Avoid Costly Home Buyer Mistakes
You can easily avoid these five potentially vaer costly home buying mistakes with just a little bit of planning and research.
Not Hiring a Buyer’s Agent
For most people buying a house is the largest single investment they will ever make. Many home buyers simply call the seller’s agent because they got the number from the sign in front of the house. The listing agent has a contract that defines their obligations to the seller, not the buyer. A Buyer’s agent is typically paid by the seller as part of the closing costs. The buyer has the benefit of professional representation, and usually, it doesn’t cost them anything. In addition to helping you find the right home a buyer’s agent will help you negotiate the price and terms of the contract. The buyer’s agent will help ensure there are contingency clauses in the contract (inspection, financing, appraisal….) to protect your interests.
Choosing an Inspector Based on Price
The home inspection is not the area you should try and cut costs. A skilled inspector will be NIBI (National Institute of Building Inspectors) Certified and will have experience in the building trades. Inspectors point out potential issues. There is simply too much risk if the inspector doesn’t have the proper training and experience. If something is missed on the inspection it could certainly cost you much more later than if you were to hire a NIBI Certified inspector.
Not Getting the Proper Protection in the Contract
The purchase agreement should offer some protection to the buyer. This is usually done with contingency clauses. These clauses require the deposit be returned to the buyer if the contingency is not met. Three important contingency clauses are, mortgage financing, inspection and appraisal. The inspection contingency will allow the buyer to cancel the contract if there are any major or too many minor flaws in the home. A mortgage financing contingency will protect the buyer if they are unable to obtain a mortgage. The appraisal contingency will ensure that the appraised value of the property meets or exceeds the purchase price of the property.
Not Considering Resale When Selecting a Property
It’s easy to get caught up in the excitement of purchasing a home, especially if it’s your first home. Your buyer’s agent should let you know if they feel the property may be hard to sell due to things that can’t easily be changed (i.e. floor plan, location, size, etc). It’s best to know this before you purchase the home, because at some point you will most likely need to sell it even if it will be many years down the road.
Not Having a Mortgage Pre-Approval
Buyers should have a mortgage pre-approval letter from their lender before they ever start looking at homes. You could get focused on homes in the wrong price range. The pre-approval will help you focus in on the correct price range of homes and you will also have an idea of how much cash you will need to make the purchase. Once you have decided on a home, a couple of days could be lost waiting for a pre-approval, another buyer could come in and make an offer while you are waiting. This could either drive up the cost or you could lose the house altogether.