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Top Ten Potential Problems To Avoid When Buying a Home
To the great relief of many people, both inside and outside the real estate business, it appears that the worst days of the depressed real estate market may be behind us. It’s perilous business trying to forecast market changes (see below) but at least in some parts of the country it does seem that buyers are starting to emerge from hibernation. If you are considering buying a home, here are the top ten mistakes that you should avoid before committing to a purchase.
1. Failing to Obtain Home Loan Pre-approval Documentation Getting pre-approval for a home loan is an important first step for potential buyers. Getting a mortgage pre-approval will give you a much better idea of the total loan amount you can readily borrow. Being pre-approved also indicates that you are serious about buying. Most sellers with worthwhile homes won’t even bother considering a purchase offer unless it is accompanied by confirmation of loan pre-approval. Additionally, should any problems with your credit worthiness crop up it is much better to recognize them at the start of the process, while you still have time to take action to rectify them. Encountering a credit problem after you have already committed to a home purchase can be quite upsetting.
2. Not Taking Advantage of the Services of a Buyer’s Agent Unless other provisions are made, with most full service real estate offices, the buyer’s agent works for you at no cost to you. His or her commission is paid by the seller’s office after the is finalized. Therefore, it is in your best interest to hire your own representative – a buyer’s agent – rather than working with the agent who represents the seller. The seller’s agent is bound by law to act in the seller’s best interest, not yours. By working with a buyer’s agent you can level the playing field since a buyer’s agent is required to work solely in your best interest.
3. Hiring the Wrong Real Estate Agent Before working with a buyer’s agent, you should interview several different agents. Ask for the names of previous clients so you can check references. Don’t limit yourself to agents with large brand name offices or so called “million-dollar” agents. Also, before hiring a friend or family member who is an agent, remember that if you are dissatisfied with the service being provided, it is much easier to drop an agent with whom you have no personal ties.
4. Not Realizing the Length of Time Involved in the Process Buyers, and sellers, often believe that the process of buying property is shorter than it actually is. There are a myriad of things that can introduce delays. Sellers can be slow in formally accepting your offer, you may have trouble selling your current property, the loan processing may be delayed, repairs may have to be completed, problems with obtaining a clear title to the property may arise, etc. Murphy’s Law always appears to surface when trying to finalize a deal quickly. Make sure to allow at least eight to twelve weeks to complete the sale.
5. Assuming the Appraisal and/or the Tax Assessment Equate to the Market Value. Appraisals and tax assessments are designed to be objective estimates of value. However, different appraisers can report considerably different results. Buyers should have their agent perform a comparative market analysis (CMA) to get a better idea of the home’s current market value prior to offering to buy.
6. Attempting to Time the Variations in the Real Estate Market Trying to time a purchase with when the market has hit rock bottom is nearly impossible. I would be an extremely rich man if I had that ability! Both buyers and sellers should realize that a sound real estate investment is always a long-term venture.
7. Ignoring Reality When Looking for Your Dream Home When buying a home, if you only follow your heart and not your head, you will probably be in for some unpleasant surprises. That gorgeous home may seem like your dream home, but make sure you take into account all that is involved. Think about such mundane issues as the impact a large loan might have on your finances, commuting times, the specifics of local schools and shopping facilities, the cost of property taxes and homeowner association as well as other quality-of-life aspects of home ownership. That amazing home may not be worth the turmoil it causes for you and your family.
8. Not Remembering That Timing Is Everything As you can most likely imagine, paying two mortgage payments can be exceedingly hard to deal with. When looking into selling your present home and buying another, keep in mind that the sale of your present home is the more critical of the two transactions. If you are unable to make payments on two loans, If at all possible, try to ensure the sale of your old home prior to committing to buy a new one.
9. Not Understanding the Contract. Remember that a purchase contract is a legally binding document. Not understanding what you’re agreeing to can be a big mistake. Read the agreement carefully prior to signing and get clarification if there is something you are unsure about. Don’t be afraid to have your attorney review it,if you wish. Ensure that it contains everything you it should, including which party is paying for what. Verbal agreements should be included, in writing, in the contract. Make certain that your agent takes an activerole in the developing of and negotiation of the contract. Hurrying through this step can add delays and cause financial and emotional pain.
10. Not Conducting a Criminal Search for the New Location. Agents in most areas of the country are not required to advise buyers that there is a sex offender or other illegal activity in the neighborhood. Check with the local police department or sheriff’s office to find out how to access local sex offender and related criminal databases. In addition, access to the internet has made this information much easier to obtain in recent years. There are a number online resources for locating this information. Visit the website .backgroundcheckpoint.com for a list of some of these investigative resources.
Jim Navary has been a freelance writer and researcher for more than thirty years covering a broad range of subjects. In addition, he is a licensed real estate salesperson in the Commonwealth of Virginia specializing in real estate in the Tri-Cities area of Virginia and Colonial Heights, Virginia homes for sale.
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