Five Biggest Mistakes When Buying a Home
by Jon Dougherty
Looking for a new house can be a fun and wondrous time as you dream of the perfect home for you and your family. Actually finding the house is a little more difficult. Buying it, however, can be downright risky. Normally, this is the largest single purchase a family makes. The advice below is to help keep you from making the five biggest (and costliest) mistakes when purchasing your new home.
1. Going Solo
This is the absolute biggest mistake you can make (unless, of course, you are in category two below).
If you are thinking about buying a house without using a team of professionals, you are probably in one of three categories. First, you have absolutely no problem in gambling hundreds of thousands of dollars. Second, you have the knowledge of a contract lawyer, the training of a real estate professional, the expertise of a mortgage lender, the experience of a home inspector, the skill of a title insurance professional and the ability to appraise a house. Thirdly, and more likely, you simply have no idea how complicated the transaction can be and think you might save a few dollars by going solo.
Think again. These days, buying a house is complicated. Get a few professionals on your side or just start rolling the dice. When it comes to professionals, real estate is no different than any other industry. A well-trained, talented professional will always, always, always save many times more money than any fee or cost for their services
2. Stranger in a Strange Land
If you are new to the area there are two things you probably already know. The first is that all towns have residential areas that are sought after and will go up in value year after year after year. The second thing you know is that you have no real clue as to where those areas are. You can look, hunt, search, research and guess, but the truth of the matter is if you don’t live here you just don’t know for sure where the great locations are.
How do you find these areas? Believe it or not many buyers gather their information by asking the sellers about the area – not a great idea. Our area is unique. Opelika, Auburn and the Lee County all have great residential areas. If you don’t know a good area from a great one, get a professional who does. If you don’t know why there is a “War Eagle” and a “Tiger”, you don’t know the area that well.
3. The Price is No Problem
The National Association of Realtors® (NAR) states that more than 90% of Americans do not pay cash for their house. If this includes you, then are going to rely on mortgage financing for your purchase. Incredibly, many buyers go shopping for houses without first getting pre-approved for a mortgage. This is a mistake for two reasons. First, you may be wasting your time looking at houses that are a bit out of your price range. Second, and equally important, is a buyer will take your offer more seriously if they know you can actually close. Assume you find a gorgeous house that just came on the market. There are two offers at the same price, yours and one from a pre-qualified buyer. If you were the buyer, which offer would you take?
4. Who Reads the Small Print?
If you don’t read the contract, and understand it perfectly, you could be losing thousands of dollars in unexpected costs, or worse. (If you have an attorney and/or Realtor® they will, of course, explain it all to you). If you do not understand the exact legal meaning of phrases like, “time is of the essence”, “this is the entire agreement”, “this is an express term”, “indemnify” and even the word “shall”, you have absolutely no business signing a real estate contract.
Think that sounds harsh? Consider this. You find a house you like, hand the seller a deposit check (bad idea) and he shows you a contract that is literally written in Greek. Unless you read Greek you would not sign it. Why? Same principle. If you don’t know the language (and contracts have their own language), don’t obligate yourself for hundreds of thousands of dollars and also put your deposit at risk. Use a professional.
5. Looks Good to Me
Before you close, get a thorough home inspection from a highly-trained, well-respected home inspector. Period. A leaky roof or broken air conditioner can cost thousands of dollars to repair. Even worse, a poor foundation can cause settling or major structural damage. Do you know the correct “temperature drop” that an air conditioning system should have from source to vent? Do you know how to spot a roof that is not leaking yet, but probably will? Do you know the difference between a slight settlement crack and a foundational problem? Home inspectors do. Find one.
We welcome your comments, questions and suggestions.
Send them to Jon Dougherty
|
|
