A systemized approach to the home buying process can help homebuyers steer clear of several common traps, allowing them to not only cut costs, but also secure the home that’s best for them. No matter which way they look at it, buying a home is a major investment. But for many homebuyers, it can be an even more expensive process than it needs to be since they fall prey to at least a few of the many common and costly mistakes which trap them into either paying too much for the home they want or losing their dream home to another buyer or worse, buying the wrong home for their needs.
A systemized approach to the home buying process can help homebuyers steer clear of these common traps, allowing them to not only cut costs, but also secure the home that’s best for them.
First, don’t bid blindly. What price should be offered when bidding on a home? Is the seller’s asking price too high, or does it represent a great deal? If a homebuyer fails to research the market in order to understand for what comparable homes are selling, making an offer at that point would be like bidding blind. Without this knowledge of market value, a homebuyer could easily bid too much or fail to make a competitive offer at all on an excellent value.
Next, don’t buy the wrong home. What are is the homebuyer looking for in a home? A simple enough question, but the answer can be quite complex. More often than not, buyers have been swept up in the emotion and excitement of the buying process only to find themselves the owner of a home that is either too big or too small. Maybe they’re stuck with a long commute to work or a dozen more repairs than they really want to deal with now that the excitement has died down. Take the time upfront to clearly define wants and needs. Put it in writing and use it as a yard stick with which to measure every home.
Watch for unclear titles. Homebuyers should make sure very early on in the negotiation that they will own their new home free and clear by having a title search completed. The last thing they want to discover when they’re in the backstretch of a transaction is that there are encumbrances on the property such as tax liens, undisclosed owners, easements, leases or the like.
Watch for inaccurate surveys. As part of an offer to purchase, homebuyers should make sure they request an updated property survey which clearly marks their boundaries. If the survey is not current, they may find that there are structural changes that are not shown, e.g., additions to the house, a new swimming pool, a neighbor’s new fence which is extending a boundary line, etc. Be very clear on these issues.
Be aware of undisclosed repairs. Don’t expect every seller to own up to every physical detail that will need attention. Both the buyer and the seller are out to maximize their investment. The buyer should ensure that they conduct a thorough inspection of the home early in the process. Consider hiring an independent inspector to objectively view the home inside and out and make the final contract contingent upon this inspector’s report. This inspector should be able to give the buyer a report of any item that needs to be fixed with associated, approximate cost.
Get the mortgage pre-approved. Pre-approval is fast, easy and free. When a buyer has a pre-approved mortgage, the buyer can shop for their home with a greater sense of freedom and security, knowing that the money will be there when they find the home of their dreams.
Contract misses are a red flag. If a seller fails to comply to the letter of the contract by neglecting to attend to some repair issues or changing the spirit of the agreement in some way, it could delay the final closing and settlement. Agree ahead of time on a dollar amount for an escrow fund to cover items on which the seller fails to follow through. Prepare a list of agreed issues, walk through them and check them off one by one.
Prepare for hidden costs. The buyer should make sure to identify and uncover all costs – large and small – far enough ahead of time. When a transaction closes, the buyer will sometimes find fees for this or that sneaking through after the “subtotal,” fees such as loan disbursement charges, underwriting fees etc. The buyer should try to understand these in advance by having their lender project total charges for them in writing.
Last, don’t rush the closing. Take time during this critical part of the process and insist on seeing all paperwork the day before its signed. The buyer should make sure this documentation perfectly reflects their understanding of the transaction and that nothing has been added or subtracted. Is the interest rate right? Is everything covered? If the buyer rushes this process on the day of closing, they may run into a last minute snag that they can’t fix without compromising the terms of the deal, the financing or even the sale itself.
Call (951) 296-8887, and get the information needed to make an informed, educated sound decision.
Questions regarding available inventory and/or other real estate matters please contact, [email protected] Mike Mason, Realtor and Broker/Owner of MASON Real Estate. LIC: 01483044, Temecula Valley resident for more than 30 years, from 2011-2017 Board of Director Southwest Riverside County Association of Realtors.