Purchasing
- Your first home
- Your next home and move
- An investment property
- A vacation home
Refinancing
- To tap your home equity
- To save money
- To avoid rate increases
- To lower monthly payments
Home Equity
- Loans and lines of credit
- Finance major expenses
- Consolidate Debt
- Invest
5 mistakes many buyers make
By Melissa Wirkus
The market
is in the perfect condition for anyone
who is thinking about buying a home.
Prices are declining daily, and there
are a plethora of homes available
on the market to choose from.
Although things are looking great
for home buyers, there are still some
very common mistakes that potential
homebuyers make, regardless of the
market’s condition.
An October 13, 2006 article from Inman
News, “Home buyers: 5 costly
mistakes to avoid,” lists some
things NOT to do when making that
big purchase.
“Fall 2006 is proving to be
a great time to be a home buyer (but
not such a great time to sell your
house or condo). In most cities, it's
a very strong ‘buyer's market’
for homes. A buyer's market means
there are more houses and condominiums
listed for sale than there are prospective
home buyers in the marketplace.
‘The buyer is king’ is
another way of saying home
buyers can negotiate hard for price
and terms in today's market.”
Everyone knows that when you go to
buy a home, you also have to finance
it, which means taking out a mortgage.
One of the biggest mistakes that potential
homebuyers make is not getting pre-approved
or pre-qualified before taking out
a mortgage.
“The smartest home buyers get
pre-approved in writing by an actual
lender so they know the maximum mortgage
amount available. Most lenders don't
charge for pre-approvals (because
they know you probably won't shop
further after you are pre-approved).
Be sure the lender gives you a pre-approval
letter, not just a pre-qualification
statement, which means only ‘We
think you can probably get a mortgage
based on your submitted information
but we haven't really checked.’”
Besides not getting pre-approved for
a mortgage, the second most common
mistake that new homebuyers make is
not using a buyer’s agent during
the transaction. “It's very
easy for prospective buyers
visiting weekend open houses to let
the listing agent they meet prepare
the purchase offer. Whether that listing
agent acts as a ‘dual agent’
representing both the home seller
and buyer (an inherent conflict of
interest) or the listing agent represents
only the seller (and nobody represents
the buyer), such a situation is not
in the home buyer's best interest.”
To find a good buyer’s agent,
ask around to your family and friends
and get some references. Buyer’s
agents don’t cost the purchaser
anything either extra, so it is always
good to have one.
Next, many inexperienced buyers make
the mistake of buying a home with
an incurable defect, such as situated
next to a major freeway or landfill.
Don’t do this!
If you fail to insist on a Comparative
Market Analysis (CMA) then you are
also committing another one of the
biggest home buying mistakes.
And the final mistake is not including
contingency clauses. It shows recent
sales of comparable homes so you can
get a good idea of how much to offer,
or if the home owners are asking too
much.
The last big mistake that potential
home buyers make is by not including
two contingency clauses in the purchase
agreement.
“Today's smart home buyers include
at least two purchase-offer contingencies:
(a) a satisfactory lender's professional
appraisal of the home for at least
the purchase price, and (b) the buyer's
approval of a professional inspection
report to be obtained at the buyer's
expense.”