23 Insider Tips – How to Avoid Costly Mistakes When Buying a Home
During our 23-years as real estate professionals, we at Guthrie Group Homes have observed many costly mistakes when buying a home that are commonly made by new home buyers.
Here, we have compiled a list of 23 tips that will help you avoid those mistakes and make you a smarter homebuyer.
Whether you’re a first-time homebuyer or have purchased before and want to be more knowledgeable, you can use this report as a guide to save you time and money.
1. The Down Payment Myth
It’s a commonly held belief that you’ll need a large down payment to buy the home you want. This isn’t necessarily true. There are loan programs out there that do not require a big down payment.
Often all it takes is finding the right mortgage loan for you. The right real estate agent can connect you with the right lender, who can do just that! Right? 🙂
2. The House Hunt Mistake
One big mistake you want to avoid is trying to look at houses without an agent representing you from the start.
Your own agent has access to large databases and other sources of property availability information that are not available to the general public. He or she will be able to quickly narrow down a list of houses to view – saving you time.
Your agent can show you any house listed for sale. You don’t need the seller’s agent to do that.
Also, if you end up wanting to buy a house and you don’t have your own agent, you could easily get swept up in the process and settle for a deal that is not really the best for you. The seller’s agent may not have your best interests at heart.
Finally, an experienced agent with a lot of relationships in the business and will often hear of houses soon to come on the market before it happens. That can be a real benefit to you!
3. The Myth of Real Estate Agent Compensation
Many homebuyers believe that they must pay out of pocket to have a real estate agent represent them. This is a mistaken belief.
The seller pays both the seller and buyer agent commissions. So, not only will you be able to have an agent looking out for your best interests, you won’t be paying for it.
4. Avoiding Mistakes with Loans and Lenders
Understanding your credit rating, what kind of loan you can afford, and whether you will be approved for a loan will help you determine the price ranges for the homes you look at.
A good agent will help teach you to avoid the mistakes that will adversely affect your credit rating while you are in the house shopping and buying process.
That good agent will also refer you to a good lender who is also right for you.
5. Avoiding Mistakes in Communication
Once you’ve found the right real estate agent, it’s important to establish just how you will work together. Not all people communicate the same way.
Discuss with your agent the methods and times of communication that work best for you. A good agent will work with you on this.
Also, a good buyer will adapt as much as possible to the realities of business facing the agent. A good agent will not be available 24/7. Instead, understand that scheduling appointments with your agent will make for better meetings and home viewings because it gives him or her a chance to research and properly prepare for your time together.
The only real estate agents who are available 24/7 are agents who aren’t doing any business.
6. The Right Agent Deserves Your Trust
The right agent will, to the best of his or her ability, advise you and represent you in finding and buying your home.
Buyers should learn to trust their agent. If you have chosen the right agent, she will be bringing years of experience and knowledge gained from many successful real estate transactions to your relationship.
Also, the right agent will listen to your point of view and fairly explain his or her point so that you both arrive at the best decision that works for your interest.
7. The Agent Selection Mistake
It’s understandable that you may be tempted to choose a friend or neighbor who now has a real estate license to represent you. They might put a lot of pressure on you to do that.
However, you should consider that purchasing your single most valuable personal asset should be done with the best representation possible.
Choosing the right experienced agent over a friend or neighbor who might have done only a few transactions, if any, could easily be a difference of thousands of dollars and time in handling the transaction and the paperwork that goes with it, or even getting the home you want at all.
8. The Lender Selection Mistake
The same goes for choosing a lender.
Be careful of the friend or neighbor who happens to do mortgage loans. Saying they do loans and actually performing when it is needed can be two different things.
The right real estate agent will have a list of lenders that he or she knows and who will get you the right kind of loan and work on getting the paperwork and hundreds of other details ready for closing when due.
Remember, the right agent will know who has performed well over time for his or her clients.
9. Understand Your Agent’s Relationship with Other Professionals
Some homebuyers are wary of their real estate agent’s relationships with other professionals who they recommend and are also involved in the home buying process (termite and home inspectors, locksmiths, title companies, etc.).
Some buyers are distrustful of this because they assume that their agent is receiving payment from these vendors in return for their recommendation in the form of kickbacks.
