While we have inserted numerous boxes with tips and things to know when buying a home, but here are few more pitfalls to avoid:
- Not Doing Your Homework – Falling in love with a home is easy and unless you understand what you are buying, it is easy to take the love for a home and try to make it yours. Spend some time looking to gain understanding about market values. If you look at a good number of houses in a structured way, you will begin to build a model in your mind. Don’t rush into a decision.
- Doing What Your Buddy Did – ‘Well, my friend bought in Midlothian and loves it, so we have decided to buy there too.’ Don’t do this. Each person’s motivations are unique. Just because friends live somewhere, doesn’t mean you should too.
- Under Buying or Overbuying – Remember, transacting a home is expensive. When you go to sell your home, it is safe to say you will lose 10% of the value of the home in commissions, repairs, closing costs, and other expenses. So if you buy a home today that will get you through the next three years before you will outgrow it or have to move again, you should consider skipping a step. Is this risky? Perhaps… but it is also risky to buy a home today and then in three years buy another one and lose much of your equity in the transaction. Think forward as much as possible and buy for the long term. I am not suggesting you stretch yourself beyond reasonable comfort, but just know that each time you sell and buy, you lose thousands of dollars in the transaction.
- Using an Online Lender – Don’t do this. Please, please, please, do not do this. If you want to use Quicken Loans or USAA, then you had better make sure you won’t experience a penalty for a missed closing date. Penalties for missed closing dates come in many shapes and forms; from moving companies, to rate expiration, to seller lawsuit to Realtor commissions, and can all can be your responsibility. Is this an attempt to scare you? Yes. Is it legitimate? You bet. Quicken and USAA are great for refinance, just not for purchase. You have been warned…
- Incorrect Use of Zillow and Trulia – Trulia and Zillow are not MLS. They are chocked full of inaccuracies and over-reliance upon these sites will cause you to receive information late or not at all. They have some neat tools and they rank well, but once again, they are not MLS.Here are some things to know:
- Search results are not organic
- Search results are not policed for accuracy
- The Agents in the sidebar pay to appear there
- Agent reviews are controlled by the agents
- Zestimates are within 10% of the value only 66% of the time (in the good markets)
Use these sites at your own risk.
- Calling the Name on the Sign in the Yard – The name on the sign represents the seller and it is their job to get you to pay as much as possible. Likewise, when you call the name on the sign, you can get yourself in a pickle with commissions owed (this topic is too complex to be discussed here as ‘Procuring Cause’ legal precedent is extremely nuanced and hard to summarize), but just remember that you should call YOUR agent for info, not theirs. If you are out and about and you do call a sign, let the listing agent know you are working with a buyer’s agent.
- Not Disclosing Fully to Your Agent – I have been in several situations where clients didn’t really come clean and it came back to bite them. If you are struggling with your loan, don’t be afraid to say so. Even if it’s embarrassing or disappointing, hiding and hoping can really put you in a bad situation and potentially get you sued. As agents, we all know the leverage points to get you out of a contract, but these points disappear the closer you get to the targeted closing date. Always disclose fully to your agent and you will receive the best representation.