Mar 24 2008
Week of March 24th, 2008
Top Real Estate Blunders for Buyers & Sellers
Excerpted from Forbes.com
1. Not Using an Agent—Both Buyers & Sellers
Both selling and purchasing a home could be the most important and complex financial transaction of your life, and going it alone is risky. Indeed, a real estate agent can save you time, hassle and thousands of dollars. Take time and care when selecting a real estate agent; find someone you can trust and with whom you have a good rapport.
2. Being Ill-Informed—Seller Blunder
It is critical that you are well informed of the details of your real estate contract. Real estate contracts are legally binding documents, and they can often be complex and confusing. Not being aware of the terms in your contract could cost you thousands for repairs and inspections. Know what you are responsible for before signing any contract. Can the property be sold "as is"? How will deed restrictions and local zoning laws affect your transaction? A real estate professional should answer all these questions, which can save you a considerable amount of money.
3. Offering Repair Credits—Seller Blunder
Would you buy a Ferrari with bent rims, stained rugs and cigarette burns on the seats, even if the seller was offering a "repair credit"? Doubtful, as you would have an understandably poor impression of how the vehicle was treated and assume the worst. When selling a home, eliminate any need for such credits in advance. Even before you list it for sale, hire professionals to inspect the roof, pool and other structural elements for termites and other important buyer considerations. Make all repairs before you list the house on the market to thwart anticipated objections in advance.
4. Failing To Stage—Seller Blunder
Do not forget to make your home look as pleasant and fresh as possible. Plant flowers, wash the windows and screens, put on a coat of new paint, lay new carpet, add furnishings and décor items, eliminate clutter and remove personal photographs from around the house. It’s time to show off your property and make someone else feel completely at home in it. First impressions are critical, so pack up your junk and put it in storage rather than the garage. That way, the prospective buyer can properly evaluate and appreciate that part of the house too. Clean out the closets so they look bigger.
5. Limiting Showings-Seller Blunder
Are you serious about selling your home? Then you need an open door policy, ensuring the home is ready to be shown at the drop of a hat–even if you’re not around. Pack up your valuables and provide an outdoor lockbox that real estate agents may access at their discretion. Most showings are fairly spur of the moment, and you don’t want to miss out on any qualified prospect.
6. Overpricing—Seller Blunder
Every seller naturally wants to get the most money for his or her product. The most common mistake that causes sellers to get less than they had hoped, however, is listing too high. Listings reach the greatest proportion of potential buyers shortly after they reach the market. If a property is dismissed as being overpriced early on, it can result in later price reductions, which reflect poorly on the listing. Overpriced properties tend to take an unusually long time to sell, and they end up being sold at a lower price than they probably would have had they been priced properly in the first place.
7. Not Shopping Mortgages—Buyer Blunder
A difference of even half a percentage point can mean considerable savings over the life of a loan. For example, the difference between a monthly payment on a $100,000 mortgage at 8% vs. 7.5% is about $35 per month. Over 30 years, that’s $12,600. Be a smart consumer and comparison-shop for the most favorable mortgage rates and terms.
8. Foregoing Home Inspections—Buyer Blunder
After your offer is accepted, set up a home inspection. It’s not uncommon to find problems, including leaky roofs, cracked walls, insect infestations and foundation problems. Hire a reputable inspector and negotiate to get the most for your money once the inspector’s report is final. If you negotiate repairs as part of the purchase, ask for a walk-through before finalizing the paperwork to make sure all issues are resolved to your satisfaction. Also, inquire about home protection plans as part of the purchase, which may save you money in the short and long term.
9. Having Unclear Goals—Buyer Blunder
Create a realistic idea of the property you’d like to buy. What features are most important to you? Make two lists: one of the items you can’t live without and one of the features you would enjoy. Refine the lists as the house hunt progresses, but remember that no place is going to be 100% perfect. It will be up to you to put the finishing touches and call it home.
10. Not Getting Loan Pre-Approval—Buyer Blunder
Many buyers want to find the "perfect" home before having their credit approved, which can backfire when an offer is on the table and time is of the essence. It’s wise to get pre-approved for a loan even before you view your first home. Your credit report may contain inaccurate information you were not aware of, which can be a time-consuming process to rectify; you might not like the loan program for which you qualify; or you might qualify for a higher loan value than you thought. Ultimately, you will need a pre-approval letter with your offer, so do yourself a favor and do this in advance. It’s free, after all.
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