Jan. 5, 2017

Emotional Mistakes To Avoid When Buying A Home

Realtors state that that emotional mistakes are very prevalent among home buyers today, especially when buying a home for the first time. First time buyers usually are lead by their feelings rather than weighing the "pros and cons" of each home and end up paying more than they should for their "dream home."

Buying a home is one of the biggest investment that a person will ever make. While in the process of buying a home, buyers should not get too emotional with any one of their choices. This will help them to make a better decision, and the selling agent should supply available comparable homes and sold homes for the last six months. An appraiser looks at the square footage, amenities, lot size, and stays in the same school district to come up with the correct value. Buyers should take the same approach and not let decorating, cuteness, or staging influence their final decision.

Love At First Sight...

If you fall in love with one of the first homes you look at, continue to look at many more to compare the location, features, price and school district. Use your selling agent's knowledge of the market to guide you through the pluses and minuses of each home. Comparing properties on an spread sheet can also help you to see them more realistically. In addition, it will also help you to see the features, square footage, baths, finished basement (or lack of), garage(s), taxes, lot size, and amenities...

Looking For the "Perfect" Home...

The flip side of the coin in buying a home, is the failure to make an offer because you are constantly looking for a better more perfect home at an amazing price. Agents are not capable of predicting what will come on the market in the the future or what someone will "take" for their home. Circumstances constantly change for sellers and buyers-- rates can rise or fall, new homes are available on a daily basis, and sellers reduce their homes to keep up with other active listings. The best thing to do, is have your agent give you a good understanding of the values of the homes within that area(s) that you are interested in and then make a reasonable offer after going over all the sold comparable homes in the last 6 months (that is what the appraiser will do for your appraisal).

"Pros and Cons" Of Your Choice...

Think you have found the "perfect" home? A house that has everything you have been looking for and in a location that you love? Make sure you and your agent go over all the "pros and cons" of this property, what you will have to do to fix any issues, and the ease of resale when you have to sell. Is there a design flaw? No basement when all other homes in the area have a basement? Consider all of this before making a bid on any home, so that you will not write an offer that is too high...Have a strategy with your agent as to how they will present the offer and what the terms for countering will be. Do not bid insultingly low---better to bid closer to what you will pay and not come up too much, than anger the sellers...That will not help in the negotiating process or during the inspection period when asking for items to be fixed. The other side of bidding, is not to start too high, as your home will have to appraise for a mortgage. Many states add that clause to the contract, "that the home was appraise for purchase price or higher," as one of the conditions of the contract. A home is place to live and enjoy life, but it is also "somewhat" of an asset or business decision. Be smart with your bids and do not pay more than you should because you love the front porch!

Do Not Be Insulting...

Everyone want to buy their home at the lowest possible price, however sending over a very low (and somewhat insulting) offer to the owners can actually be not the best strategy. If the market activity is moving fast, and homes are selling, the sellers may find your offer offensive and not take you seriously. The sellers might just decide to reject your offer and not even counter. I had one seller who I encouraged to just counter the offer, and they went back OVER the asking price to make sure the buyers "got the message." Do not be surprised if you give a low offer, that you receive a high counter. This makes the whole offer process longer and not as friendly. You want the sellers to like you, so that you have an easier time negotiating inspection issues and many times they leave many items for free---lawn equipment, furniture, hoses, etc. Again, I cannot stress the importance of checking all the comparable homes that have sold in the last 6 months and the ones that have contracts pending (would not know the final sales price, but the final asking price would be a good reference point) with your agent...If you are not using a real estate agent, then check the tax records for sales in the area you are interested in, and compare square footage, amenities, and location...A wonderful resource, if you do not have an agent, is an appraiser...

Always Get Pre-Approved or Pre-Qualified...

The National Association of Realtors state that most first-time home buyers usually overestimate what they can really afford. They only worry about their monthly mortgage and down payment when calculating the amount that they need in order to buy their new home. That is why it is SO important to sit down with a banker or mortgage broker to figure out your closing costs, monthly amount for insurance, taxes and house maintenance. Your real estate agent is a great resource for explaining home owners association dues, (monthly or yearly), special assessment fees, real estate taxes, and other fees that the new home owners are responsible for.

Check Out All Your Mortgage Options...

It is really important to check out all the mortgage options and many times there are several "special" programs in different states to help the first time home buyer. Many sure you ask the loan officer or the banker what they have to offer and if there are any "special promotions" that would be available currently. Currently the mortgage rates are truly low, and there are many options...There are conventional loans with as little as 5% down, FHA loans with 3.5% down, and many other configurations (such as 15%, 5%, possible 10-10). Of course, there is the traditional 20% down, and then you do not have monthly PMI. There are balloon mortgages, 5 or 7 year mortgages, Jumbo mortgages, and special programs for Veterans (most do not require any or very little down payment).

Check All Your Information and Resources Available To You...

Are you thinking of purchasing a short sale or foreclosure?  That might be seem to be a good decision if you carefully researched the sold homes, the available prices on the home, and realize that short sales and foreclosures are sold "AS IS," so anything wrong with the homes, is your responsibility once you close. (No can always do a home inspection and if too many issues, you can get your earnest money back and cancel during attorney approval and insurance time). You have to make sure that you really are getting a good deal and be aware of all the issues that can and may come up with those types of sales. The question is, "Are you really getting a super deal, or could it be more costly than a regular sale? Make sure you use all the resources that are available to you--tax assessors, appraisers, real estate agents, and others that are knowledgeable. Check all the property histories, to ascertain the market time, have contracts fallen through, and what the sellers owe (as far as short sales, and two lenders, etc.) Once you write a contract (make sure that you have the right to all inspections---home inspection, radon inspection, mold inspection, lead paint inspection, well and septic inspection, structural, if necessary). It is extremely important to assess all the systems of the home, roof, mold, lead, asbestos, and any other issues, to make sure you are not in for large monetary issues shortly down the road. Paying for inspections is a wise move---do not skip them!

Make sure you pick a real estate agent that cares about you and will spend the time to educate you in what is necessary to make a wise purchase in a good location and will have good resale value. One never know what will happen, and you may have a job change to a different location. An experienced real estate agent can make sure you do not over pay for your home, buy in a good location, and make sure you know all the features, issues, dual offers, and make sure you get your dream home without all the nightmares. Never be afraid to ask questions and get the explanations you need to be comfortable with your final purchase.

Enjoy your new home purchase and realize that knowledge is power!


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