In fact, any sort of kickback is illegal as well as unethical. A good and ethical real estate agent works with professionals who have demonstrated over time that they provide good service at a reasonable price.
Remember, the smoothest possible transaction and a happy home buyer are the right real estate agent’s first priority.
10. The Negotiation Misunderstanding
Many homebuyers assume that they must do the negotiating. It’s also true that a great many people both dislike and actually fear the negotiation process.Hire an experienced real estate agent to represent you, to do the negotiating for you #realestateagent #realestatepro Click To Tweet
Along with understanding all the paperwork that goes into buying a home, your agent is prepared to step up to the plate for you and get you the best deal on the home you want.
This is where your agent can really shine and where the best agents show their worth.
11. The Negotiation Mistake
The flip side of the fear of negotiating is the buyer who feels he or she is a great negotiator.
Now even if that were true, negotiating a home purchase is a different ball game – a game where someone who actually is a good negotiator but lacks the knowledge and experience in real estate, can actually make big, expensive and time wasting mistakes.
The right real estate agent knows the ins and outs of negotiating home purchases.
He or she will work with your goals in mind and work closely with you and negotiate to meet your needs and always protect your interests.
12. The Price Fixation Mistake
There are many, many unique issues involved in a home purchase that affect what gets paid out of your pocket and what your monthly payments will be.
Understand that sometimes the sale price isn’t the most important aspect of buying a home. Sometimes getting better terms in the negotiation is more valuable than the home price itself.
A good real estate agent will work for your best interest and might be able to negotiate for different costs to be paid by the seller; even furniture, appliances or fixtures.
Also, with the right terms, even with a higher sale price, you may actually end up with a lower mortgage payment. The right real estate agent can guide you in this.
The idea is that almost anything can be negotiated, so don’t back away if the price is a little more than you hoped – it could actually be a great opportunity.
13. The “For Sale by Owner” Myth
If someone is selling their home themselves, don’t assume that you won’t need a real estate agent to represent you to buy that home.
First off, as a buyer, you won’t be paying any of the agent’s fees. So, having your own agent will be at no cost to you.
Secondly, with a good real estate agent, the process will move along quicker and he or she will be able to negotiate more effectively on your behalf and help guide the seller who will likely not be knowledgeable about the process.
Remember, there are many things about a real estate transaction that both you and the person selling their own home don’t know.
14. Avoid the Mistake of Last Minute Loan Shopping
Imagine this scenario: You’re in the middle of a purchase agreement on the home of your dreams. You’ve locked in your mortgage loan and are waiting for the transaction to close.
But then, you start wondering if maybe you can shop around and find a “better loan deal.” This is only natural. We’re all bargain hunters.
However, beware of those appealing Internet loan offers. If they seem too good to be true, it’s because they most likely are.
There are often hidden costs and catches that do not become known until the last second before closing when there is no turning back.
Also, these Internet lenders are almost always out of state lenders who have no idea of the local laws and regulations.
Using these loans will, contrary to most of their advertisements, almost always end up costing more, and drag out the process – sometimes dragging it out long enough to cause the transaction to fall apart. We’ve seen it happen many times!
15. The “Double Dipper” Mistake
We call someone who acts both as a real estate agent and a loan broker a “double dipper.” Although this practice is quite legal in some states, it very rarely works out to the buyer’s benefit.
In this scenario, the real estate agent is not looking out for his or her client’s best interest. The ‘double dipper’ is just looking to sell one of the lending options he or she has available, not necessarily the best possible loan for the buyer.
Being a good real estate agent or a good loan broker are each very difficult to do. Doing both well, and to the benefit of the buyer, is just about impossible.
16. Avoid the Mistake of Not Asking Questions
Whether you are new or have some experience in the home buying process, you are likely to be exposed to terms and processes that people who are not in the business would likely not understand.
Though we do our best to explain everything, we might miss something. The best thing to do is ask as many questions as you can. Even if you think it’s a silly question, ask away.
Buying a house will be an important and exciting time in your life, and the best agents want to make sure that you understand everything before you complete the transaction. So please do not hesitate to ask.
17. Avoid Advice Mistakes
Sometimes friends and family members have strong opinions when it comes to buying a home. And while it’s important to listen to them, be wary of putting too much value into what they say.
