Get insider secrets to avoid costly blunders on the most important
investment of your life. Lear about the 25 biggest Real Estate mistakes,
compiled together by some of the top real estate experts, to help you avoid the
most common mistakes when buying and selling our homes.
1. Buying a House for Its Decor
Remember that you are buying the house, not the things inside it,
so make sure you see beyond the decorations and look at the bones of the home.
Focus on the floor plan and the square footage. You also might want to measure
the dimensions and graph out how that's going to work with your belongings.
2. Not Providing Easy Access for Showings
Make your house easily accessible to potential buyers. If there's
nowhere to park or it's difficult to get into, buyers may just skip it and look
at someone else's property.
3. Not Researching the Neighborhood
It's absolutely critical that you research the neighborhood before
you buy. Check out the area, amenities and the school system to be sure that
your address corresponds with the correct school district. Also attend a
community meeting, if possible. You're not just buying a house, you're buying a
piece of that real estate and the land around it.
4. Losing Money With Auctions
While the starting bidding price for a house on auction might be a
good deal, it doesn't mean the final price will be. Make sure that you are very
strict with your budget when you are bidding; do not go over your final price
because you got wrapped up in the excitement of a bidding war. Another thing to
keep in mind is that when you buy a property at auction, you aren't able to get
any of the warrantees or guarantees, and you are not able to do a home
inspection. Find out if the auctioneer is going to add those charges on top of
the sale price as well as if there are any liens on the property. You could be
responsible for paying the property taxes on that house you just bought, which
could make what looks like a good deal into a really bad deal.
5. Trying to Make the "Hard Sell" While
Showing
If you are selling your house, you really shouldn't be around at
the open house. You might want to try to sell the place on all the reasons you
think the house is great, but that might not translate to the buyer. If you
leave, you allow the buyers to give unbiased objective feedback to the agent,
which is only going to help you in the end.
6. Waiting Until Spring to Sell Your House
Spring is the busiest real estate activity period, but that does
not mean that people don't buy houses 365 days of the year. That doesn't mean
you can't emphasize your home's seasonal amenities.
7. Treating Real Estate Like the Stock Market
When the real estate market is really hot and is appreciating really
fast, people tend to look at it like it's the stock market. But playing real
estate is nothing like the stock market; when you invest in real estate, you
really need to take a long-term approach.
8. Failing to Market Your Home in Different Ways
Don't market your home with just a "for sale" sign.
Explore other marketing tools as well. Talk to your real estate agent about the
marketing that he or she will do. It's something that should be set up from the
initial signing of a contract with an agent. Some homes have virtual tours and
photographs online. If you choose to go that route, don't forget to include the
floor plans. That way, people can see the layout of your home and know if it's
right for them.
9. Not Thinking About Resale
When you are decorating and renovating your home, you need to
think about what is going to appeal to a broad section of buyers when it comes
time to sell it. Buying houses and being in the real estate market is like
chess: You always want to look two or three steps ahead in the game.
10. Buying Without Actually Seeing the Property
It's really easy to buy a house without seeing it because of the
Internet and virtual tours, but virtual tours can be deceiving. Plus, it's
really hard to actually get a sense and feel of a home by only looking at it
online. You need to actually walk through the place yourself. If that's just
not possible, hire an inspector to go look at the property and provide you with
an assessment.
11. Trusting Everything a Real Estate
Advertisement Says
Don't assume every ad is fact. Learn to decipher real estate
lingo. For example, "cozy" means small, and "as is" means
it's a fixer-upper. If there are a lot of exclamation points in an ad, it's
because there is so little to say about the place. Follow the old adage: If it
sounds too good to be true, it probably is.
12. Picking the Wrong Agent
Treat meetings with agents like a job interview because that's
really how it works. Keep in mind that the person is going to be working for
you. Talk to your friends who've sold houses and had good experiences with
their particular agent, and go to open houses and observe how that agent
interacts with other people. It's also a good idea to meet with the agent in
their office. It allows you to see how organized he or she is, what kind of
environment they work in and whether that's conducive to being able to do a
good job for you.
13. Not Hiring an Agent
There's a lot more to selling a house than just putting a sign on
the front lawn. If you don't have an agent, you will not get on the
multiple-listing service (MLS). That means that other agents are not going to
know that your property is for sale. Another thing to consider is if you are
willing to show the house each time someone wants to come by and look at it. If
you do plan to sell your house on your own, be sure to have a lawyer present at
the closing. It's really important to have someone on your side who understands
all the complexities.
