11 Mistakes Home Buyers Make

Hope, this  related items will be of use for you!

1. Letting charm cloud your judgment

No one will fault you for falling hard for a charming older home. But, unless the house has been painstakingly remodeled or you’re prepared to pay for repairs and upgrades, an old house can quickly lose its allure. If you’re considering an old home, don’t let the inspection be your last line of defense.  Give yourself time to get estimates of the repair for the ones that the owner is unwilling or unable to take care of.  Give yourself time so that you can back-out of deal if needed.

2. EmotionThis is the most costly mistake. Emotion leads to irrational thinking, which leads to poor decision making. The best way to overcome it, is to take enough time before making your decision. Do not sign a contract on a new home the same day that you look at it. Take some time to evaluate all of your goals and dreams about this home before you buy it. Write down everything you want the new home to achieve, and carefully inspect the data on the home to make sure it meets your requirements.

3. Snubbing the real estate agent

With so many websites offering a mass of data on listings, who needs an agent? Most people, actually. Finding a house and figuring out comps–the price of comparable homes on the market–is the easy part. Managing the nuances of offers, inspections, financing and all the other pivotal steps to buying a home is where many new buyers tend to get tripped up.

When you hire an agent to act as your “buyer’s representative they are obligated to put your interests first, even if her commission is paid by the seller and based on the sale price. Skeptical? That’s all the more reason to find an agent on your terms. Make sure they are a Real Estate Broker with experience in todays market. Ask friends and acquaintances for referrals.

4. Not getting lender pre-qualification

Things have changed since the real estate bubble burst. Lending standards are much tighter, both in terms of credit scores, down payments and salary history. If you are planning to purchase in the near future (or even if you’re just looking), go ahead and contact a lender to see how much you can afford and get pre-qualified for a loan. That way, when you see the home of your dreams, you’ll be able to move on it.

5. Guesstimating how much you can afford

Many buyers mistakenly take a do-it-yourself approach to financing. They use online calculators to estimate how much house they can afford, dive into the house hunt and then get a dose of cold water when lenders refuse to qualify them for that amount. The process is so different than it was four or five years ago.  Not only are lenders reading loan applications closely, they are verifying employment and running credit checks multiple times during the process.  Stated income days are over. Make a date with a mortgage broker or banker before you get serious about your search.  Remember, too, that the costs of buying and owning a home go well beyond the sticker price. While online calculators do take into account property tax and insurance, it’s up to you to account for maintenance costs, moving fees and association dues.

6. Trying to time the market

When home prices have been declining, it is tempting for buyers to wait as long as possible to make an offer in hopes that prices will decline even further. But just like trying to time the stock market, this strategy rarely works. It’s impossible to predict when prices will reach the bottom until they start rising again. And once a home is priced to what the current market will bear, buyers will make offers. Now that sellers have become more realistic about list prices, many properties are actually selling quickly.  And recently there have been more multiple bid situations, with some would-be buyers walking away empty-handed. The best strategy is to work with a real estate agent to make an offer based on what comparable homes are selling for.

7. Waiting for something better to come along

It’s ironic. In a seller’s market buyers are falling over each other to buy any house that even remotely meets their criteria. But in a buyer’s market, when there’s so much inventory to choose from,  there’s always this nagging feeling that something better might come along, even if the house has everything you are looking for. Like a coach, a good real estate agent will guide you in prioritizing your housing needs and wants and ask questions along the way to keep you focused on your priorities. When you do finally find THE ONE, she’ll help you negotiate the best deal.

8. Making arbitrary offers

With housing inventory running high and sales at record lows, in most markets, there’s no shortage of houses for sale and sellers desperate to get out from under them–all the more reason to hold out for the right house and the right price. But when you find that perfect house, don’t assume you can lob a lowball offer or make unreasonable demands. Even in hard-hit markets, nice houses in desirable neighborhoods are fetching multiple bids.

9. Believing interest rates will stay low

Interest rates are still at 40-year lows right now, but that will not last forever. In fact most economists agree that rates will begin to rise sometime later this year. That will affect not only your monthly payment but also your purchasing power, or how much you can afford. For example, if interest rates rise 1% point, this almost offsets a 10% drop in price…so while you’re waiting to see if prices are going to go down any further, you may be shooting yourself in the foot. You could end up paying a higher price AND a higher interest rate.

10. Thinking you’ll make a killing by buying a short sale or foreclosure

It IS possible to get a good deal by buying a distressed property, but be aware that these kind of transactions have their own set of challenges (too numerous to cover here), and they often don’t turn out to be quite as good a deal as they seem on the surface.  Make sure you hire a real estate agent and an attorney who are experienced in this kind of transaction, so they can guide you through the process, negotiate the deal and help you avoid making costly mistakes.

If you have the financial wherewithal to purchase a home and are fortunate enough not to have a property you have to sell first, you have an excellent opportunity to get a great deal on your dream home. Just be careful not to blow it by making one of these costly mistakes.

Are you in the market to buy a new home? Are you a first time home buyer? Even if you aren’t, there are 3 things that you really need to consider before signing on the dot line to get that new home. These 3 things are absolutely critical for you to understand, and be ready to deal with should they pop their ugly heads up.

11. Focusing on the house, not the hood

There are many factors outside of the property itself that you need to consider. Things like what school district it falls in, does it have an HOA (home owners association, which almost always means recurring annual fees, sometimes hundreds of dollars per year), what the neighbors are like, is it close to a train or bus station, the proximity of police and fire stations, are all factors that should be considered before buying that new home.

In hindsight, many buyers say they wish they’d taken their due diligence a few steps further to really get to know all the perks, quirks and hassles of living in a particular place. You can always fix up the house, but there’s no easy remedy for annoying neighbors, oppressive homeowner association rules and marathon commutes. Spend as much time as you can in your future neighborhood, ideally on different days and times. Eat in the restaurants, drop in a yoga class, test drive your commute.

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