Buyers Mistakes

HGTV recently ran an episode about the 25 Biggest Real Estate mistakes that both buyers and sellers make. Here we are going to show the buyer mistakes. This is a valuable list for those seeking to buy.
(For selling mistake, visit the Sellers Guide section of our website.)

Buying a House for its Decor
Remember that you are buying the house, not the stuff inside of it, so make sure you see beyond the decorations and look at the bones of the home. Focus on the floor plan and the square footage. You also might want to measure the dimensions and graph out how that's going to work with your current belongings.

Not Researching the Neighborhood
It's absolutely critical that you research the neighborhood before you buy. Check out the area, amenities and the school system to be sure that your address corresponds with the correct school district. Also attend a community meeting, if possible. You're not just buying a house, you're buying a piece of that real estate and the land around it.

Losing Money With Auctions
While the starting bidding price for a house on auction might be a good deal, it doesn't mean the final price will be. Make sure that you are very strict with your budget when you are bidding — do not go over your final price because you got wrapped up in the excitement of a bidding war. Another thing to keep in mind is that when you buy a property at auction, you aren't able to get any of the warranties or guarantees, and you are not able to do a home inspection. Find out if the auctioneer is going to put those charges on top of the sale price as well as if there are any liens on the property. You could be responsible for paying the property taxes on that house you just bought, which could make what looks like a good deal into a really bad deal.

Treating Real Estate Like the Stock Market
When the real estate market is really hot and is appreciating really fast, people tend to look at it like it's the stock market. But playing real estate is nothing like the stock market — when you invest in real estate, you really need to take a long-term approach.

Buying Without Actually Seeing the Property
It's really easy to buy a house without seeing it because of the Internet and virtual tours, but virtual tours can be deceiving. Plus, it's really hard to actually get a sense and feel of a home by only looking at it online. You need to actually walk through the place yourself. If that's just not possible, hire an inspector to go look at the property and provide you with an assessment.

Trusting Everything a Real Estate Advertisement Says
Don't assume every ad is fact. Learn to decipher real estate lingo. For example, cozy means small, and as-is means it's a fixer-upper. If there are a lot of exclamation points in an ad, it means they are there just to take up room because there is so little to say about the place. Follow the old adage: If it sounds too good to be true, it probably is.

Buying the Most Expensive Home on the Block
The most expensive house will only depreciate in value over time, rather than appreciate, which is what you want. Also, those houses are often not the first house to sell because they are usually overbuilt to the neighborhood. It's absolutely critical that you research the neighborhood before you buy to find out what the price point should be.

Not Setting a Realistic Budget
Just because the bank pre-qualifies you for a loan amount of $400,000 doesn't mean you can afford to make that payment every month. Before hitting the streets for a house hunt, you should sit down and make a monthly budget of what you spend every month. Come up with a number that you are comfortable spending on your mortgage payment, aside from those other expenditures. An easy way to do this is to take a third of your gross income and have that figure be the number you spend on the house. It is also a good idea to have six to nine months of mortgage payments in the bank, plus a little extra if you have any repairs that you might need to do.

Visiting the House Only Once
It's important to visit a house more than once because the neighborhood itself may be very different, depending on the day of the week and the time of day. It's also a good idea to go home and think about it, even sleep on it, before you go back again.

Not Being Pro-Active at Closing
The best thing to do when going into a closing is to get all the paperwork ahead of time. All that information should come from a mortgage broker or banker. They have what they call a HUD (Housing and Urban Development) One form that lists out all the charges, and you can legally get it in your hands 24 hours before closing. Schedule the closing for in the morning, so you have a fresh mind and plenty of time to go over everything and ask questions. The final walk-through is another imperative part of the process. You may want to have a home inspector accompany you.

Skipping the Loan Pre-Approval Step
When you are pre-approved, the bank is saying, “we will give you a mortgage of up to this amount, so now all you have to do is find your home.” Some sellers only allow realtors to show their house if someone has a pre-approved letter. That indicates that the shopper really is serious about buying a home.

Falling in Love With the First Property You See
Many home buyers, particularly first time home buyers, fall into the trap of falling in love with the very first house that they see. You need to at least look at three more houses in the area to get an idea of what the comparables are in that price range. You want your realtor now to show you homes comparable to what you saw. At the end of the day, re-evaluate.

Buying a Home Without a Professional Inspection
There are a lot of things a home inspection can reveal about a property that are not visible to the naked eye. Be sure to hire someone that comes with a good referral basis, that's been in the business a while and knows what to look for. Look up the American Society of Home Inspectors and get a list of qualified home inspectors in your area. Once you find an inspector, insist that they compile a written report, complete with photos. Photographs are important because there are areas a home inspector will go that you might not look at.

Overlooking the Extra and Hidden Costs
Buying a home is not just about the money that you spend up front; it's about all the rest of the money you have to spend beyond that. Find out what the property taxes are, what your water bill might be and what a standard electric bill is in that home, especially if you have electric heat vs. gas heat. You also need to factor in furnishings you may need to purchase before you can move in.

Buying What You Want, Not What You Need
Look at the space that you are already living in. It will help you to realize what you have been missing and what you need in your next home. Make a list those of needs and then ask your agent to start shopping these needs. On average, Americans live in a house for about nine years. Remember, you can always trade up a few times before you find the ultimate home.

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