5 Home-Buying Mistakes To Avoid And How To Solve Them
5 Home-Buying Mistakes To Avoid And How To Solve Them
Mistakes To Avoid When Buying A House
If you're planning to buy a new house soon, be aware of the common mistakes that new homebuyers often experience so that you can avoid them. Gain some knowledge so that you'll be more than able to negotiate and obtain a better deal.
Yes, buying a home is an exciting time, but you must also know the mistakes that could make your efforts futile. So, discover ways on how to secure beneficial deals though you may be a first-time homebuyer.
Although the prospect of buying your first house is exciting, this could also fill you with unease. Perhaps you're wondering if you're doing the right thing, and maybe you're thinking about every little detail that you must consider which you have not thought about at first. As a homebuyer, you must understand that you have a lot of power when negotiating with a seller; and you'll likely end up with a good and fair deal as long as you remember certain crucial points. Below, you'll learn more about what factors to carefully consider when buying a house.
When it's your first time to hunt for a new home, going through all that's available in the market can become quite confusing. If you don't have any experience in buying a house, you could easily fall into common traps which may cause bigger problems later on. Take note of these five common mistakes so that you will avoid making them. By knowing about the common mistakes that most first-time homebuyers make, you prevent future issues and obtain a deal that's beneficial and satisfying.
1Basing Comparisons On Listing Price
When checking out properties for sale, most home buyers readily decide whether a property is a good deal or not based on the listing price alone. To explain, let's say that a real estate agent took you to three different houses for sale in the same location. From the agent, you learned that the listing prices for each property were: $163,000, $172,000, and $189,000. When you base your decision on the listing price alone, the obvious choice will be the first one that costs $163,000. Before deciding, you must also look at "comp sales" or the sales of properties that are comparable to the three.
2Relying Solely On The Price
Be aware that the price a seller asks for may not always match the value of a particular property. To illustrate, the asking prices of some sellers may not go with how the market is currently doing. In such cases, real estate agents may take advantage of buyers by showing the too-eager ones a few overpriced properties first then touring them next to homes that cost tens of thousands of dollars less than the first properties shown.
The agents may put undue pressure on the buyers so that they'll take the deal. It will be so easy for the buyers to fall into these traps because the second group of homes was priced significantly lower. One way to avoid these traps is to do your research about the selling prices of homes in the area, particularly those that have been sold recently.
3Undervaluing The Power Of Negotiation
When the listing price seems way over your budget, don't let is scare you off so easily. Before you decide that it's not the right one for you, meet with the seller first because some sellers are willing to reduce the price that they initially asked for. Let's say that the home that was listed for $163,000 could be bought for $162,000 after negotiations. However, when the real estate market is down, sellers may even drastically lower their expectations, like being willing to get $150,000 for a property that's valued at $172,000.
You won't know how low a seller will go unless you negotiate with him, so schedule a discussion with either the seller or his agent once you see a house that you like. Give them a fair deal that's based on facts and take into consideration how the market is doing at the moment. You can explain to a seller why the home is overpriced and then perhaps you could ask if he could lower the price. This way, you can end up having your dream home at a lower price.
4Not Asking Questions About The Appraisal
More often than not, new homebuyers don't question the results of appraisals, which is another thing to avoid. There are real estate experts who say that having an appraisal is beneficial to sellers. They could obtain an appraisal that values a home for more than what it is worth so that they can have a lower listing price for it; this will attract gullible buyers who'll think that they're getting an excellent bargain. An agent may put more pressure on the buyer by telling him that it's a great deal as the seller is practically giving his house for free since the listing price is $25,000 less than the value of the property based on the appraisal; thus, a buyer ends up paying more.
5Putting Total Trust On Appraisers
An appraisal can change, so its value is quite limited. This is especially true in areas where the real estate market constantly fluctuates, which means that an appraisal may likely lose its validity within a month or two. Aside from the date of the appraisal, another vital issue to consider is the dates when the appraisals were done on comp or comparable homes, which are typically used as references.
It's typical to base appraisals on the prices of comp homes, and these should not be older than three months or 90 days; however, appraisals that are as old as six months to a year are acceptable if the market is slow and steady. As a homebuyer, you must take into account that appraisals are somewhat subjective and as such, are often based on what one person thinks about a particular property. It's common for appraisers to forget to check for less obvious problems or defects, and some may even ignore other issues. Don't ever allow a seller to convince you to buy a house that's priced beyond your budget just because it has a glowing appraisal.
House hunting is exciting, but buying a house can be quite daunting and stressful, so you must arm yourself with the right information, which can increase your confidence and expedite the process. Here, you learned that you're not obligated to buy a house with an asking price that you cannot afford, and you should also negotiate with sellers so that you can ask for a discount. Moreover, don't rely too much on appraisals alone. Appraisers do commit mistakes too, so you should not blindly trust them. Do your research and be well-informed so that you can get your dream house at a fair price.
You should remember that what's standing between you and your dream home is: you. Begin the process armed with the right knowledge because you need to be informed to make smart decisions regarding which property to purchase and which sellers or agents you should negotiate with. Yes, your new home is right in front of you; you only need to avoid the common pitfalls and be prepared to implement the right solutions in case you encounter problems.
Jackie Wing is an Alaska native, who enjoys snowboarding more than is probably socially acceptable. She lives in Anchorage with her two dogs Reese and Peanut, or as she likes to call them "Thing 1" and "Thing 2."