A good and experienced REALTOR can often make the home buying process look simple. A major mistake made by many home buyers is to assume it is a simple process and not account for the various complexities when buying their dream home. They then learn an expensive lesson too late. This list is presented so that homebuyers can avoid some of the mistakes that others have made.
1. Looking for a home prior to talking to a lender in person. The lender should be one you can sit down with and who has been recommended by others. Do not fall for those too good to be true deals found on the internet. Your REALTOR can help you with which lenders are most likely to close the loan for qualified applicants. Understand that your credit score may raise your borrowing cost and necessitate that you buy less house. Know that your fixup cost can sometimes be included in your loan at closing. Some buyers may assume they can not afford a home because they did not seek the assistance of a good lender. Know that just because you qualify to buy a home, before spending the money find out if the home qualifies. Just knowing the difference between the two types of modular homes can make a dramatic difference in your lending cost if a modular home is your choice. (On frame will often have higher borrowing cost). Some condominiums or vacant land may not be eligible through your lender. A mistake that is often made is when a buyer makes a large purchases after the loan application and prior to close. This includes furniture and cars. They may then disqualify themselves.
2. Not using an agent that looks out for your best interest. Remember my opening statement about how a good an experienced REALTOR can make it look simple. It is not simple and a buyer should always have good representation when around a seller's agent, open houses, for sale by owners, or new construction. Do not allow a seller's agent understand how you feel about their listing. A good seller's real estate agent not only knows the right questions to determine your motivation, they look for the nonverbal signs. It is important to be sure to let your agent know all your wants and needs so they do look out for your best interest. Do not commit to more than one agent during the buying process.
3. Not objectively analyzing your cost. Buyers often rationalize they can afford a house at the expense of not looking at the big picture. This is a partial list of some of the additional cost;
b) Credit report
c) Home Owner's Insurance
d) HOA or Maintenance fees
e) Property taxes
f) Deferred maintenance cost and cost of updating
g) Home inspection
h) How much are your living expenses prior to this purchase, use the appropriate numbers in your budget.
i) Potential utility cost
4. Not considering location. This home will someday need to be sold so what may not be important to you may be important to the next buyer. Are the schools good, shopping nearby, employment accessable, what will happen in the future around the house. The beautiful farm that borders, can it become something undesirable or the road that borders the property will it become more heavily traveled and consequently expanded? Does economic obsolescence or functional obsolescence apply to the property and if so has that been considered in the price?
5. Not using a professional inspector.
6. Buying the most you can afford on two incomes.
7. Compromising on the the important things. Figure out what is absolutely necessary and stick to it. Along with this do not be too picky and lack vision when you find the diamond in the rough. Do not be seduced by minor upgrades such as a clean painted house with great curb appeal if it does not meet your vital criteria otherwise you will probably regret moving there.
8. Thinking distressed property or distressed seller equates to a great buying opportunity.
9. Not understanding where you are in the real estate cycle. This is not always easy to discern and understand and even though you may be in a buyer's market, there may be certain areas or price ranges that have become a sellers market. A REALTOR can help you work through this and know what is hot and what is not. A traditional tool used by many real estate agents is months supply. How many months based on current sales trend will it take to sell a similar home with six months supply representing a stable market. If there are five months or less of housing inventory then it is considered a seller's market and prices will likely rise. If the inventory of similar houses is seven months or more then prices will possibly be coming down. Has the housing inventory been decreasing or increasing the past six months is also important factor?
10. Not doing a serious final walk through. Take pictures prior to the offer to purchase and if there is something of value that may be changed (chandelier), then take that picture also. Never assume that just because something was in MLS or there when you preview the house that it will be there at closing. Get it in writing with your initial offer.
There are of course other mistakes that a home buyer can potentially make in the home buying process. Because the market in the Tampa Bay Area has gone from a "Buyer's Market" to a "Seller's Market" recently some common mistakes that are now occurring are; Always looking for a better deal and lowballing instead of negotionating realistically. Since the housing inventory has declined and interest rates are low and the market in most of the Tampa Bay Area has become a seller's market and there is becoming an upward pressure on prices and less housing inventory.
Charles Rutenberg Realty