Getting excited about the home buying process and wanting to jump in immediately is a common reaction to most people.
Having the realtor chauffeur you around to look at beautiful homes and neighborhoods, holding the door for you, etc. I mean, it feels like you’re a celebrity for a day!
However most buyers make common mistakes which always cost them time and money.
Here are 10 mistakes buyers make when shopping for a new home:
1. Not Having Their Financials In Order
It’s OK to have fun during the process, but not coming prepared can quickly turn the excitement phase into a panic phase if you don’t have your financials in order.
A pre-approval for your home loan and/or proof of funds letter for the downpayment is one of those golden things that sellers look for to let them know you are serious and not wasting their time.
Always have several versions of your proof-of-funds letter and your pre-approval handy at all times. This will put you above the competition when you find a home that you want to go after.
2. Not Researching The Neighborhood
Knowing a neighborhood by only listening to what your realtor is telling you, as opposed to actually researching the neighborhood, are night-and-day differences. It’s important for you to actually speak to the locals at “Mom-and-Pop” stores, cafes, restaurants, markets, etc.
Immersing yourself into the neighborhood as a “local” will allow you to catch information that will not be disclosed by your realtor. This will give you a clearer picture of your surroundings.
Always, ALWAYS go back to the neighborhood at nighttime. It amazes me how one neighborhood can be in the daytime vs. night. Loud music, parties, etc. can sometimes be observed only at night. So it’s a good idea to drive by a few times to see what’s going on after the sun sets.
3. Not Mentally Preparing To Deal In “Large” Numbers
Your home is (for most of us) the largest purchase you will make in your life. Now consider how you live your daily life – shopping at the market, buying gas for your car, shopping for clothing, etc.
Your mind is constantly dealing with “smaller” amounts of money; i.e., “how can I save $10 on this shirt/blouse” or “Wow, the price of avocados really went up”.
This type of daily conditioning sets you up for a shock when you start dealing with home prices.
Sometimes it helps to switch to thinking in percentages, rather than actual values – as in, “this home is asking 15% more than the last home we just saw”.
Also, if you are getting a mortgage, think in terms of how much your monthly payment will be instead of thinking always in terms of the sticker price of the home.
Sometimes adding another $20,000 on to the purchase price of the home, really doesn’t amount to much of a change in your monthly payment.
4. Not Doing Proper Research On Their Realtor
Seeing a working real estate agent can be deceptive. From the surface, it looks pretty easy – I mean, showing a home and talking about the view, the kitchen, etc. while wearing some fancy shoes and expensive car lease – How hard can it be??
The truth is agents deal with an enormous amounts of stress and complications. Many of them are expert problem solvers, have “insider” information about properties/areas and can get you a great price on your home from their negotiation skills.
Just like in any profession though, there are the good and the bad. An inexperienced agent can cost you time, money and can actually minimize your chances of finding the property you really want.
Always research your agent, thoroughly. I’m not talking about looking about their rave reviews on their own website, but actually speak to their past clients. If they’ve sold a home in the neighborhood, don’t be afraid to knock on the door and say that you’re thinking of moving there. Ask the owner about the agent and how their experience was with them.
If this sounds like “intrusive” or unnecessary then just think about the consequences of not having this information. Do you always believe every salesman based on what they tell you? No way! Do your research.
Please don’t make the mistake of becoming the agent’s BFF. Honestly, do you really think that they would hang out with you if you weren’t looking for a home? It’s a business relationship – nothing more.
5. Overbidding Due To Emotions
The best poker players aren’t emotional. The best traders on Wall Street separate their decisions from any emotional attachment to money.
This is the mindset that you need to adopt when shopping for a new home.
Not having your “poker face” on when shopping for a new home will cost you dearly. Sellers and seller’s agents pick up on your visual cues when you really like something.
Remember, every time the words “I love it” and “it’s amazing” come out of your mouth, the price of the home goes up.
If you have your emotions in check, but your partner or significant other doesn’t, sometimes it’s best to leave them at home! Honestly, you must be each other’s support system to keep your emotions in check.
Clear your emotional state, because overbidding for a home is a competition you DO NOT want to win.
6. Not Looking Past The Paint Color…
Is a pink Ferrari still a Ferrari?
I totally get it; everyone’s tastes can be totally different especially when it comes to decorating a home. Awful wallpaper, pink plastic swans by the pool, lawn gnomes, carvings of playful dolphins in stair railings… Yeah, you get the picture.
Location, square footage and layout should be the mantra in your mind when viewing property. It takes practice to look past the cosmetic features of a home to see its potential.
Watching property transformation shows on HGTV helps a lot in visualizing property potential. “Before and after” home design shows can actually retrain your brain into forming mental transformations as you walk through a property.
Always try to mentally remove the furniture and paint color. This will help immensely in getting the most value out of a property. Remember, if you have this ability, you have an advantage over another buyer who doesn’t have it.
7. Touring New Constructions Without Seeing Renderings Of The Finished Home.
Buyers love to be the first one to see a property. This type of “off-market” privilege feels very special, like they are getting a glimpse into something no one else has access to..
Often times an owner will allow buyers to tour a property which is under construction. However, (refer to number 6. above) not many buyers possess the skills to visualize what the property will look like upon completion.
If you are interested in touring a home under construction, always ask for renderings (computer generated, or other) which will help visualize how the finished home will look.
Let’s face it, the site of construction site, along with the trash left behind by the construction workers, etc. is no pretty site. It might even ruin your perception by forming a negative image in your mind.
If you have a vision of how new construction will look when finished then GREAT! Otherwise, always ask for renderings or ask to tour a completed home by the same developer/builder.
8. Not Researching Moving Companies Early
No one likes to move, do they? The packing, sorting, lifting, driving, etc. A moving company can be a wonderful asset, if you choose the right one.
If you want to save money – while still finding a reputable company – well, this will take some time.
Don’t be rushed last minute trying to find a good moving company. Ask around, use Yelp, get references, ask them about their insurance policies, etc. until you narrow down your list into a couple of options. The last thing you want is to hurry through this process close to moving time.
There are also full-on relocation companies, though these can be costly. If you have the upper-hand in a negotiation, don’t be afraid to ask for a credit to cover moving costs. Always remember that your realtor’s commission is negotiable!
If you are in Los Angeles, Greystone Relocation offers a five-star service.
9. Skipping The Home Inspection To Win The Bid
Never ever EVER skip the home inspection. There are sellers out there who will suggest you do this to secure your offer into becoming the winning offer. Don’t do it.
There are too many things which could go wrong with a house – not having knowledge of these things can cost you dearly in the long-run.
Do you think soil and geo reports aren’t important? Think again.
10. Falling In Love With The First House They See
It can be easy to get caught up in the excitement and think you have found your dream house on the very first showing. Still, if you don’t look around first and explore all your options, you may regret it.
You need to physically go through the process of comparing all homes in an area to get a clear picture of what is or what isn’t a good deal.