Buying a home is a big deal. There are many aspects and phases of buying a home that legal and financial ramifications while going through the home buying process as well as long after you have closed on your home. Good decisions need to be made. Avoid these common home buying mistakes that can turn the American Dream into a nightmare.
14 Common Home Buying Mistakes
Failing to Get Pre-Approved
Getting a mortgage pre-approval letter is the first step of the home buying process. And one that should not be skipped. When it comes to financing a home don’t assume anything. Get pre-approved early so you know exactly what a house will cost you and you head off any problems at the beginning of the process.
Getting pre-approved before you look at houses will end up saving you time and money as well as lessen the stress of home buying.
Not Knowing What You Don’t Know
Buying a home can be a complex process financially, legally and procedurally. But many buyer’s get caught up in the excitement and the pace of buying a home with out seeking out the proper help they need.
It is important to realize you don’t know what you don’t know when it comes to buying a home. It is equally important to seek out the proper help. There are plenty of people who do know like real estate agents, real estate attorneys, home inspectors, etc… than can help guide you thru certain aspects of the home buying process.
Missing a vital step or not understanding part of the process can easily cost you money.
Not Understanding the Money Involved in Buying a Home
Usually most people go into buying a home knowing they have to put down a down payment. Often a buyer may overlook the other costs associated with buying a home.
On top of you down payment you will have closing costs, pre-funded escrow accounts, home inspection fees, moving costs and more…. Again, a reason to get pre-approved early so you do understand all of the costs associated with getting a loan in the way of closing costs, escrows and prepaids.
Your real estate agent can help you plan on additional costs outside getting a mortgage.
Not Understanding How Your Agent Works for You
Real estate agency is the law behind the capacity in which an agent works for you. Laws vary from state to state but it is critical to understand the relationship you have with your agent. It can make or break you.
Not all agents work for you. And this is what trips up many home buyers, who work with an agent they think is acting in their best interest, but in fact is acting in the sellers best interest by a legal agreement.
Not Using A Buyers Agent
Here in Massachusetts a Buyer’s Agent is the only agency relationship where the agent works for the buyer and owes them a fiduciary responsibility (in most states). A buyer’s agents job is to counsel a buyer through each step of the process to the buyer’s benefit.
Buying a House With A Dual Agent
Dual Agency is a very complicated form of agency where an agent represents both buyer and seller in the same transaction. Unfortunately you give up many of the rights you would have in a single family situation. Unfortunately in the haste to get a property under agreement the buyer and seller don’t take the time to fully understand what they are giving up.
Personally, I and many of my counterparts feel that dual agency should be banned as it does not benefit either party and it is a very confusing form of agency.
Buying A House Directly From The Listing Agent
Either by niavity, or because a buyer thinks they will get an inside deal, buyers will go directly to the listing agent to buy a house. Yet, the listing agent is supposed to give the seller every advantage they legally can along the way, often at your expense.
How an agent works for you may never come into play, but when there is a conflict between buyers and sellers how an agent works for you definitely can definitely make a difference in the outcome.
Falling in Love with The Eye Candy and Not Paying Attention To What is Important
Did you ever hear the phrase “pig with lipstick”? Often it is easy for us to get get all googly eyed over granite, stainlles appliances, new laminate floors, etc…. But at the end of the day you need a house with good bones and no significant repairs like a roof looming around the corner.
You can live with an outdated bath or hardwood floor that needs to be finished but you can’t live with a broken furnace or a leaky roof. Analyze the soundness of the structure and systems before getting caught up in the bling.
Buying a Home Strictly on Emotion
I have had buyers fall in love with the wrong home and buy for all the wrong reasons. Some will even admit they are. But try and remove the emotion and make sure your house is satisfying your needs on all the important levels.
Don’t fall in love with a home because you love the backyard with a pool, if the house is absolutely wrong for your family. Or some other reason. Compromises do need to be made when you are buying a home but make sure they are practical compromises.
Over Spending on a Home
Just because the bank can approve you for more money doesn’t mean you can afford it. Only you can determine that for yourself. Create a budget and run your numbers and make sure your mortgage payments work for your individual circumstances.
It is human nature to want more than what your budget allows. But after your purchase you will want extra money to live life and improve the house the way you want it and not scrape by every month to pay the mortgage.
Not Having A Home Inspection
The home you may be buying may look to be in terrific shape. And in a hot real estate market it may be tempting to remove your home inspection contingency to strengthen your offer.
The whole purpose of a home inspection is for a trained and licensed professional to go over your purchase with a fine tooth comb and identify potential latent issues that could result in significant repairs in the near term.
As good as a a home may look, you don’t want to get saddled with tens of thousands of dollars worth of repairs shortly after moving in. There are certainly repairs that just cannot be put off and require immediate attention.
Not Paying Attention To Your Home Inspection Results
It one thing to have a home inspection because you think you should. But often a home buyer uses the home inspection to check out the house and see where the furniture will go. Instead you should show up and be engaged with the home inspector.
Ask questions, many home inspectors can be a valuable resource on long term maintenance as well as important issues that need immediate attention. When the home inspection is complete thoroughly review the inspection report and if you don’t understand something…. ask!
Your home inspection is the last line of defense in buying a home that is structurally sound with all major systems working properly while providing a healthy environment to live in.
Not Doing Your Due Diligence
Ok, you found the perfect home. But don’t forget to do your due diligence while in the home inspection period. Has the house had significant work where permits should have been pulled? Is your 3 family really zoned as a three family? How is the neighborhood? Is there anything surrounding your home that would impact your enjoyment of your new home?
I once had a neighbor buy a house next to me. Little did they realize their property abutted the railroad tracks they were shocked and not to happy. But a quick drive around the neighboring streets would have revealed that down the embankment behind the trees was an active railway!!
Taking the time to do some due diligence would have prevented the problem.
Buying a House That Requires Too Much Work
Often a home buyer will think if they buy a fixxer upper they will save money. There is a couple problems with this thinking.
First, a home buyer will fail to think ahead and figure on where the money is going to come from to do the repairs and renovations, often leaving much of the work undone. Secondly they fail to assess their own skills in completing the work in a craftsmen like manner leaving any of the work undone sub par.
While you can save money buying a fixxer upper it is certainly not for every homeowner.
Turning the American Dream Into A Nightmare is written by Kevin Vitali of EXIT Group One Real Estate. If you would like to sell your home or buy a new home give me a call at 978-360-0422 and let’s get the process started.
Real Estate Services in the following areas: Northeast Massachusetts, Merrimack Valley, North Shore and Metrowest. Including the following communities and the surrounding area- Amesbury, Andover, Billerica, Burlington, Chelmsford, Dracut, Groveland, Haverhill, Lowell, Melrose, Merrimac, Methuen, Middleton, North Andover, North Reading, Reading, Stoneham, Tewksbury, Tyngsborough, Wakefield, Wilmington, Westford