Whoever said what you don’t know can’t hurt you wasn’t a Realtor®. And while some mistakes can be corrected before closing, others can’t. Buyers who don’t do due diligence during a real estate purchase might well be saddled with consequences that will cost them for years to come. Or it could mean a deal doesn’t close. Here then is a look at three of the top mistakes a homebuyer makes.
Not confiding in your real estate professional
Whether it’s a Realtor® or real estate attorney, you need to keep him or her fully informed of any and all information related to the purchase of a home. Some buyers, however, hold information back because they worry how that information will reflect on them or think they don’t need to share information because they know how to handle a particular situation themselves. Other times, a buyer may feel information is not important enough to be shared or aren’t confident in their advice, in which case it might be a good idea to find another professional to work with.
Professional Realtors® are experienced in working with a variety of different transactions as well as personality types and there’s little they’ve not seen or heard before. Realtors® also have a fiduciary responsibility to work in your best interest but can’t always do that effectively if they don’t have all information pertaining to a property or sale.
It’s also natural for many first-time homebuyers to get cold feet and want to pull back from a transaction. When that happens, it’s always best to share those feelings with your agent. He or she can help you deal with those anxieties and also help cancel the transaction in the most advantageous way if it’s really necessary.
Changing your financial circumstances prior to closing
With no car payment, no credit card debt and good incomes, Jason and Sue were first time homebuyers who easily qualified for financing of a new home. Then a week before they were to close on their new home, they bought and financed a new car, and that changed everything. Because the new debt changed their financial ratios, they no longer qualified for their original financing and lost their loan.
Nothing can cause first time homebuyers major problems as quickly as buying anything major on credit or with a credit card after completing a home loan application. That means don’t buy automobiles, appliances, lawnmowers, expensive electronics, furniture or make other sizeable purchases. Changes to your credit ratios can end with an underwriter pulling a loan out from underneath you and in addition to losing the house, you could also lose your earnest money.
Purchasing the wrong house
The first thing any homebuyer should do is to make a list of their priorities and objectives in buying a home. What features are most important? What benefits do you hope to attain. What items are an absolute must and which can you live without? Refer to that list often and certainly review it before closing escrow.
One buyer looking for a home in a neighborhood near the downtown of her town absolutely loved the exterior of a small yellow cottage style house she found and got so caught up in the excitement of purchasing it that she convinced herself it was what she needed, even though it had less room than she had originally started looking for.
As one example, despite having two teenage sons, the woman had talked herself into believing she could make the home’s one bathroom work but soon found sharing it was absolutely impossible. She sold the house at a loss after living in it less than a year and had to spend money on top of that buying a more spacious two-bathroom home in a different neighborhood.
Yet a different buyer bought a home that cost him $80,000 more than he had originally listed as the top of his budget. Not only was the purchase price more than he had intended to spend, the Victorian style home had 1,000 square feet more space than he really needed. He soon found out that the high ceilings he was so attracted to also made the house very expensive to heat. That combined with other maintenance costs quickly made the house too expensive to maintain, he fell behind in his mortgage payments and the bank foreclosed.
Both buyers would have been much better served by sticking to their original priorities instead of letting their emotions take control of their purchases.