Whether this is your first purchase or your tenth, you will want to avoid these common home buyer mistakes.
In no particular order... here are some of the most common mistakes home buyers make in MN when going through the home buying process.
1) They look at homes before getting qualified for a loan.
Please don't set yourself up to fail. If you don't carefully review your credit options and finances BEFORE you look at homes much could go wrong, time may be wasted and poor decisions may be made. Even if you are confident in your credit and ability to get a loan, you owe it to yourself to shop around a bit.
2) Calling the phone number on the sign.
Simply put the phone number on the sign is that agent that represents the SELLER. If you were being charged with a crime and didn't have your own attorney, would you call the prosecuting attorney for info and advice?
3) They put too much faith in online info.
While the Internet has become an invaluable tool for home buyers to search through homes, research neighborhoods, get their credit score, etc, it’s still not as good as getting a reputable team of professionals who can physically meet with or at least speak with you in your corner. And remember, not everything you read on the internet is true!
Like online home values, when it comes to checking out houses and neighborhoods online, real estate agents have become wary of what clients find at sites like Zillow and Realtor, which can give buyers a false sense of home values. Oh yeah, and they sell your information.
And back to finances... The online mortgages calculators don't know your personal qualifications nor do most of them factor in taxes, insurances and other expenses accurately. Most of them are programmed to give you the lowest possible payment option to attract you to the lender or house.
Buyers trying to cut costs, forgoing the fee that inspectors charge to perform a two- to four-hour search to flag material defects of the property, but those defects can result in thousands of dollars of damage down the road. Inspection rates start at $350, on average, and vary depending on a home's size and how it was built.
5) They forget to check the comments and emotions at the door.
While it's important to note cracks and and evaluate potential DIY home improvements, buyers should not become fixated on these things while seeing the home. In a seller's market where multiple offers may essentially be the same if buyers complain the whole time or get exasperated about what are ultimately small-ticket items, they will make a bad first impression - to the listing agent at the open house or security cameras the sellers may have on site. Save those questions for a your agent, who should help you do due diligence after a home tour by looking at disclosures and questioning the listing agent.
6) They assume their home’s value will automatically appreciate over time.
Many first-time homebuyers invest their life savings into a home, hoping to turn a healthy profit when they sell four, seven or ten years down the road. While experts believe we won't ever falter and crash again like we did in 2008, you need to be prepared to stay in your home through rough times or take a loss if you must sell in a down market. Still, owning a home is generally far less risky than playing the stock market.
7) Setting an unrealistic timetable
With a regular sale, assuming you're preapproved and it's straightforward conventional or FHA financing, you can probably do it in 30 days, but 45 is more common. To be on the safe side, allow 45 to 60 days. If you are considering a foreclosure or short sale property, talk to your agent about an extended timetable. Plus, the timeline is negotiable so the seller may have a timeline in mind as well.
8) Believing you can't afford pro advice
Whether it's a family sale or building new construction, avoiding experts is one of the most often-seen homebuyer mistakes. Often the right professional advice saves far more than it costs (which can often be under $500!).
If you believe you have most of the bases covered on your purchase and you don't want full Buyer Representation, but you need some professional advice on one aspect, it doesn't have to be all or nothing, because we do have a Facilitator option in MN that allows for A-la-Carte services.
Likewise, if you need an appraisal to make sure you're in the right ballpark, you can get a professional appraiser to do just that for a single-family home for $300 to $600, depending on the property and area.
And if you're not a lawyer by training, you may need the services of a real estate attorney to review and explain the finer points of your contracts, especially if you are trying to handle the biggest transaction of your life on your own.
Take time to look at the data your agent provides and discuss it. LOCAL market snapshots and trends are important in your decision makeing process.
11) They prioritize the home over the neighborhood
When people start looking for that dream home in their dream neighborhood, many realize just how far outside their budgets dream homes can be, especially in big cities and affluent suburbs. It’s tempting to continue to look for that same dream home, just in a neighborhood that might not be as good. Location, location, location!
12) They change their financial picture
They buy a car or get a credit card AFTER their loan approval without talking to the mortgage lender. Changing jobs during the home search process is also NOT a good idea.
13) Not reading and/or understanding contract terms.
Even the simplest MN real estate purchase agreements are always over 8 pages plus you will have disclosures and inspection reports to read. Ask your agent (or a real estate attorney) to review the details with you and TAKE NOTES.
OK - there are a number of other items but I'll stop. You get the idea. You need experienced, professional assistance to keep you on track for a successful home purchase!