8 BUYER TRAPS TO AVOID
It is reported that purchasing a home is the largest investment/purchase most people ever make. So it should be without saying, that you want the absolute best Realtor to assist you through a complex process. Unfortunately, the level of service you receive from a licensed Realtor will range on a scale from 1-10. The average Realtor completes 4 transactions a year so its most likely you will be working with someone learning the process with you. It is critical to your purchasing success to find, interview, and select a seasoned experienced Realtor. This along with the following tips can save you 10’s of thousands of dollars and help you make a successful purchase/investment.
A systemized approach to the homebuying process can help you steer clear of these common traps, allowing you to not only cut costs but also secure the home that’s best for you in a great location at a great price.
- Bidding Blind – In the more than 20 years I have been selling Real Estate, I am amazed at how many people believe that if they a purchase a home for a few thousand less then List Price, they made a great buy. On the flip side, many believe every house they look at can be purchased for 5-10% or more below list price. This thought process is flawed and can be very costly. Let’s look for a minute at our opening statement about the average Realtor. With such little experience, what makes you think they know how to establish an accurate market value for a seller, maybe the listing agent listed it for whatever the seller wanted with no correlation to actual market value… So offering a few thousand less on a home that is $15,000.00-$20,000.00 over priced just cost you more than $10,000.00. On the contrary, trying to discount a home that is priced well may prevent you from obtaining your perfect home. It is important to find an experienced realtor with 100’s of transactions completed, has excellent negotiation skills, and can determine real market value prior to strategizing on your offer.
- Buying the Wrong Home – What are you looking for in your next home…this is a simple question but the answer can be quite complex. More than one buyer has been caught up in the emotion of the buying process to find themselves later owning a home they don’t like at all, it’s too big, it’s in the wrong location, or it has fix ups beyond their ability. Take the time to clearly define your needs and wants, put them in writing and use them as a yardstick to measure every home you look at. Again, the correct Realtor and one with a Buyer Satisfaction Guarantee can help remove this risk.
- Undisclosed Fix-Ups – Don’t expect every seller to be 100% honest with every little detail about the condition of the home. In some cases, they just may be unaware or have forgotten a detail that might be important to you. Both you and the seller desire to maximize your investment. Hire an independent home inspector early in the process to objectively view the home inside and out giving you a detailed report on all the functions and systems of the home. A failed A/C unit your first year of ownership can easily cost you $12k in unexpected repairs.
- Unclear Title – Early in the process make sure the title search is complete and that you will own your home free and clear. The last thing you want to discover on the final stretch or closing of your new home is title issues like tax liens, undisclosed owners, easements, leases, etc.
- Not Getting Mortgage Pre-Approval – Pre-approval is fast, easy and free. When you have a pre-approved mortgage, you can shop for your home with a greater sense of freedom and security, knowing that the money will be there when you find the home of your dreams. It is also an important ingredient for optimizing the negotiating strategy.
- Contract Misses – If a seller fails to comply with details of the contract, intentionally or unintentionally, or fails to correct items agreed to during the inspection clause, can cause delays. Agree ahead of time on a dollar amount for an escrow holdback to cover the cost of uncompleted repairs, verify, and inspect prior to the Close of Escrow day.
Find an agent that has a Buyer Satisfaction or Purchase Savings Guarantee. These guarantees are designed to put the agent’s reputation, experience, and expertise on the line taking the risk away from you, guaranteeing to save you money and ensure you find the right home.
- Hidden Costs – Today’s disclosures help prevent most unseen or hidden fees, however, it is good to understand all of the costs associated with your purchase transaction. Your lender can project all of the fees for you ahead of escrow to eliminate possible surprises.
- Rushing the Closing – Take your time during this critical part of the process. The lender is required to give you a closing accounting 3 days prior to the close of escrow. Review and make sure you understand all of the fees, where the money is going, that the interest rate is correct, and is everything covered. If you rush the process the day of closing you may run into a snag that you can’t fix without compromising the terms of the contract, the interest lock, the financing or even the sale.