October 4, 2016

Home Buyer Mistakes to Avoid

Home Buyer Mistakes

The keys to avoiding home buyer mistakes.Chris Neri: My name is Chris Neri. I’m the Assistant Commissioner in charge of the subdivision section at DRE. In this video Mr. Neri discusses home buyer mistakes and how to avoid them.

Home Buyer Mistake 1 – Going it alone.

Going it alone is probably a big mistake. Buyers should, early in the process, hire a professional, either a REALTOR® or a lawyer, or other qualified person.

Home Buyer Mistake 2 – Not getting pre-approved.

Not getting pre-qualified, pre-approved. Being pre-qualified means that a buyer has looked into how much they can actually spend on a home. Being pre-approved means the lender is actually willing to commit that money to the buyer, to buy the home.

These are important because the seller, and the seller’s agent, are especially interested in having a pre-qualified buyer. If there are two competing offers, comparable offers, they’re always going to lean towards the person that’s pre-qualified.

Home Buyer Mistake 3 – Over-buying

Other than that, over-buying. If you’re qualified for a certain amount, and you spend up to that amount, you could find yourself in a situation where you’re house poor. Basically, what that means is you’re spending all of your money on the mortgage, and you have very little left for entertainment, increases in taxes, or insurance. You put yourself in a precarious position.

Home Buyer Mistake 4 – Not understanding contingencies

Two important contingencies that a buyer wants to make sure that they have in their contract; the first is a mortgage financing contingency. This basically says that if the home doesn’t appraise at the value that you expected — let’s say it appraises lower — you may be bound to still close on the deal unless you have this contingency written into the offer. You would have to make up the difference in your down payment.

The other important contingency is inspection. Home inspection is critical, both in new and used, but primarily in the used home market, because there may be hidden problems with the home; electrical, plumbing, roof. These, without the home inspection, can cause the buyer much heartache down the road. If you don’t have this contingency written into the contract, then you could be out thousands of dollars down the road.

Home Buyer Mistake 5 – Not getting all terms in writing.

Another important consideration, relying upon oral agreements. You want every representation in writing. Something as simple as a chandelier, if you’re not sure if it’s written into the deal, or if you’re going to receive the chandelier, maybe the seller’s agent represents that it is a part of the deal and you will receive it.

If it’s not in writing, you’re probably going to end up in litigation. Oral agreements always can cause problems, so make sure everything is in writing.

Home Buyer Mistake 6 – Rushing into a purchase.

Another consideration is rushing into a purchase. Buyers, as with anything new, get excited about the home buying process. This is the time to take some time. Take a step back, consider what you need, what your family needs. How many bedrooms, how many bathrooms? Take your time in the home buying process.

Remember that if you entered into a contract to purchase, there’s a slim chance of getting out of that deal. You may find a home soon after signing a purchase contract that better suits your needs. Once you sign that contract, the expectation is that you will close. On the flip side of that, if you rush into the home purchase, you can also cause yourself some problems.

People have specific requirements, and you need to stand by those. If you want two bathrooms, and you think you can get by with one, and your kids are growing up, becoming teenagers, you may soon find that one bathroom is just not enough. You also may be passing up homes that are excellent values, and suit your needs. It may not be your dream home, but you can’t let some of these opportunities pass you by.

YouTube video posted by the Department of Real Estate on February 1, 2012.  The Department of Real Estate is now the Bureau of Real Estate.