6 Real Estate Deal Killers
No matter the condition of the real estate market it is good advice to avoid these real estate deal killers.
1. Skipping the pre-approval process. Assuming you are able in today’s market to finance your purchase just the way you want to is the wrong approach. You do not want to pick out your dream home, tell everyone you are buying, and spend the money to appraisal and inspect it only to find out a loan is not available for you to pay for it. Do you know what your new dream home is going to cost you a month? Maybe you can budget $1200 a month, but you really want a $300,000 house. The payment on that dream is going to be significantly higher. Lots of great loans are available, make sure you are “able” to complete the process by getting pre-qualified. Check out these mortgage calculators to get a better idea of what you can afford to spend.
2. Not understanding what you are signing. The contract you sign is a legally binding contract. If you are selling the buyer can force you to sell, and the seller could sue you for any loss they incur as a result of your not completing the purchase of their home. It is a good idea to talk with an attorney BEFORE you sign the contract, in fact in some states it is a requirement. Make sure that contract fully and completely expresses your understanding of the agreement. What is in writing is what you can enforce, oral agreements you can not.
3. Emotions over facts. Never let your excitement over the house cloud your vision. You can jump up and down about how excited you are in the car, or once the deal closes. The other side will see your enthusiasm and take advantage of it.
4. Poor timing. Give yourself a few extra months to complete your transaction. Buyers financing can get delayed, it can take longer to sell than planned, the bank you want to buy from may take weeks to accept your offer, or hundreds of other possible delays. While the average days on market is a good indicator of how long, remember it is an average, some homes take much longer to sell. Also if you are a first time buyer, you want to time your move with the expiration of your lease. It is a whole lot easier to pay an extra months rent than to find a place to live for a month while you wait for your new home to close but your lease had expired.
5. Missing the whole picture. Including due diligence. When evaluating a property think both about the purchase but also when you will be thinking of selling. A 1 bedroom home or condo might be great for you, but has a diminished market appeal which may add to your time to sell or a reduced market value when you sell. Think about taxes, commute times, quality of schools, deed restrictions when a part of a homeowners association, will the home fit your needs 5-10-20 years from now, and so much more. Drive by the home at various times of the day, a quiet street during the day may turn in the a circus at night, or traffic might make getting to or from your home a challenge. In some states your agent and or the seller is not required to tell you about certain things like if a registered sex-offender lives nearby, was a crime (like murder) committed on the property, is the property thought to be haunted, etc. You may need to ask the local police department, search the internet, and talk to neighbors to do your due diligence.
6. The wrong professionals. You need to find the right professionals to help you with the process. Interview real estate agents, mortgage professionals, attorneys or title agents, home inspectors and find ones who you like and DO NOT JUST SHOP PRICE YOU GET WHAT YOU PAY FOR. Ask your agent or mortgage professional for referrals, they work regularly with these people and often times provide better service as a result. Ask your real estate agent to offer statistics on their business for example if selling what is the average days on market for their listings to other properties on the market (you want them to be shorter than the market), what is their average list price to sale price ratio (obviously you want that as close to 100% as possible). A good agent like Brian Burke South Windsor Real Estate will have this information readily available for you. Ask your mortgage broker what mortgage rates are based on (run if they track the 10 year Treasury bill). What economic events are coming in the future that will impact rates. A great rate today on the wrong loan could cost your tens of thousands of dollars on the wrong loan or locked at the wrong time.
You may want to check out this post Are You Shopping Expired Mortgage Rates?
