When it comes to making mistakes when buying real estate, people are remarkably consistent. Over the years of watching people do that in my part-time job as a real estate agent, I also discovered that the reasons they make those mistakes are also consistent. The biggest handicap most people face is inexperience. Most people only buy a house every 7 to 10 years, so it’s not like you get a lot of opportunities to practice.
Combine that with the fact our housing market is completely dysfunctional and a little bit crooked and you’re set up for buying a home to be a really unsatisfying experience. While it’s not possible to condense years of experience into one article, it is possible to go over the big mistakes so you can avoid the most common home buying landmines.
Putting Too Much Faith In Your Agent
Your real estate agent is rarely your friend, even if it’s someone you know. Some of the worst real estate experiences I had in my personal journey were at the hands of people I knew and trusted. Too many people are putting too much faith in their real estate agent, forgetting that they’re in business to make money and that they have every incentive to show you the most house you can afford. There are thousands of homes and hundreds of housing options your real estate agent will never show you because they don’t pay or the commission is lousy.
Not Doing Enough Research On The Neighborhood
You know why most open houses are Sunday morning? It’s not just because you’re off work, it’s also because the rowdy neighbors are asleep. A bad neighborhood can spoil even the best house and you should do at least as much research on the area around your home as the house itself. Always drive through the neighborhood on Friday and Saturday night. Just some of the other factors you should consider are crime rates, school ratings (even if you don’t have kids) and access to public transportation and bike lanes. Also keep an eye out for portable basketball hoops, unless you really enjoy hearing and feeling THUMP! THUMP! THUMP! all night.
Not Shopping For a Mortgage
Your real estate agent is going to steer you to someone who can get you approved, not necessarily the company offering the best deal. The best deal on a mortgage is not always the lowest interest rate. If you have really good credit and a long history of working with your bank, consider asking for a portfolio loan. The real nightmare in mortgages today are mortgage servicing companies. Anything you can do to avoid dealing with one puts you ahead of the game. If you have exceptionally good credit demand a waiver so you can pay taxes and insurance yourself instead of through escrow.
I used to see a look people got in their eyes right after they walked in the door and that was the look that told me that was the house they were going to buy. Buying a house is business, it’s big business in America but far too often it comes down to an emotional decision. Emotion lasts about a week after you move in, then you realize that a house is just a box that holds up the roof. Emotion makes people pay too much for houses in declining neighborhoods and buy way more house than they need. The more businesslike you can be picking a place to live, the happier you’ll be with your decision. A small house closer to your job is almost always going to be a better deal in the long run than a big house and longer commute.
The main thing to remember is if your gut tells you that you might be making a mistake, listen to that feeling. If you feel like you’re getting rolled in the deal, even if you’re only days away from closing, don’t be afraid to walk away. People in the real estate industry are masters of the unspoken truth. So, when those surprises turn up either the day before or at the signing, put your foot down. That’s when you have the most leverage in the process.