1. Attempting to "Time the Market" or getting stuck on "To buy or not to buy?" This is the real estate question haunting would-be buyers. It really has nothing to do with the economy. It’s an age-old question. Buyers have always been uncertain about making their first purchase for decades. It’s scary. Let’s face it, it’s a lot of money. And a long-term commitment. And there are so many details. But, consider how much your rent might increase over the next 30 years? And how much of your hard-earned dollars are you spending on rent when you could be building your own equity? If your rent is just $1,000 a month, in five years you will have spent $60,000 and have nothing to show for it. Don’t get overly bogged down with whether you think sales prices are going to go up or down, in the short-term. You only deal with the sales price two times, when you buy and when you sell. You deal with the cash flow — your monthly payment — you see every month. Luckily your monthly payments are based on interest rates, which are still at all-time lows. What buyers need to realize is that housing markets, like any market, have their ups and downs. And still, homeownership has a record that is virtually unmatched by any other purchase in terms of appreciation and building wealth.
2. Getting greedy – overpricing your home If you are considering a sale, the biggest mistake you can make is to over price. If your home is realistically worth $500,000 and you’re asking $550,000, you’re setting up prospective homebuyers to be underwhelmed. They’ll be comparing your house to others that are really worth $550,000 and it won’t compare well. Price it right and make your home look like it’s worth every penny. Also, buyers are more knowledgeable than ever. If your home is perceived as overpriced, buyers simply won't come to see it. The fewer buyers who see your home, the less likely you will get an offer to purchase. And the longer your home is on the market, the worse it gets. Your home may become "stigmatized," and you may have to lower the price later, to below market value, to attract new buyers. Remember, the most common mistake when pricing a property is failing to consider how it will compete with other current listings. Don’t confuse asking prices with market value. You need to be aware of the prices of comparable properties that have recently sold. Pricing a property with a cushion for negotiation is also considered over pricing your property and will carry the same consequences.
3. Over-extending yourself when buying Success is not about keeping up with the Joneses. It is about being able to comfortably make your payments. A good rule of thumb is to plan to spend about 2.5 times your annual salary on a home. Talk with me, your loan officer for actual prequalification figures, so you don’t waste time looking in a price range you simply can’t afford. Don’t get in over your head. Set a realistic budget and then stick to it. Also remember, the tax savings inherent in home ownership may help you make your payment easier to afford. Ask your tax accountant or CPA how home ownership may benefit you with lower taxes.
4. The white elephant – home renovations that don't increase the value of your home It’s easy to get carried away with remodeling projects. Granite this and bamboo that and all of a sudden you’re caught in a wave that is way beyond what you budgeted, AND perhaps more that you could ever hope to recoup if you were to sell. Check out neighboring open houses to see if the renovations you are planning are consistent with neighborhood norms, especially if your improvements are intended to help you sell for more money. Most home improvements will help you sell your home faster, but don't increase its market value.
5. There’s no place like home – buying in an unfamiliar place If you are looking for an investment property, don’t get caught up in those sales presentations that are all about buying property in obscure cities you don't know anything about. If you don’t know anything about the neighborhood or the market, it’s not smart to buy there — no matter what anyone says – or how low the price appears. Experts suggest first time investors buy close to home. That way, it’s easy to drive by and make repairs or check on your property.
6. Not getting professional help Even though most buyers start their home buying online, the process is complicated enough that it is highly recommended to call in the pros. When you buy a home, you will deal with a real estate agent at some point. You might as well choose an experienced real estate agent and a good mortgage loan officer to advise you. While you’re at it, you’ll ultimately need a good home inspector. These folks are in the business of buying and selling homes. They know where the pitfalls are and will help you to avoid them. Seek out a real estate advisor who is like a mentor who can help devise a home buying plan.
7. Skipping the home inspection While you’re drooling over the fabulous kitchen and oohing and ahhing over the incredible views, don’t overlook the possibility that there might be problems with things you can’t see. Hiring a professional home inspector to check out the three most important big-ticket components — the roof, the plumbing and the structure — can save you thousands of dollars in expensive repairs later. When you work with a Real Estate Agent, the home inspection will be part of the Purchase Contract you will use in the buying process.
8. Paying too much for money, or not getting pre-approved When shopping for a mortgage, ask questions. Loan products range from the standard 30-year fixed rate loan, to a variety of non-traditional loans that might include step-ups in interest rates and monthly payments. But remember, you are shopping for money and, in the end; it boils down to selecting a reliable and reputable lender and a loan product that fits your budget. Also remember, talk to a lender early in the home buying process. You will want to be pre-approved for a mortgage to compete successfully with other buyers in the marketplace. Despite the changes in mortgage lending, if you have good credit, a job and a steady income, you will find there is still plenty of mortgage credit to be had at very low rates and affordable terms. Be sure and avoid these 8 real estate mistakes by calling me to help you through the process.
MARK HOWARD rb20384
808-791-2923 [email protected]