5) Common Buyer Traps to Avoid Paying Too Much
BEFORE Buying a Home, Avoid These 9 Common Buyer Traps to Avoid Paying Too Much
No matter which way you look at it, buying a home is a significant investment. But for many homebuyers, it can be an even more expensive process than it needs to be since they fall prey to at least a few of the many common and costly mistakes that trap them into either:
- Paying too much for the home they want, or
- Losing their dream home to another buyer or,
- (Worse) buying the wrong home for their needs.
A systemized home-buying process can help you clear these common traps, allowing you to cut costs and secure the best home. This critical report discusses the nine most common and costly homebuyer traps, how to identify them, and what you can do to avoid them:
1. Bidding Blind
What price should you offer when you bid on a home? Is the seller's asking price too high, or does it represent a great deal? If you fail to research the market and understand the value of comparable homes, you will be at a severe disadvantage. Without this knowledge of market value, you could quickly bid too much or fail to make a competitive offer at an excellent value.
2. Buying the Wrong Home
What are you looking for in a home? It is a simple enough question, but the answer can be complicated. More often than not, buyers have been swept up in the emotion and excitement of the buying process only to find themselves the owner of a home that is either too big or too small. Maybe they're stuck with a longer-than-desired commute to work or a dozen more fix-ups than they want to deal with now that the excitement has died down. Take the time upfront to define your wants and needs clearly. Please put it in writing and then use it as a yardstick to measure every home you look at.
3. Unclear Title
Make sure very early in the negotiation that you will own your new home free and clear by completing a title search. The last thing you want to discover when you're in the back stretch of a transaction is that there are encumbrances on the property, such as tax liens, undisclosed owners, easements, leases, etc.
4. Inaccurate Survey
As part of your offer to purchase, make sure you request an updated property survey, which marks your boundaries. If the survey is not current, you may find structural changes that are not shown (e.g., additions to the house, a new swimming pool, a neighbor's new fence extending a boundary line, etc.). Be very clear on these issues.
5. Undisclosed Fix-ups
Don't expect every seller to own up to every physical detail that must be attended to. Both you and the seller are out to maximize your investment. Ensure that you thoroughly inspect the home early in the process. Consider hiring an independent inspector to objectively view the house inside and out and make the final contract contingent upon this inspector's report. This inspector should be able to give you a report of any item that needs to be fixed with associated approximate costs.
6. Not Getting Mortgage Pre-approval
Pre-approval is fast, easy, and accessible. When you have a pre-approved mortgage, you can shop for your home with greater freedom and security, knowing that the money will be there when you find the home of your dreams.
7. Contract Misses
If a seller fails to comply with the contract letter by neglecting to attend to some repair issues or changing the spirit of the agreement in some way, this could delay the final closing and settlement. Agree on a dollar amount for an escrow fund to cover items the seller fails to follow through on. Prepare a list of agreed issues, walk through them, and check them off individually.
8. Hidden Costs
Ensure you identify and uncover all costs - large and small - far enough ahead of time. When a transaction closes, you may find fees for this or that sneaking through after fees such as loan disbursement charges, underwriting fees, etc. Understand these in advance by having your lender project total charges for you in writing.
9. Rushing the Closing
Take your time during this critical part of the process, and insist on seeing all paperwork the day before you sign. Ensure this documentation perfectly reflects your understanding of the transaction and that nothing has been added or subtracted. Is the interest rate right? Is everything covered? If you rush this process on the day of closing, you may run into a last-minute snag that you can't fix without compromising the terms of the deal, the financing, or even the sale itself.
When you start looking for a new house, you don't want any unpleasant surprises that could cost you your dream home. By understanding these nine buyer traps, you will be well on your way to buying a home that meets your needs and provides enjoyment for years to come. I hope you found this special report helpful, but please realize that this is just a tiny part of the overall process. Please call us at 858-281-4659 to build a plan together to realize your goals.