BUYING MISTAKES TO AVOID
Not being properly represented
There is a lot of misinformation these days regarding representation by a real estate agent. The internet is making it easier than ever for individuals to scout potential properties on their own. It is important to understand why you should be represented by an agent, and it is not simply to search for properties or unlock doors. A highly skilled agent will serve as your advocate throughout the transaction, negotiating all points of the deal (not just sales price), and making sure you are protected. The seller pays for the agent’s fees, so the service does not cost anything to you as a buyer. While it is true that some seller’s agents may give you a discount for not using an agent yourself, that is not always the case. And using the right agent may save you more in the long run. To learn more about why you should be represented by a skilled realtor, click here.
Waiting for the “perfect” property
This is like trying to find a needle in a haystack and can sabotage your search. Looking for perfections can narrow your choices too much. Instead, make a list of desired specifications and rank them on importance. From our knowledge of the current market conditions and inventory, we will be able to level set expectations ahead of time to avoid disappointment down the road.
Not weighing enough options
Along the same lines of not making your search too narrow, make sure you are visiting a broad range of properties. Looking at only one or two homes before making an offer, even if you fall in love with one of them, can cause you to miss out on potentially better options. Look at everything on the market that interests you. Even if you see a home that you don’t love cosmetically online, it can look very different in person, and we can help guide you in improvements that would need to be made. Take the time to find the best home for you and never feel guilty about requesting more showings. Our job is to make sure we find the best property for you, so we want you to see as many options as possible.
Forgetting that location matters
The neighborhood should always be one of the first considerations in purchasing a home, especially if you are able to purchase in a neighborhood with strong appreciating values. The smallest house in an appreciating neighborhood can be a much smarter decision than the largest home in a neighborhood that is not as desirable. Also keep in mind your education, recreation, dining, and entertainment options will vary greatly depending on the neighborhood, so find one that suits your family's lifestyle best.
Underestimating the effect of a commute
If you are considering moving far away from work, friends, or family make sure you test your commute a few times before committing to a location. Sometimes the distance may not seem like a lot of miles, but once you make the drive in peak traffic a few times, you will get a much better idea of whether or not it is something you want to deal with on a daily basis. Also be mindful of the traffic patterns and where the population growth is happening in the city. We can help advise you on certain areas that may be subject to heavier than normal traffic due to high growth or upcoming city infrastructure projects.
Making emotionally based decisions
This is self-explanatory. Don’t lead with your heart with this type of an investment. We all hope that you find your dream home, an offer is accepted, and the transaction closes smoothly. Unfortunately, in a competitive market like Houston, that is rarely the case. It is easy for buyers to become emotional and impatient after missing out on one or two great properties. Do not get frustrated, and do not make quick, emotional decisions that cause you to stray from what you really care about in a home. The right home for you will come on the market, it may just take longer than you originally hoped for.
Overcompensating for past mistakes
If you have purchased a home before and want to avoid making a mistake you made the first time around, be careful not to overcompensate or overlook other problems you may not have considered. For example, you may have chosen location over square footage the last time around and are desperate for more space. Be careful not to go to bullish over a large square footage home and ignore the importance of location by buying a big, brand new house far away from work, friends, family, and places you like to frequent.
Buying too much house
Once you have a pre-approval letter from the bank on the amount of loan you qualify for, it can be tempting to spend that full amount. Be mindful of the full costs of home ownership to avoid creating a “cash poor” situation – DO NOT overextend yourself. Just because you qualify for a larger mortgage, it is not always the best decision. To read more about how to budget for your home purchase, click here.
Not properly budgeting the costs
As a homeowner, you will pay for more than just the mortgage amount on your home. You will be responsible for property taxes, mortgage insurance, homeowners’ insurance, hazard insurance, repairs, maintenance and utilities, just to name a few. All of these items need to be taken into account when purchasing a home. To learn more about the costs of home ownership, click here.
Skipping proper planning
If you need to sell your current home before purchasing your new home, it is important to know exactly how much you can expect to walk away with after selling your home so that you know what funds you will have available for the next home. Navigating this process can be a little tricky, especially in a competitive market where you may find your dream home before your current home sells and be unable to successfully make an offer. Luckily, working with the Krantz Linn Group gives you exclusive access to the Compass Bridge Loan Program, which helps bridge the gap between the home you have and the home you want and will front 6 months’ worth of payments and expenses while you wait for your home to sell. To learn more about Compass Bridge Loans, click here.
Not understanding market fluctuations
Real estate markets have cycles just like the stock market. Like the stock market, it is nearly impossible to perfectly time transactions in the real estate market. But you can lean on us to help you understand the current state of the real estate market and how to best leverage various factors to ensure you get the best deal possible and make a smart investment.
Talking to only one lender
As in all cases, the more you shop the market, the better the deal you will get. Rates and fees are negotiable, but it can be intimidating if you do not understand how the lending market works. There are also many loan products on the market beyond the conventional loans you might be familiar with. VA, FHA, and USDA Loans are all nonconventional loan options depending on the lender you choose to work with. We can help you navigate the process, whether you need referrals for lenders or help understanding the costs associated with mortgage loans.
Assuming you need at least 20% down
While putting 20% down will likely give you access to better interest rates and avoid additional costs such as points or mortgage insurance, it is not always mandatory. There are many products on the lending market that do not require a large down payment. This is why it is so important to do your due diligence with lenders. You will then have to weigh the pros and cons of the costs associated with a lower down payment.
Moving too fast
Take your time. This is a huge investment and decision and should be thought out carefully. Lean on us as your trusted advisors and advocates throughout the process of finding the best home purchase for you!