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Don't make these costly homebuying mistakes Whether you are a seasoned or first-time buyer, almost most every homebuyer makes one of the mistakes. For most people purchasing a home is the largest purchase they will make in their lifetime. Thus choosing the wrong property or paying too much will have huge implications on their budget and wealth building goals. That said, everyone would like a place to call their own and a way to build equity. So, make sure you don't make any of these mistakes. 1. Choosing the wrong real estate agent. Just because your best friend or someone in your family just got a real estate license doesn't mean they the right agent for you. Make sure you do your research and compare agents, make sure they do real estate full time and know the local inventory. You can lose an offer if you’re not responsive in a couple of hours, in a tight market like this I see this happen more than I would like. I would request the agent’s sales data, and find out how he or she communicates. I recommend asking questions like these to gauge the agent’s tech-savviness: “Is it OK if I text you? Is it OK to sign documents electronically? If I can’t see the home in person, can you shoot me a video?” If you prefer to receive texts and emails, you may not want an agent who insists on faxing documents. 2. Shopping before you get pre-approved. This is a biggie for sure! Make sure you know the difference between a pr-eapproval and a qualification. You want to do this before you get serious about buying a home or any type of real estate, find out how much mortgage you qualify for and get a pre-approval letter from your lender. We consistently have potential client's who say they will fill out the mortgage paperwork once they find a home. The problem lies when you 'find the perfect home, write an offer and then find out you can't get approved for the financing you thought, it's an emotional roller coaster that you can't afford'. We won't even show homes or put clients into our car until they show proof that they are pre-approved. One of the benefits of pre-approval is that you can now become laser focused on your home search criteria which reduces the amount of showings and speeds up the buying process. 3. Maxing out your spending power. When qualifying for a mortgage be cognizant of your budget . A lot of people will push the limits and put all of their available cash into the purchase, forgoing keeping money aside for a rainy day fund. Or, they max out their monthly payment. It is usually wiser to be a bit conservative, in case of additional unforeseen expenses, such as an increase in property taxes, insurance, condo fees and maintenance. For example when buying into a condo with a Homeowners Association, you might not be aware of their future plans. If the Association decides to do a major upgrade to the common areas, you may get hit with a hefty special assessment to cover the costs. 4. Taking advice from outsiders. We love this one! Parents, relatives or friends who haven’t bought property in the local market may not understand local pricing and market conditions. If they own houses in the suburbs may also have unrealistic expectations about what the equivalent amount of money buys in the city. You also have to be careful on advice you take surrounding your financing. All of the changes that have taken place over the past couple of years to make the mortgage world safer, have basically created a situation where every mortgage is different. Just because your co-worker got a 4% rate doesn't mean that 4% is the going rate for everyone. There are basically 6 factors that have the final determination of your interest rate and loan program. So, make sure you do your home work.
5. Skipping the home inspection. Home inspections can help alert potential buyers to problems such as structural issues, faulty wiring and other problems a layperson probably wouldn't notice. They help make sure you are buying what you think you are buying. In hot markets like we are experiencing now, buyers may be tempted to waive the inspection to sweeten the offer or shorten the time frame to close. Yea, requesting an inspection might slow down the process or might not make your offer quit as attractive but keep in mind, you don't know the seller in most cases and you never know if they are hiding anything. This is a big decision and one of the largest purchases you will ever make, so make sure you are getting what you think you should be getting. 6. Overdoing contingencies. Some buyers get nervous and use the inspection results to pack on the contingencies. It's normal to ask for major items to be fixed or adjusted through price reduction, but a lot of the times client's use these as a way to possibly back out of the transaction. There are ways to compose a good offer with out all of the contingencies and still leave you with several ways to get out of the contract. This is where a seasoned agent who knows the area will provide you with the greatest insight to make sure your interests are protected. 7. Getting too attached to one property . The home buying process is extremely emotional. Try to think of it as a business transaction and try not to get too attached to any one home. It makes it much easier to continue your search if you don't get your offer accepted.