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What are the Top Three Mistakes that Home Buyers are Making?

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By : Bill de Ridder    99 or more times read
In today’s very tight real estate market, buyers are making mistakes that can cost them lots of money, time, and even the home they really want.

The single largest mistake that I see over and over again from end use buyers is trying to “get a steal” on a home. Everyone who has turned on a TV, picked up a newspaper or gone to a cocktail party, knows the real estate market has been turned on its ear for going on 5-6 years or more. Home values are at lows not seen in decades.

Look for a Good Deal - Not the Perfect Deal

How big of a steal do you really need? A $200,000 difference will probably impact your life for the next 30 years over the life of a typical standard mortgage. However, in contrast, 10K, 15K or even 20K extra, when amortized over 30 years, won’t really create the same size ripple in your standard of living.

Also, a home that looks like a steal often has some hidden (and expensive) reasons why the house is so affordable. This is especially true in REO homes that are purchased at the trustee sale, where the bank won’t let you inspect the home until the final closing.

Also, as the home is on the open market, you are competing with other homeowners also looking for a perfect deal. If you wait too long or attempt to negotiate too low of a purchase price, you may find yourself on the outside looking in. Even worse, you are competing against investors who are willing to spend cash for the home. If you need to sell your existing home first or have another contingency, you are at a severe disadvantage. In addition, as many investors are also real estate professionals, the seller does not have to pay your buying agent anything. This puts you at an even bigger disadvantage.

We have had numerous buyers put their heart and soul, and lots of time and effort into chasing down the perfect house at a great price only to have an investor come in at the last second, and steal it away for just a couple of thousand dollars more which equates to $15 or $20 per month.

Endless Loan Shopping

Some buyers spend endless hours, days and weeks shopping for the perfect loan – watching every uptick and downtick in the loan rates, talking to numerous brokers and banks, trying to get the best possible deal and saving a few bucks here and there on points, fees and other expenses.
In our practical experience, it’s all about what is the buyer qualified for and what can they afford? Rather than trying to get the absolute best loan deal, spend time to make sure you have the best available loan broker or mortgage banker.

An experienced and well qualified professional can smooth over the bumps and mini-crises that are experienced with almost every home loan these days. Banks and finance companies are very stringent about their rules and procedures. Having someone who knows the ropes and few short cuts can greatly help you save time and annoyance when closing your loan for your new home. You may have to spend an extra couple hundred bucks but the lack of hassle and last minute negotiations and financial scrambling should more than make up for it.

Location First – Price Second

Everyone wants to buy a home at the best price. However, it is more important to find an affordable home that you and your family are going to want to live in. You can always improve and upgrade the look and size of the home but you can never change its location and the advantages or the disadvantages of the neighborhood around it. Often a “worn out” house that requires a little bit of cosmetic work to make it shine can be the best possible deal.

If you are planning to live there - not flip the house or rent it out, then the long term environment is more important than trying to get the absolute best deal possible.

On the other hand, some buyers have too narrow of a geographic target. They want to live in a specific area of a specific neighborhood and will not consider a home, at a good price, just across the street or dividing line. Sometimes that attitude is justified, but many times it is not. Visit other neighborhoods outside of the targeted one and see if the homes look good and are well maintained, what is the renter to buyer ratio, are the schools acceptable, check to see if the home prices are going up or down. Often buyers find that within a large region without a stellar reputation, that there are many “secret” small neighborhoods with excellent residents that have pride of ownership.

Remember , you don’t want to lose out on the perfect home for your family because you spent too much time and argued too much looking for the best possible deal or the best possible loan. A little bit of flexibility coupled with the ability to see what could be, can make your home hunting expedition much more successful and rewarding in the long run.

Yes, you may lose out on bragging rights among your friends, but you will have a comfortable home where you and your family will be happy for a long time.
Bill De Ridder, President of QualityFirst Real Estate. He has over thirty years of real estate experience in most aspects of the industry. He obtained his degree from San Francisco State University in Public Administration in 1974. In 1978 he obtained his real estate agents license and then his broker's license in 1984. Bill's career began in the Title Insurance industry rising to Regional Sales Manager with Stewart Title and gave extensive seminars in real estate financing in Land Contracts. Bill has owned Real Estate Companies in North and East San Diego County. Bill has worked with builders handling their tract homes and over the course of several years, sold several hundred homes. Additionally Bill worked in the banking industry originating loans and worked in the foreclosure trustee business working with loss mitigators and asset managers.

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