To the great relief of many people, both inside and outside the real estate industry, it seems like the worst part of the sagging real estate market could be behind us. It's dangerous business attempting to foretell market movements (see below) but at least in some areas of the country it does look as if buyers are beginning to come out of their lengthy hibernation. If you are thinking about buying property, here are the top ten problems that you should steer clear of before taking the plunge.
1. Failing to Obtain Home Loan Pre-approval Documentation Getting pre-approval for a home loan is an important first step for potential buyers. Getting a mortgage pre-approval will give you a much better idea of the total loan amount you can readily borrow. Being pre-approved also indicates that you are serious about buying. Most sellers with worthwhile homes won't even bother considering a purchase offer unless it is accompanied by confirmation of loan pre-approval. Additionally, should any problems with your credit worthiness crop up it is much better to recognize them at the start of the process, while you still have time to take action to rectify them. Encountering a credit problem after you have already committed to a home purchase can be quite upsetting.
2. Failing to Hire 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. Consequently, it is in your best interest to hire your own representative - a buyer's agent - instead of working with the seller's representative. The seller's agent is required by law to act in the seller's best interest, not yours. By engaging a buyer's agent you can level the playing field since a buyer's agent is obligated to serving in your best interest.
3. Selecting the Wrong Real Estate Agent Before choosing a buyer's agent, you should talk to a number of different agents. Request the names of earlier clients so you can check references. Don't limit yourself to agents with large brand name firms or so called "million-dollar" agents. Also, before hiring a friend or family member who is an agent, remember that if you are disappointed with the level of service provided, it's considerably easier to dismiss an agent who is a "stranger".
4. Not Understanding the Length of Time the Process Takes Buyers, and sellers, often believe that the process of buying property is shorter than it actually is. There are a wide variety of unforeseen issues that can cause delays. Sellers can delay formally accepting your offer, you may encounter difficulties selling your old house, financing may be delayed, repairs may have to be made, problems with getting a clear title to the property may arise, etc. Murphy's Law always seems to surface when trying to secure a deal quickly. Be sure to allow at least eight to twelve weeks to complete the transaction.
5. Presuming the Appraisal and/or the Tax Assessment Are the Same as the Actual Value. Appraisals and tax assessments are intended to be objective approximations of value. Yet, different appraisers can arrive at significantly different results. Buyers should request that their agent conduct a comparative market analysis (CMA) to get a better idea of the property's present market value before submitting 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'd be an extremely wealthy man if I had that ability! Both buyers and sellers need to understand that a practical real estate investment is always a long-term proposition.
7. Ignoring Reality When Looking for Your Dream Home When buying a home, if you only follow your heart and not your head, you will most likely be in for some ugly surprises. That magnificent home may appear to be your dream home, but make sure you bear in mind everything involved. Take into account such unexciting issues as the effect a larger mortgage payment might have on your resources, commuting distances, the availability of local schools and shopping facilities, the effect of property taxes and homeowner association in addition to other quality-of-life aspects of home ownership. That extraordinary house may not be worth the headaches it causes for you and your family.
8. Forgetting That Timing Is Everything As you can probably imagine, paying double mortgage payments can be extremely tricky to deal with. When considering selling your present home and purchasing another, remember that the sale of your present home is the more essential of the two transactions. If you would be unable to make payments on two mortgages, If at all possible, try to arrange for the sale of your present home before committing to buy a new one.
9. Not Reviewing the Purchase Contract. Keep in mind that a purchase contract is a legally binding document. Failing to understand what you're agreeing to can be a painful mistake. Read the document thoroughly prior to signing and request clarification if there is something you are not sure about. Do not be afraid to run it by your attorney if you wish. Be certain that it contains everything you it should, including which party is paying for what. Verbal commitments should be included, in writing, in the contract. Ensure that your agent takes an active role in the writing and negotiation of the contract. Hurrying through this step may add delays and result in financial and emotional pain.
