Common Mistakes To Avoid
#1: Not using an experienced Realtor to advise on the transaction
Your Realtor can help you make a purchase with the lowest risk and the least number of problems. He or she can ensure the price you pay is an accurate market value. Good Realtors can offer expert advice on what to look for, conditions to include, best negotiation strategy, and help you through the process with confidence. An experienced Realtor make all the difference in the transaction
#2: Not Getting Pre-Qualified by a Lender before Looking of offering to Purchase a House
The FIRST STEP is to GET PRE-QUALIFIED BY THE LENDING INSTITUTION.
Only when you know what you are qualified for can you know the price range to look to purchase in.
This will normally save you many hours searching and negotiating on properties that you may not qualify for.
Pre-qualifying provides confidence, flexibility and peace of mind. It helps narrow the search criteria and provides your agent with a negotiating edge by being able to alleviate the sellers concern over financing and the ability to complete the transaction.
This is especially important when there are competing offers and time and certainty is of the essence. The pre-qualified buyer has the buying "edge" going into this process, by far.
In a multiple offer situation, the qualified buyer will normally come out on top, or at least the chance for success is significantly improved for the pre-qualified buyer.
#3: Not Obtaining Professional Inspections and/or not addressing Deficiencies before completion
Not getting an independent inspection before purchasing a home is possibly the biggest single mistake you can make as a new buyer. I always suggest to my clients not to rely totally on the inspection report but also to do their own careful due diligence inspection, with the help of qualified trades people if necessary. Always carefully review the report with the inspector as a condition of the deal. Make sure you get references on which inspector to use because as with any trade, inspector skills range widely. Note also there is a built in legal disclaimer in the Inspection Agreement that prevents you from seeking costs later from the inspector for undisclosed damages, often even in the event of a serious mistake. It is a terribly disheartening lesson to purchase a home only to find out later there are major defects or hidden problems that might be very expensive to repair if they were overlooked at the time of purchase.
Try to maintain alertness and an unemotional disposition during the purchase process to try avoid such mistakes. Sometimes it is helpful to have an experienced home buyer or trades person attend with you at your own inspection for extra advice and another set of eyes. Insure that you obtain inspections where needed, e.g. home inspection, structural engineer, any infestations, questionable air quality or the quality of water well tests if necessary, etc. If the inspection report identifies significantly costly deficiencies, you may be able to negotiate an adjustment in the purchase price to cover required repairs or make your satisfaction of the inspection subject to the homeowner remedying the problem. You should also review your inspection report with your Realtor. These inspection reports often become the focal point of last minute negotiations on price. Like it or not, they are an important reality in the buying and selling process whenever you are buying or selling a pre-owned home.
On new homes there is the limited protection of the new required home warranty program but again BE CAREFUL to make certain that all deficiency inspections are completed as provided in the written contract.
Make certain the deficiency lists with values are made and agreed to in writing and preferably dealt with before the completion.
More than anything else on a new home, It makes a big difference dealing with a reputable builder who has a track record of satisfied customers and a valuable reputation to uphold. There is no substitute for the ethics, integrity and skill of the builder.
Always check out any builder carefully before making a new home purchase. Seek references from other purchasers.
#4: Buying a house Before Selling your existing home
If price is important you should always try to sell your present home before unconditionally buying another. It has the advantage in letting you know exactly how much money you will have available for your next purchase. Selling your home first allows you to place fewer conditions on your purchase which makes your offer more attractive to a seller. Sellers normally demand more money to take a "subject to" offer which essentially takes their home "off the market". The other advantage is if you find a suitable house, chances are others will also find it attractive and you might lose out it if you can't make an unconditional offer.
#5: Not Shopping around for Mortgage Terms
Mortgage lending rates are negotiable and vary from institution to institution. Banks will often improve rates to get good clients, particularly if you have a good credit rating and might bring other business to them such as bank accounts, retirement accounts, savings accounts or other assets. Posted rates are a starting point. Always seek out the best rate by obtaining competitive quotes. An experienced mortgage broker can make a world of difference. Be certain to carefully check ALL the main terms of the mortgage, such as penalties on early payout or transfer, the portability of mortgage to a new property if you move, and other discounts that may be available on fees, if any.
#6: Not Knowing the Full Costs and Expenses of Buying a Property
Know all the costs and expenses associated with your purchase. Add up all the legal fees, transfer taxes, property taxes, immediately required renovations, appliances, window coverings and initial monthly operating expenses. Be realistic, create a proper written budget, review and revise it and provide a small cushion for the unexpected, as a means of minimizing the stress of the purchase.
Please remember, these are only a few of the major items to consider and common mistakes to avoid when purchasing a home. The are undoubtedly others that might have to be considered. Items listed here are intended to be TIPS and suggestions, not necessarily a complete list of each problem that may possibly arise.