House Hunting Mistakes
Updated: Sep 18, 2020
There is a lot that goes into a real estate transaction and finding the right home can feel overwhelming. However, there are a few mistakes that are sure to make the journey more challenging.
Putting Off Pre-Approval. I’ve said it before, but I still feel this is a critical first step towards purchasing a home. If you are financing the purchase with a loan, you will need a pre-approval letter to submit with your offer. A delay could cost you the home you love so it’s important to be pre-approved ahead of time. The pre-approval process is also incredibly helpful as it gives you a concrete idea of how much house you can afford and allows you to build a relationship with your lender. Having a good line of communication with your lender will be crucial for a successful transaction.
If you are a cash buyer, be sure to reach out to your financial institution. You won’t need a pre-approval, but you will need a Proof Of Funds letter and you want to be certain you will be able to get ahold of someone when it is time to write an offer. Pre-approval letters and Proof Of Funds letters should be edited to reflect the amount you are offering for a home. If you submit a letter saying you are approved to 350K, but you are offering 300K for the home it is almost a certainty that the sellers will write a counteroffer for a higher price.
Going It Alone. Many buyers start out looking at homes on their own, but this can present a few issues. First, scheduling a tour can be a challenge (particularly in the age of COVID-19) when you don’t have an agent. Second, if you are able to schedule a showing through the listing agent, you need to be mindful that they represent the seller so they will not be able to point out any issues with the home that might harm their client’s ability to negotiate and secure the best terms.
Being Taken In. Trendy updates and staging are nice, but don’t let those things get the better of you. Sellers—especially investors—know that sometimes all it takes is some popular updates and beautiful staging to draw a buyer’s attention. Don’t get me wrong, I love to see an updated kitchen as much as the next girl and staging can be a really helpful way to enable buyers to conceptualize a space, but you need to look beneath the surface when touring homes. Your agent should be checking out things like the hot water heater, HVAC, siding, roof, and more as you go through the home. After all, kitchen appliances and granite countertops don’t cost anywhere near what a new HVAC system costs.
Not Thinking About Life After Closing. Homeownership comes with a lot of benefits, but it also comes with inevitable costs and maintenance. Lenders tend to require that you have at least 2-3 months of cash for reserves, but it is prudent to have more than that in the bank after closing. Like I said before, make sure you find out about the systems in a home. It may be worth paying a little more in price that will be financed in order to find a home that won’t need all new systems in the next year. Remember, those will be out-of-pocket expenses.