To the great relief of many people, both inside and outside the real estate business, it seems like the worst part of the depressed real estate market may be behind us. It's precarious business trying to predict market changes (see below) but at least in some parts of the country it does look as if buyers are beginning to come out of hibernation. If you are considering buying a home, here are the top ten problems that you should steer clear of before closing the deal.
1. Not Obtaining a Loan Pre-approval
Obtaining pre-approval for a loan is an important first step for potential buyers. Obtaining a loan pre-approval will give you a much better idea of the total amount you can safely borrow. Being pre-approved also indicates that you are a serious buyer. Most sellers with worthwhile properties won't even consider an offer unless it is accompanied by verification of pre-approval. In addition, should any problems with your credit worthiness surface it is much better to find out about them early, when you still have time to make changes to correct them. Discovering a credit glitch after you have already agreed to a home purchase can be quite upsetting.
2. Not Hiring a Buyer's Agent
Unless other plans are made, with nearly all full service real estate firms, the buyer's agent works for you at no cost to you. His or her compensation is paid by the seller's representative after the sale is completed. Hence, it is in your best interest to hire your own representation - a buyer's agent - instead of working with the agent who represents the seller. The seller's agent is required by law to act in the seller's best interest, not yours. By working with a buyer's agent you can level the playing field since a buyer's agent is obligated to serving in your best interest.
3. Working with the Wrong Real Estate Agent
Prior to deciding upon a buyer's agent, you should meet with a number of different agents. Request the names of previous clients so you can check references. Do not limit yourself to agents with large brand name companies or so called "top-producing" agents. Also, before hiring a friend or family member who is an agent, remember that if you are dissatisfied with the service being provided, it's much easier to drop an agent who is a "stranger".
4. Not Understanding the Length of Time Involved
Buyers, and sellers, often believe that the process of buying property is shorter than it actually is. There are a myriad of unforseen problems that can result in delays. Sellers can be slow on formally accepting your offer, you may have trouble selling your old house, the loan processing may be delayed, repairs may need to be completed, problems with getting a clear title to the property may arise, etc. Murphy's Law always to surface when trying to close a deal promptly. Be sure to allow at least two to three months to complete the transaction.
5. Believing the Appraisal and/or the Tax Assessment Are the Same as the Market Value.
Appraisals and tax assessments are intended to be objective estimates of value. However, different appraisers can come up with notably different valuations. Buyers should request that their agent perform a comparative market analysis (CMA) to get a better idea of the house's present market value before making an offer to purchase.
6. Trying to Time the Ups and Downs of the Real Estate Market
Attempting to time a purchase with when the market has hit rock bottom is virtually impossible. I would be an extremely wealthy man if I had that ability! Both buyers and sellers should realize that a practical real estate investment is always a long-term venture.
7. Ignoring Reality When Looking for a Dream Home
When buying a home, if you only follow your heart and not your head, you will probably be in for some nasty surprises. That beautiful home may appear to be your dream home, but make sure you bear in mind all that is involved. Think about such everyday issues as the impact a larger home loan will have on your finances, commuting distances, the specifics of local schools and shopping facilities, the cost of property taxes and homeowner association and other quality-of-life aspects of home ownership. That extraordinary house may not be worth the negative issues it creates foryou and your family.
8. Not Remembering That Timing Is Everything
As you can probably imagine, paying double mortgage payments can be exceedingly tricky to deal with. When considering selling your current home and purchasing another, bear in mind that the sale of your current home is the more critical of the two transactions. If you would be unable to make payments on two home loans, If at all possible, try to secure the sale of your present home before committing to purchase a new one.
9. Not Understanding the Contract.
Don't forget that a purchase contract is a legally binding committment. Failing to understandwhat you’re agreeing to can be a big mistake. Review the contract carefully prior to signing and get clarification if there is something you are unsure about. Don't be afraid to run it by your attorneyif you wish. Be certain that it contains everything you think it should, including which party is paying for what. Verbal commitments should be included, in writing, in the contract. Make certain that your agent takes an activerole in the writing and negotiation of the contract. Being impatient duringthis step may add delays and cause financial and emotional pain.
10. Not Conducting a Criminal Search for the New Location.
Agents in most areas of the USA are not obligated to advise buyers that there is a sex offender or other criminal living in the neighborhood. Check with the local police department or sheriff’s office to learn how to review local sex offender and related criminal databases. In addition, the internet has made this information much easier to obtainin recent years. There are many online resources for gathering this information. Visit the website www.backgroundcheckpoint.com for a list of several of these investigative resources.
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Jim Navary has been a freelance writer and researcher for more than thirty five years covering a wide range of subjects. He is also a licensed real estate salesperson in the Commonwealth of Virginia specializing in Prince George VA real estate and Fort Lee VA homes for sale.
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