What things do buyers do that often create problems for them in the home buying process?
Not obtaining finance pre-qualification as their first step.
This should be your absolute first step, unless of course you are so incredibly rich, that money is no object and you simply walk around with the cash in hand to buy a home on the spot. If you have not identified the type of loan you will be utilizing, than you don’t know the type of home that is allowed under those loan guidelines and you have no idea how much you can spend. Often times a seller will take a qualified buyer’s offer at slightly less, than an buyer‘s offer that is slightly higher who has not consulted a lender yet.
Submitting a low-ball offer or shopping outside of their price range.
Even in a buyer’s market, it is important to research and understand fair market value. If you insult the seller out of the gate, you are risking the lifestyle benefits you had hoped to gain by purchasing this home in the first place. Some sellers will flat out refuse to work with you, others may begrudgingly accept your offer, but you have damaged the relationship. If you pay for your inspections and learn of a repair that must be addressed, don’t count on the seller to cooperate with you and the same can be said for any contingencies or timeline changes you might want/need to make throughout the process. Put yourself in the seller’s shoes and ask yourself, is this a reasonable offer that I can work with, or is this simply ridiculous?
Taking it personal or being overly emotional
This is a business transaction and it’s easy to get your heart wrapped up in the process. You’ve decided to purchase a home because of an ideal in your mind- some benefit that you hope to gain. Take a deep breath and repeat after me… it is business, not personal… The seller doesn’t know you and unless you’ve done something to offend him/her such as submitting a low-ball offer or quibbling over minor repair issues- he/she isn’t out to get you. Their goal is simply to get the best price/terms which is basically what you’re goal should be as well- without causing irreversible psychological harm to the other party or yourself. Play nice…
Acting either too quickly, or too slowly.
If you are not comfortable with the market in which you are shopping, you need to take a step back and evaluate what your comfort zone is. No one has a crystal ball so predicting the future is impossible. You’ve heard the saying- life is what’s happening while you’re busy making plans for the future? Well, the inventory on the market today may not be there tomorrow. If you’re holding out for the “perfect” home, it may never come while you’ve passed up what may have been the closest may ever come to it. Make the call… The same can be said about moving too quickly. Make sure your comfortable working with the market you’re in now, if you are not- take a step back.
Not truly listening, failing to communicate
Communication is the key to a smooth and successful transaction. Talk with your agent about any issues or concerns. Real Estate agents aren’t mind readers; they rely on your feedback and input. You are going to spend a lot of time with your agent and you’ll be working closely- if something is bugging you fess up, even if it may seem petty. In the same vein, if you have skeleton’s in your closet that may affect your financing ability, or your relationship with another party in the transaction, it’s better to address up front, rather than scrambling to fix it on the back end.
Using an inspection as a means to take the seller for all he/she is worth.
The inspection process should be used to ensure that you are getting what you are led to believe you are getting. An inspection should be to uncover any latent defects, structural issues, safety concerns etc., if you are buying a 50-year old home, expect some age related items to be on the report. Cosmetic issues, things outlined in the seller’s disclosure or items that you could clearly see were in need of repair during the showing period should not later be used against the seller. If you were aware of these items prior to the inspection, unless you’ve agreed during negotiating the offer that they are to be repaired by the seller, should not be brought up after inspection. Remember, if you wanted a brand-new house, you could have ponied up another 80k for it, but you chose the 50-year old house because if it’s charm and it’s price tag…
Not being loyal to their agent.
Your agent has agreed to hold your best interest above all, including his/her own. Your agent will do everything they can to get you the best terms/conditions in the market you are shopping in. Don’t compromise your negotiating strategy by visiting other agents and perhaps divulging more about your motives and timeline than you perhaps should have. If you would like to visit properties or open houses on your own, let your agent know and be prepared to let any other agents you meet know that you are in fact working with someone already. Real estate agents are paid on a contingency basis- it’s only fair to let other agents know upfront so they don’t mistakenly think you would like to work with them.
Not being prepared to offer a deposit.
It is customary to offer what is called an “Ernest money deposit”, a deposit as seen as good faith that you will honor the terms outlined in your offer. It also sends the message that you are serious about purchasing this home. If your deposit is inadequate or absent, it will reflect on your overall offer to purchase the property. Your deposit is protected by the contingencies outline in the contract for purchase, but beware-if all contingencies are met and you simply change your mind in the eleventh hour, the seller will expect you to forfeit your deposit for liquidated damages being that the seller took the home off the market for a period of time, while you sought financing, conducted inspections and such. Perhaps the seller even made an offer on another home, or gave their notice to their employer because they were moving. If you go through with purchasing the home, the deposit is simply applied to your down payment.
Listening to bad advice.
If I had a nickel for every time I overheard someone giving real estate advice to a friend or family member that I knew was inaccurate, I probably could retire. Everyone wants to help and everyone has an opinion, however if they do not work in real estate full time, please smile, nod your head in agreement and then call your agent. Remember, the home you choose is your decision, unless someone else is footing the bill, they shouldn’t get a vote. Only you know which property best meets your needs and desires. Your lifestyle- not theirs.
Thinking they know the process.
Most buyers see the steps to home ownership as a 3-tiered process. Search for home, make offer on home, buy home. There are many, many steps involved- roughly 15 depending on the transaction.
- Prequalify for financing and identify loan type (there are SEVERAL types of loans available)
- Indentify wants/needs (Make sure you and your partner are on the same page)
- Research the community you want to live in. (In town, or rural, school districts etc.)
- Identify your timeline (do you have a lease or do kids need to finish school?)
- Identify properties you would like to see and evaluate those that you have seen.
- Learn about competing buyers.
- Narrow your properties down to first and 2nd choices.
- Research comparable sales/Market data (homes that have sold in the last 90-120 days)
- Make a fair and reasonable offer, negotiate fairly.
- Perform your buyer due diligence regarding inspections, review of covenants and restrictions.
- Honor dates and deadlines outline in contract such as inspections and finance commitment.
- Shop for homeowner’s insurance and secure a binder for closing
- Make arrangements for utility transfer, moving details
- Work with lender throughout transaction to get necessary documentation to your originator.
- Review HUD statement and attend closing.
By Lainie Doe, Realtor/Broker NH & VT
For more detailed information on home buying, visit www.LainieDoe.com