14. Buying the Most Expensive Home on the Block
The most expensive house will only depreciate in value over time,
rather than appreciate, which is what you want. Also, those houses are often
not the first house to sell because they are usually overbuilt to the
neighborhood. It's absolutely critical that you research the neighborhood
before you buy to find out what the price point should be.
15. Not Setting a Realistic Budget
Just because the bank pre-qualifies you for a loan amount of
$400,000 doesn't mean you can afford to make that payment every month. Before
hitting the streets for a house hunt, you should sit down and make a monthly
budget of what you spend every month. Come up with a number that you are
comfortable spending on your mortgage payment, aside from those other
expenditures. An easy way to do this is to take a third of your gross income
and have that figure be the number you spend on the house. It is also a good
idea to have six to nine months of mortgage payments in the bank, plus a little
extra if you have any repairs that you might need to do.
16. Visiting the House Only Once
It's important to visit a house more than once because the
neighborhood itself may be very different, depending on the day of the week and
the time of day. It's also a good idea to go home and think about it, even
sleep on it, before you go back again.
17. Not Being Pro-Active at Closing
The best thing to do when going into a closing is to get all the
paperwork ahead of time. All that information should come from a mortgage
broker or banker. They have what they call a HUD (Housing and Urban
Development) One form that lists all the charges, and you can legally get it in
your hands 24 hours before closing. Schedule the closing for in the morning, so
you have a fresh mind and plenty of time to go over everything and to ask
questions. The final walk-through is another imperative part of the process.
You may want to have a home inspector accompany you.
18. Doing Major Renovations/Remodeling Before
Selling
Minor upgrades usually have a higher return on your money than
tackling major renovations before placing a home on the market. The main
reason? Huge construction projects always cost more than you think they will,
and they also take longer than you expect. The best place to spend money is
outside. Research shows that increasing the curb appeal often returns the most
value on your money. It's what gets buyers inside the house.
19. Skipping the Loan Pre-Approval Step
When you are pre-approved, the bank is saying, "we will give
you a mortgage of up to this amount, so now all you have to do is find your
home." Some sellers only allow real estate agents to show their house if
someone has a pre-approved letter. That indicates that the shopper really is
serious about buying a home.
20. Falling in Love With the First Property You
See
Many homebuyers, particularly first-time homebuyers, fall into the
trap of falling in love with the very first house that they see. You need to at
least look at three more houses in the area to get an idea of what the
comparables are in that price range. You want your real estate agent to show
you homes comparable to what you saw. At the end of the day, re-evaluate.
21. Buying a Home Without a Professional
Inspection
There are a lot of things a home inspection can reveal about a
property that are not visible to the naked eye. Be sure to hire someone who
comes with a good referral basis, who's been in the business a while and knows what
to look for. Look up the American Society of Home Inspectors and get a list of
qualified home inspectors in your area. Once you find an inspector, insist that
they compile a written report, complete with photos. Photographs are important
because there are areas a home inspector will go that you might not look at.
22. Overlooking the Extra and Hidden Costs
Buying a home is not just about the money that
you spend upfront; it's about all the rest of the money you have to spend
beyond that. Find out what the property taxes are, what your water bill might
be and what a standard electric bill is in that home, especially if you have
electric heat instead of gas heat. You also need to factor in furnishings you
may need to purchase before you can move in.
23. Buying What You Want, Not What You Need
Look at the space that you are already living
in. It will help you to realize what you have been missing and what you need in
your next home. Make a list of those needs and then ask your agent to start
shopping based on those needs. On average, Americans live in a house for about
nine years. Remember, you can always trade up a few times before you find the
ultimate home.
24. Setting Too High of a Sale Price
As a seller, it's really important to do your research. To come up
with your sale price, look up what comparable homes in your neighborhood have
sold for. Figure out what the going price is and try to put yours right in the
middle of that, unless you have something extra-special to offer. It's always
better to price a home that way than to start too high and have to reduce. Once
you reduce, it always looks like something is wrong with the home.
25. Failing to Showcase Your Home and Making Small Cosmetic Changes
When you are selling your house, you have to really look at it
objectively and think about it from the viewpoint of the house hunter. Make
minor enhancements to the house and maybe hire a professional stager to come
and arrange your furniture. Staging is about decorating your house for the
buyers' taste, not yours. A great place to start is with the front of the home
and the main entryway. Home staging is designed to increase the potential
selling price and reduce the amount of time the house stays on the market.
