Real Estate Mistakes to AvoidPosted by Emily Ray-Porter on Wednesday, February 1st, 2012 at 4:09pm.
By: Donna Galinsky
Take off the rose-colored glasses. The home selling/buying process is often more extensive than you think, from the early planning stages to protracted negotiations to often delayed closings. It can take time before a seller formally accepts a buyer's offer. Financing typically takes 45 to 90 days, title issues such as missing COs can pop up, rough edges discovered in the final walk-through must be smoothed, etc. Give yourself a couple extra months to complete the deal.
Here are some other things to keep in mind:
Exposing your hand. For the Buyer: Never let your love for a house cloud your vision. Contain your enthusiasm, keep a poker face. Otherwise, the sellers and/or their agent will know they've hooked you and will be less flexible on price negotiations. You can scream "Yes!" when you get back out in your car. For the Seller: Never let the buyer know how much you want/need to sell. Keep that close to your chest.
Skipping the loan pre-approval step. For buyers, getting pre-approved for a mortgage gives you a clear idea of how much you can safely borrow, plus it addresses credit-rating issues and kick-starts other financial paperwork. What's more, it identifies you as a serious buyer. Sellers should demand nothing less than proof of pre-approval from the potential buyer's financial institution. No sense in wasting time on time-wasters. Interest rates are absurdly low right now, but you should still shop for the best deal — remember you are shopping for money.
Assuming the appraisal equals actual value. In theory, appraisals are objective estimates of value. Sellers, before you put your home on the market, have an agent do a comparative market analysis to better indicate the home's worth. Do not rely on what your friends and neighbors say it is worth. And buyers, get similar "comps" from your agent. But realize the true value of a house is what someone is willing to pay for it.
Timing the market. Sellers and buyers have been have always been playing this game. You can never pick tops or bottoms of any market. Keep in mind, that if the current market is 10 percent down when you sell, you will also be buying at 10 percent down. Real estate is your home as well as an investment.
Hiring the wrong agent. Buyers and sellers should interview several agents, from small and large firms. Get references and success stories. You may not benefit by opting for an agency's top-volume seller. That top-producing agent may have listed 40 homes last year and sold 30, but another agent may have listed 15 and sold 14. And choosing the agent who suggests the highest listing price is not a recipe for success either — nor is opting for the agent who charges the lowest commission. Remember the SEED qualities in an agent: Smart, Empathetic, Experienced and Dedicated will usually get the job done right. You also need to feel that the agent is someone that you trust as you will be having a close relationship throughout the process, and trust is important.
Missing the big picture. Opting for a dream house that will otherwise negatively affect your quality of life such as longer commutes, distant schools, limited access to services, etc., can cause buyers to question their decisions after a few months. Make sure your dream house is grounded in reality.
Not knowing what you're signing. Be sure you have everything gone over with a real estate attorney. The sales contract is a legally-binding document. It should address all your concerns and the concerns of the other party, such as who will pay what for closing costs and repairs. A poorly written or incomplete contract can cost you lots of time, money and emotional energy and tie up your deal for weeks or months. If there have been any oral commitments, they should be put in writing.
Hire the right professionals. Be it your realtor, mortgage broker/banker, home inspector or real estate attorney. Pick one that has been recommended, that you are comfortable working with, and that you can trust. Interview more than one. Ask them how they work and what they charge and make an informed decision.