House Buying Mistakes
a house covers a lot of ground--including legal, financial and emotional considerations. To not educate yourself
and learn from the mistakes of others only sets you up to be at best disappointed and at worst finding yourself
living in the wrong house. We have listed some of the most prevalent--and potentially dangerous and expensive--mistakes
made by first time home buyers.
- Running before walking.
This is easy to do once the decision to buy a home has been made. It means rushing off looking at homes, surfing
the web or calling on advertisements before doing some up-front preparation. Not spending time doing this preparation,
though, can be a disaster. We get a number of emails from buyers who have contracted to purchase a home and want
to know the easiest way of getting out of the purchase. Let it be known loud and clear: If you contract to purchase
a home and "change your mind," the chances of getting released from the contract are almost non-existent.
Still we hear "We found another home!" Sorry, too late. Maybe next time. "We are buying too much
house!" Okay, maybe you will be able to rent out a room or two. " It's not what we want!" Maybe
you can paint the house, or add on to it or replace the carpeting, but you will almost certainly will be living
- Over-buying the first time.
Being "house poor" is a very uncomfortable existence. A large and beautiful home with little or no furniture
tends to be empty and cold. A life where almost every dime of your earnings goes to the support of your house wears
thin very quickly and is a frequent cause of family stress. Pushing yourself right up to--or beyond--your limits
leaves you highly exposed when the inevitable changes to the national or your personal economy occur. Leave yourself
some breathing room! See the sections devoted to finances and budgets.
- Finding out too late that you have no representation. This can be a real nasty surprise when you assume that the Agent with whom you
are working represents you when they actually represent--and owe complete allegiance to--the seller. How does this
happen? By not taking the time to investigate and familiarize yourself with the laws regarding Agency. Or, by rushing out
to look at homes, whether in person or on the Internet, and contacting the Agent who has the house advertised (who
will be the listing Agent and will absolutely represent the seller). Another pitfall occurs when you try to represent
yourself in the purchase of a home, thinking that you will save money. This may be the case, but it is just as--or
more--likely that you will run into a savvy seller who is looking to keep the commission savings in their pocket
rather than give it to you. In addition, without representation and the use of a Comparative Market Analysis,
how do you determine a realistic selling price for a property?
- Not comparing mortgages.
There are far too many variables--type of mortgage, term, lender and amount of points to mention a few--not to
investigate all of your options. Don't simply accept the first plan presented to you, whether it is from a mortgage
broker, an Agent or on the recommendation of a friend or relative. Spend time comparing to get the most advantageous
plan for your requirements and financial situation. See the section devoted to Mortgages, including Common Mortgage Questions and Mortgage
Tips. You can get comparisons of bona-fide mortgage offers
directly from a source such as Quicken
- Not getting mortgage preapproval.
In the past it may have been different, but in the year 2000, prequalification and preapprovals are a necessary
part of the home buying process. Not only will it give you an exact price range for your purchase, preapproval
will add a great deal of strength to your offer. See the pages devoted to the subjects of prequalification and preapproval.
- Waiting for the "perfect" home. Many first time buyers make the mistake that they will, if they look around long enough,
find a home that has a full 100% of their needs and wants. With the thousands of variables available in housing,
including location, style, size, amenities and condition, this is almost always an unrealistic goal. There are
two potential problems with this strategy: First, these buyers pass by homes that meet 90% or more of their requirements
only to eventually give up (often purchasing homes with less of their requirements because they are worn out!)
and second, while they are waiting for the "perfect" home, housing market prices (and often mortgage
rates) continue to rise, adding expense to their purchase. Instead, it makes sense to determine the most important
of your needs and the most desired of your wants and selecting a home that meets the majority of them.
- Shortcutting the inspection process.
This can involve skipping a whole house inspection completely in order to save the relatively small amount of money
involved or it may involve using a friend or relative with limited experience to conduct the inspection. In either
case you run the risk of not exposing potentially expensive--or even hazardous--defects in the property. Protect
yourself and invest the $200 to $500 for a professional inspection. See the Inspection section.