Buying a home is a major investment, so here are nine common home buying traps you must avoid to secure the home that’s best for you.
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The term ‘buyer beware’ is one that all buyers should know and understand. No matter which way you look at it, buying a home is a major investment. For many homebuyers, it can be an even more expensive process than it needs to be because many fall prey to a least a few of the many common and costly mistakes which trap them into either paying too much for the home they want, losing their dream home to another buyer, or buying the wrong home for their needs.
A systemized approach to the home buying process can help you steer clear of these common traps, allowing you to not only cut costs but also secure the home that's best for you. Here are the nine most common and costly of these homebuyer traps, how to identify them, and what you can do to avoid them:
1. Bidding blindly: What price should you offer when you bid on a home? Is the seller's asking price too high, or does it represent a great deal? If you fail to research the market in order to understand what comparable homes are selling for, making your offer would be like bidding blindly. Without this knowledge of market value, you could easily bid too much or fail to make a competitive offer at all on an excellent value. The main thing you need to do to avoid this is employ an experienced Realtor.
2. Buying the wrong home: What are you looking for in a home? It’s a simple enough question, but the answer can be quite complex. More than one buyer has been swept up in the emotion and excitement of the buying process only to find themselves the owner of a home that is either too big or too small. Maybe they're stuck with a longer than desired commute to work or a dozen more fix-ups than they really want to deal with once the excitement has died down. Write down all the things you’re looking for and all the things you don’t want in a home up front.
3. Unclear title: Make sure very early on in the negotiation process that you will own your new home free and clear by having a title search completed. Attorneys usually handle this in North Carolina, but you want to get them to do the title search as soon as possible so you don’t end up with tax liens, undisclosed owners, easements, leases, etc.
4. Inaccurate survey: You always want to make sure you have a survey done on your property. This is to protect yourself as the buyer. You want to make sure your house isn’t encroaching on someone else’s property. I’ve heard of people having to move new construction because their survey was incorrect, and they only had to move it a few feet. Make sure you’re very clear and that you understand your survey.
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Don’t jeopardize your investment by falling prey to one of these traps.
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5. Undisclosed fix-ups: Don't expect every seller to own up to every physical detail that will need to be attended to. Both you and the seller are out to maximize your investment. Ensure that you conduct a thorough inspection of the home early in the process. I prefer to do it within the first week the property goes under contract. You should always have two or three inspectors you can choose from, and you want to use one who’s very negative. After all, that’s what home inspections are all about. They’re looking for things that are incorrect—not what is correct.
6. Not getting a mortgage pre-approval: Getting a pre-approval is fast, easy, and free. When you have a pre-approved mortgage and the right house comes along, all you have to do is submit that letter right then and there and that will open up a whole new avenue to work with. It’s also a great negotiating tool.
7. Contract misses: If a seller fails to comply with to the letter of the contract by neglecting to attend to some repair issues or changing the spirit of the agreement in some way, this could delay the final closing and settlement. Agree ahead of time on a dollar amount for an escrow fund to cover items that the seller fails to follow through on. Prepare a list of agreed issues, walk through them, and check them off one by one.
8. Hidden costs: Make sure you identify and uncover all costs—large and small—far enough ahead of time. When a transaction closes, you will sometimes find fees for this or that sneaking through after the subtotal fees such as loan disbursement charges, underwriting fees, etc. Understand these in advance by having your lender project total charges for you in writing.
9. Rushing the closing: Take your time during this critical part of the process and insist on seeing all paperwork three to five days prior to closing. Make sure this documentation perfectly reflects your understanding of the transaction and that nothing has been added or subtracted. Is the interest rate right? Is everything covered? If you rush into the process on the day of closing, you could hit a last-minute snag that you can't fix without compromising the terms of the deal, the financing, or even the sale itself.
If you’re selling your home or would like to schedule a strategy session to talk about it, feel free give me a call. If you’d like, I can also send you a copy of my “90-Step Marketing Plan.” My team and I would be happy to help you.