that verbal agreements are not enforceable when they deal with Real Property. Always get it in writing!
19. Not knowing your rights and obligations
If you do not know your rights, then you can be taken advantage of. If you do not know your obligations, you may inadvertently cause friction between yourself and those with whom you are about to enter a contract. Both your REALTOR and Lawyer are great sources of information concerning this; make use of their expertise and resources.