For one thing, everyone’s situation is different and there are a lot of mistaken beliefs out there. You’ll find it much more valuable to listen to what your friends and family say and then talk to your real estate agent before making any decisions.
Look at it this way, who has the sounder advice when it comes to buying a home? A friend or family member who has done one or two transactions or an experienced agent who has done more than 1,000 and wants to do the best job possible for his or her client?
18. The Mistake of Looking at Too Many Homes
Looking at homes can be a time-consuming and often exhausting process.
There are hundreds of details to keep straight and seeing too many in one day can actually be counter-productive. The homes all start to blur together.
An experienced agent, once he or she has gotten to know you, will be quickly able to determine how many homes would be best to see at a time.
19. Avoid the Mistake of Not Being Prepared for Viewing Properties
When you’re looking at homes, come prepared so that you’re as comfortable as possible and don’t waste time.
Dressing properly for a day of looking at houses can be the difference between an enjoyable and agonizing experience.
Wear comfortable shoes. Wear comfortable loose fitting clothing that is neither too light nor too heavy for the weather.
And if you have a young child, understand that taking him or her to look at houses might be distracting (not to mention boring for your child).
It might be better to leave your child with a sitter so you can give your full attention to looking at homes.
Bring note taking materials with you or a voice recorder to help you remember important details. Take a photo of that special feature that makes a house stand out.
20. The Home Inspection Mistake
Having your soon-to-be home professionally inspected is probably the smartest thing you can do as a homebuyer.
Once the home inspector has poked around into every nook and cranny of the house and checked all the appliances, plumbing, furnace, etc., you will have the best idea possible of the condition of the house you are buying.
If unexpected issues come up as a result of the inspection, there is time during the transaction process to negotiate a satisfactory solution for everyone.
We’ve seen it over and over again where a buyer who is somehow connected to the building or home improvement industry or has friends or family in the industry thinks that they can inspect themselves and pass on getting a professional home inspection. In every situation they regretted it.
21. The Home Warranty Mistake
A home warranty can cost somewhere around $400, and while shelling out that extra $400 might seem like a burden, you’ll be relieved if you if you end up needing it. And plenty of people do!
A home warranty covers things like built-in appliances, the furnace, water heater, certain plumbing and electrical issues, etc.
If something fails after you move in, all you’d have to pay is a small deductible to get it fixed or replaced.
While paying for the home warranty doesn’t sound fun, it is more fun than buying a new air conditioning unit or water heater. Those things are really expensive!
22. The Multiple Offer Mistake
Many homebuyers don’t know that their written offer to purchase a house becomes a purchase contract once the seller signs it.
That means if you make more than one offer at a time, you run the risk of being legally obligated to buy more than one house.
It can be tempting to try to shorten the process by making multiple offers, but it can backfire on you. This can be a very, very messy mistake!
23. The Market Timing Mistake
Home prices decrease and increase in cycles.
Over the long-term, home prices have increased, however, there have also been times where home prices have dropped.
When a down cycle occurs, it is common for potential buyers to want to “time the cycle” and wait until the prices hit their lowest point before they buy their house.
Even the expert’s joke that they never know when a bottom occurs until well after it happens, so a homebuyer has very little luck in timing the cycle with any accuracy.
Most importantly, trying to time the market in this way can end up costing you more money.
You know what interest rates are right now but you don’t know what they will be in the future.
Interest rates have a huge affect on your mortgage payment!
If they go up, it may not matter what the home’s price is at the bottom of the cycle.
It could be possible that the home you could have purchased at a higher price may, in fact, not be affordable at the bottom of the cycle because it may require a higher monthly loan payment than higher in the price cycle.
Savvy real estate investors know that the cost to borrow money is sometimes more important than the cost of the property.
In Conclusion –
Hopefully, you’ve learned some valuable tips you may not have thought about yet as you have been traveling the path to finding and purchasing your dream home. Now you know 23 mistakes to avoid when buying a home.
It has been our experience that if you keep these tips in mind and apply them, your experience in purchasing a home will be much more enjoyable and successful than it would be otherwise.
Contact us today if you have any questions at all about buying a house, or if you would like to discuss the possibility of Guthrie Group Homes giving you the highest quality real estate services possible!
Call Libby Guthrie at 925-872-6732 or email us at [email protected]