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5 Home Buying Mistakes |
1. Misunderstanding
the real estate agent's role
Real estate agents are very friendly. That's a major part of their job. In the
course of shopping for a house, a home buyer spends a lot of time with an agent.
However, the wise home buyer understands who's working for whom. Unless the agent
is an exclusive buyer's agent, then agents are working for the sellers. Most
states require them to tell the home buyer this in the beginning, but it's easy
to forget. If an agent's potential dual role is a concern, a home buyer should
hire a buyer's agent who is contracted to work for the home buyer. This doesn't
cost any more than a traditional agent. A wise home buyer will agree to work
with the agent for 30 to 90 days and is wary of anyone who insists on upfront
fees or a long-term contract.
2. Falling in love
If you think a house is ideal, don't let the seller or any of the seller's agents
know. If the seller finds out you're in love with the house, the seller could
hold out for a higher price. A wise home buyer knows there's lots of houses --
and there's one out there that's the right house at the right price. It's not
a dream house if the payments are a nightmare. If you can't afford it, move on
and keep looking.
3. Not doing proper
research and preparation
Understand your family's finances and needs. The wise home buyer will analyze
assets, decipher debts and pull credit report before plunging into the house
hunt. Understanding your finances prevents wasted time looking at unaffordable
houses. Before making any offers, get pre-approved -- not just prequalified --
for a loan. Learn how to fit a mortgage and housing costs into your budget by
using our calculator, "How
much house can you afford?"
• Know the neighborhood. Remember you're not just buying a house; you're
also buying a location. With the agent's help, a home buyer can find out about
the quality of schools, the crime level and upcoming zoning issues.
• Make a proper offer. Don't base your offer on the seller's asking price.
Instead, he gets a comparative market analysis from his agent. This analysis
will reveal recent asking and sales prices of similar homes in the neighborhood.
With this, a wise home buyer can make an offer that is comparable.
• Understand the responsibilities and costs of homeownership. The wise
home buyer knows that owning a home is complicated and potentially expensive.
Besides the mortgage, one needs to plan on paying for insurance, assessments
if any, property taxes, repairs, appliances, landscaping and improvements.
4. Not getting two important
contingency clauses
in the contract
When making an offer, a wise home buyer asks for two important clauses -- a mortgage
financing contingency and a professional inspection contingency. These could
save a lot of money and grief. The mortgage financing contingency clause saves
you if the home doesn't appraise for the offered price. You can cancel the sale
and renegotiate the price or get back your deposit. The second clause hinges
the deal on a professional inspector OKing the house. If the inspector discovers
hidden flaws, structural damage or faulty systems, the wise home buyer may want
to renegotiate or back out of the deal. An even wiser home buyer goes through
the house with the inspector to learn any concerns the inspector has.
5. Buying a house that is tough to resell
Many home buyers stay focused on finding a home sweet home where their families
will be happy and safe. You should also remember this is also a big financial
investment. Take a moment to look ahead to the day you'll sell the house. Knowing
the neighborhood and paying attention to marketable details of the house will
go a long way toward preventing a buying mistake. |
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