5 COMMON MISTAKES BUYERS MAKE
5 COMMON MISTAKES HOME BUYERS MAKER
Hi Everyone! We all know of someone who has regrets when it comes to the home that they purchased. Today my goal is to help buyers to avoid 5 of the most common mistakes that people make when they are buying a house. Now several of the things I am going to tell you may seem unorthodox coming from a Realtor who makes a living getting commission for selling homes, but I can assure you that it is all sound advice. Think of me as your guide through a potentially hazardous but very rewarding process. There may be lots of pitfalls, but with the right guide you can navigate your way to the other side and arrive safely and happily at home ownership. Realtors have gotten a bad (although sometimes rightly deserved) rap for only being concerned with making a sale no matter the cost. As a realtor though, it is first and foremost our jobs to look out for the best interest of our clients. I am a firm believer that if you treat people the way you want to be treated, they will remember that and gravitate towards you because of it. If you do the right thing and have integrity, people will take notice and want to do business with you, so there is no reason to cut corners just to try and make a buck. This will make more sense to you as you read the article. So without further ado, I give you the 5 most common mistakes that buyers make.
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1. Buying Instead Of Renting
This is where the unorthodox advice from a real estate agent comes into play. Many buyers, especially first-time buyers, tend to make the mistake of buying when they should actually be renting. Now, by far when comparing the mortgage cost vs. the rent cost of 2 similar properties, it will be cheaper to have a mortgage. It is important to remember though that unlike renting, if there is a repair that needs done, it will be your responsibility to fix it. We have had a lot of rain this spring and we have had a lot of flooded basements because of it. Most of the people whose basements flooded didn’t have flood insurance, which means that they had to pay for all of the repairs out of pocket. If you don’t have money in reserves to cover unexpected repairs such as flooded basements or broken furnaces, renting may be the best choice for you and your budget. Often times there is a stigma associated with renting, but there is no shame in making a wise choice for your future. Don’t rush it. Save up your money for a few years and then you can buy a home when you are well prepared.
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2. Buying More Than You Can Comfortably Afford
Often times people chose a house that is at the top of their budget. What I suggest is that you buy a house that is NOT at the top of your budget, but rather somewhere in the middle. This ties in with what I was talking about earlier, but if you buy a house at the top of your budget it can leave you strapped for cash when emergencies come up. Your home should be the place you go to relax, unwind, and spend time with the ones you love. When you buy more house than you can afford, home can become a stressful place that you barely see because you are too busy working overtime in order to make ends meat. If you buy a house in the middle of your price range (or dare I even say the lower end of your price range…gasp!) you will have more disposable income that you can save up for emergency repairs or even to do something fun with. Wouldn’t it be better to be able to just come home and relax than to feel like you have to work “X” amount of overtime to make your payments? Wouldn’t it be amazing if you had extra money to use to save up for that dream vacation you’ve always wanted to take? If you overspend, it can bring heartache and hardships down the road. Be sure to also keep in mind closing costs when you are coming up with your budget. All lenders are different, but on average you can expect to pay between 2% and 4% in closing costs. What that means is that for every $100,000 that you mortgage, you will most likely be paying between $2,000 and $4,000 at the closing table. This is in addition to your down payment and any points that you are buying down.
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3. Misunderstanding The Role Of The Real Estate Agent
This one can be tricky. Most people assume that if they call an agent to show them houses that agent must be working for them and their best interest. I know I assumed that before I got my Real Estate License. But that may not be the case! Unless you sign a buyer’s agreement, your agent is required by law to be working for the sellers of the houses that you are looking at. They legally have to look out for the seller’s best interest, not yours. Even if they’ve been working with you for a month and they’ve never even met the sellers before. So if you were to confide in your agent information such as how you needed to find a house quickly because your home had already sold, or if you tell them that even though you are looking at houses in the $350,000 range you can actually afford up to $450,000, the agent is required by law to bring that information to the seller when submitting your offer. That way the sellers can use the information as leverage against you in negotiations. I cannot stress this enough... it is vitally important that if you are looking at homes with an agent, you should have a signed buyer’s agreement with them! If you do have a signed buyer’s agreement, the agent is then legally required to work for YOU and your best interests, not the seller’s. By law, they then cannot disclose to the sellers any confidential information unless you give them permission to do so. Most agents these days automatically have you sign a buyer’s agreement before they show you properties, but not all do so BE SURE TO GET A SIGNED BUYER’S AGREEMENT.
4. Not Getting An Inspection And Extended Title Insurance
It can be tempting to look at house and say to yourself, “This house is in great condition! It has been well cared for. Let’s just save some money and skip the inspections.” Don’t do it! This home most likely is the biggest investment of your life. You never know what problems could be hiding. Most people, when they look at houses, don’t turn on the faucets to check water pressure, test the furnace in the summer, or scope the pipes to check on the condition of the septic tank. You want to make sure that you know what you are getting yourself into and that your bases are covered. Along those same lines, you never know what you are getting yourself into when it comes to a houses title. Yes, they check the title before you close on the house, but that doesn’t mean that there won’t be liens added to your house after you buy it that are linked to sellers. If you don’t have the extended title insurance, you are responsible for any liens that come in after you close. We actually had that happen to us with our first house. We had a well for water, but public sewer. A couple of weeks after we bought our house, we received a notice that the city was going to be placing a lien on our house because the sellers hadn’t paid their sewer bill in a year. Luckily, we had extended title insurance, so we didn’t have to pay the bill.
While it is true that you should love your home, if you make you purchase decisions based solely on emotions, you could be costing yourself thousands of dollars. Moving is a very emotional process and there are a lot of stresses that can come from it. But when you are ready to make an offer on a house, it is important to take a step back and really evaluate that house from a financial standpoint. Yes, you may love the cozy fireplace and the cute little porch swing, but are you letting your love for the house cause you to write an offer that is too high? It is important that you look at your budget and the prices other homes in the area to determine if this is a wise investment for you and your future. This can be especially hard to do if you are competing with another buyer for the house. You need to figure out what your no regrets number is by determining what the true value of the house is, how well it fits your needs (not necessarily your wants), and whether it is a good fit for your budget and your family. Then, after you place your offer, you can have a peace of mind knowing that no matter the outcome you made a good and rational choice.
I absolutely want you to love the home you purchase, but I also want you to love it and the decisions you made along the way 1, 5, even 10 years later. Don’t be one of those people that have to live with the regret of making a poor choice in their home purchase. I hope that this information helps you along the way! Remember, the home buying process may be a roller coaster ride, but it should be a fun and adventurous one!
For more articles and home buyer advice, check out my website ChrissyMyers.com
For more articles and home buyer advice, check out my website ChrissyMyers.com
Have a great day guys!
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Realtor Direct: 937.241.7123 1365 E Michigan Ave Saline, MI 48176 ChrissyMyers@RealEstateOne.com |