10. Not Conducting a Criminal Search for the New Location. Agents in most areas of the country are not required to advise buyers that there is a sex offender or other illegal activity in the neighborhood. Check with the local police department or sheriff's office to find out how to access local sex offender and related criminal databases. In addition, access to the internet has made this information much easier to obtain in recent years. There are a number online resources for locating this information. Visit the website .backgroundcheckpoint.com for a list of some of these investigative resources. - 31385
1. Failing to Obtain Home Loan Pre-approval Documentation Getting pre-approval for a home loan is an important first step for potential buyers. Getting a mortgage pre-approval will give you a much better idea of the total loan amount you can readily borrow. Being pre-approved also indicates that you are serious about buying. Most sellers with worthwhile homes won't even bother considering a purchase offer unless it is accompanied by confirmation of loan pre-approval. Additionally, should any problems with your credit worthiness crop up it is much better to recognize them at the start of the process, while you still have time to take action to rectify them. Encountering a credit problem after you have already committed to a home purchase can be quite upsetting.
2. Failing to Hire 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. Consequently, it is in your best interest to hire your own representative - a buyer's agent - instead of working with the seller's representative. The seller's agent is required by law to act in the seller's best interest, not yours. By engaging a buyer's agent you can level the playing field since a buyer's agent is obligated to serving in your best interest.
3. Selecting the Wrong Real Estate Agent Before choosing a buyer's agent, you should talk to a number of different agents. Request the names of earlier clients so you can check references. Don't limit yourself to agents with large brand name firms or so called "million-dollar" agents. Also, before hiring a friend or family member who is an agent, remember that if you are disappointed with the level of service provided, it's considerably easier to dismiss an agent who is a "stranger".
4. Not Understanding the Length of Time the Process Takes Buyers, and sellers, often believe that the process of buying property is shorter than it actually is. There are a wide variety of unforeseen issues that can cause delays. Sellers can delay formally accepting your offer, you may encounter difficulties selling your old house, financing may be delayed, repairs may have to be made, problems with getting a clear title to the property may arise, etc. Murphy's Law always seems to surface when trying to secure a deal quickly. Be sure to allow at least eight to twelve weeks to complete the transaction.
5. Presuming the Appraisal and/or the Tax Assessment Are the Same as the Actual Value. Appraisals and tax assessments are intended to be objective approximations of value. Yet, different appraisers can arrive at significantly different results. Buyers should request that their agent conduct a comparative market analysis (CMA) to get a better idea of the property's present market value before submitting 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'd be an extremely wealthy man if I had that ability! Both buyers and sellers need to understand that a practical real estate investment is always a long-term proposition.
7. Ignoring Reality When Looking for Your Dream Home When buying a home, if you only follow your heart and not your head, you will most likely be in for some ugly surprises. That magnificent home may appear to be your dream home, but make sure you bear in mind everything involved. Take into account such unexciting issues as the effect a larger mortgage payment might have on your resources, commuting distances, the availability of local schools and shopping facilities, the effect of property taxes and homeowner association in addition to other quality-of-life aspects of home ownership. That extraordinary house may not be worth the headaches it causes for you and your family.
8. Forgetting That Timing Is Everything As you can probably imagine, paying double mortgage payments can be extremely tricky to deal with. When considering selling your present home and purchasing another, remember that the sale of your present home is the more essential of the two transactions. If you would be unable to make payments on two mortgages, If at all possible, try to arrange for the sale of your present home before committing to buy a new one.
9. Not Reviewing the Purchase Contract. Keep in mind that a purchase contract is a legally binding document. Failing to understand what you're agreeing to can be a painful mistake. Read the document thoroughly prior to signing and request clarification if there is something you are not sure about. Do not be afraid to run it by your attorney if you wish. Be certain that it contains everything you it should, including which party is paying for what. Verbal commitments should be included, in writing, in the contract. Ensure that your agent takes an active role in the writing and negotiation of the contract. Hurrying through this step may add delays and result in financial and emotional pain.
10. Not Conducting a Criminal Search for the New Location. Agents in most areas of the country are not required to advise buyers that there is a sex offender or other illegal activity in the neighborhood. Check with the local police department or sheriff's office to find out how to access local sex offender and related criminal databases. In addition, access to the internet has made this information much easier to obtain in recent years. There are a number online resources for locating this information. Visit the website .backgroundcheckpoint.com for a list of some of these investigative resources. - 31385
About the Author:
Jim Navary has been a freelance writer and researcher for over thirty years covering a broad range of subjects. In addition, he is a licensed real estate salesperson in the Commonwealth of Virginia specializing in real estate in the Tri-Cities area of Virginia and Petersburg, Virginia homes for sale.
