To the great relief of many people, both inside and outside the real estate industry, it seems like the worst part of the sagging real estate market could be behind us. It’s dangerous business attempting to foretell market movements (see below) but at least in some areas of the country it does look as if buyers are beginning to come out of their lengthy hibernation. If you are thinking about buying property, here are the top ten problems that you should steer clear of before taking the plunge.
1. Not Obtaining a Loan Pre-approval Letter Getting pre-approval for a home loan is an important first step for potential buyers. Obtaining a loan pre-approval will give you a much better idea of the amount of money you can safely borrow. Having a pre-approval letter also indicates that you are serious about buying. Most sellers with quality houses won’t even consider an offer unless it is accompanied by verification of pre-approval. Furthermore, should any problems with your credit worthiness arise it is better to learn about them early, when you still have time to take action to resolve them. Encountering a credit glitch after you have already agreed to a home purchase can be devastating.
2. Not Hiring a Buyer’s Agent Unless other arrangements are made, with nearly all full service real estate companies, the buyer’s agent works for you at no cost to you. His or her commission is paid by the seller’s broker after the sale closes. Hence, it is in your best interest to hire your own representation – a buyer’s agent – instead of working with the seller’s agent. The seller’s agent is obligated by law to act in the seller’s best interest, not yours. By using the services of a buyer’s agent you can level the playing field since a buyer’s agent is required to serve 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. Presuming the Appraisal and/or the Tax Assessment Are the Same as the Actual Value. Appraisals and tax assessments are intended to be objective approximations of value. Yet, different appraisers can arrive at significantly different results. Buyers should request that their agent conduct a comparative market analysis (CMA) to get a better idea of the property’s present market value before submitting an offer to purchase.
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. Failing to Remember That Timing Is Everything As you can probably imagine, paying two mortgage payments can be incredibly hard to manage. When thinking about selling your current home and buying another, understand that the sale of your current home is the more crucial of the two transactions. If you would be unable to make payments on two loans, if at all possible, try to secure the sale of your current home before committing to purchase a new one.
9. Not Reviewing the Purchase Contract. Keep in mind that a purchase contract is a legally binding document. Failing to understand what you’re agreeing to can be a painful mistake. Read the document thoroughly prior to signing and request clarification if there is something you are not sure about. Do not be afraid to run it by your attorney if you wish. Be certain that it contains everything you it should, including which party is paying for what. Verbal commitments should be included, in writing, in the contract. Ensure that your agent takes an active role in the writing and negotiation of the contract. Hurrying through this step may add delays and result in 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 Virginia specializing in real estate in the Tri-Cities area of Virginia and Petersburg, Virginia homes for sale.
