In the past seven years alone, I’ve done over $30 million in real estate transactions. In that time, I have learned a ton of lessons with my clients in both buying and selling homes. I’ve also watched the people on the other side of the deal walk right into these traps. And let me tell you, nothing will save you time, money, and headaches like avoiding these eight common mistakes.
Here Are The Eight Most Common Mistakes Buyers Make:
1. Not Having Enough Cash
As the market keeps heating up and interest rates stay low, home prices are rising. That means the cost of a down payment and closing costs are also rising. It’s rare to get a seller to concede to help the buyer with closing costs, and these costs can be as much as 3-4% of the sale price, while down payments are a minimum of 3.5%. So, on a $350,000 sale, you need a minimum of $12,250 for a down payment and $10,500 for closing costs, bringing the minimum total to $22,750!
You’ll also need cash for the home inspection ($550), termite inspection ($50), and appraisal (when using a loan to buy your home). There may also be a need for a roof inspector, pool inspector, or a/c specialist if there are potential issues with the home. That could all mean a cash need up to $30,000!
2. Skimping On The Inspection
You have 10 days (or more if you can negotiate for it) to get your inspection done. Take the time to be thorough. Use a licensed and bonded home inspector early on in the 10 day period. That way, if any issues come up you have time to have a specialist look at it. An expert such as an A/C contractor, roof inspector, or pool inspector will get you the full story on anything the inspector discovers. AND USE AN INSPECTOR. Contractors are great when it comes to making sure you can remodel the way you want, but contractors are NOT inspectors and thus not trained on the more than 300 items that inspectors are trained to find.
3. Buying Without A Financial Plan
In this hyper-competitive market, many homes get multiple offers. One way to sweeten the deal is to forgo the appraisal and agree to pay the offered price regardless of how the appraisal turns out. This is a double edged sword. If you are really in love with the home and see it as a place you will live for a long time, the price is less important than if you are planning to sell in a few years. Like the stock market, prices don’t go up forever, and if there is a downturn, you don’t want to be trying to sell a house for less than you owe.
4. Underestimating The “Fix Up” Costs
Have a contractor out to price any potential fixes, so you have a more realistic idea of what you can afford. And remember to add 10% to that price because there are ALWAYS extras! You can have a contractor check out the potential home (during your 10 day inspection period) to see if your improvements are both realistic and affordable…before you buy!
5. Having An Unrealistic Wish List
You may want a long driveway, a gas stove, a shower in the 3rd bathroom and a yard facing East, but are you willing to see 100 houses to find it? Think about who will be living in your house, and make your priority list on what really counts: are the schools good? How long will my commute be? Will I have room to garden in this yard? Build your priorities based on your lifestyle, not LOVE IT OR LIST IT!
6. Not Focusing On Your Best Prospects
Use your time with online listings to make your time out on the streets viewing your prospects more efficient. With busy schedules and concerns over the pandemic, it just makes sense to weed out some houses to avoid burning yourself out running to every listing you see. Many listings now offer virtual tours. And it’s easy to view a neighborhood onGoogle Maps to see the area before you step foot in any house. This will avoid a rushed decision when you are too burnt out or suffering from the fear of missing out – FOMO.
7. Failing To Do Your Homework
You have the right to do due diligence on the property you are hoping to buy. Even if the listing says “AS IS” that doesn’t mean you HAVE to take it. DO the inspection so you know what you are purchasing and don’t forget to buy a HOME WARRANTY.
8. Trusting The Closing Date
WIth the mad rush for everyone to refinance or buy, the lenders and banks are overwhelmed with requests, and sometimes deadlines get missed. When a closing has to move even by a day, it can be costly in terms of moving companies and hotel rooms. Create a 3-4 day buffer if possible. If the closing date works out, great, but if it doesn’t, you will be okay.
Ready For A Mistake-Free Buying Experience?
If you’re ready to buy a home, and you don’t want to end up in a trap caused by a simple mistake, then you need to work with a professional Realtor who does this full time. Call me. Let’s talk and put together a plan, a strategy, to get you into the right home, in the right neighborhood, at the right price.