Common Home Buyer Mistakes

Calling the listing agent on the sign in front of the property

Remember that the listing agent works for the seller, not you. Anything you tell the agent about yourself and your circumstances can be used to reduce your negotiating position.

Allowing the listing agent to show you the house

Again, this agent works for the sellers.  Unless you’re willing to let the agent work for both of you (dual agency) and forfeit your opportunity of having someone advocate on your behalf, it’s best not to talk directly with him.  In North Carolina, it’s the real estate agent who introduces you to the property that earns the commission, whether or not that agent actually represents you.  Once a seller’s agent shows you a property, it usually means you won’t have the opportunity to be represented in a transaction on that property unless you are willing to pay the buyer’s agent’s fee out of your own pocket.

Visiting open houses and model homes without an agent to represent your interests

If you see a house you’d like to visit, be sure to tell the seller’s agent that you are working with a buyers’ agent and hand them the agent’s card (ask your agent for extra cards).  This way your interests will be protected.

Assuming it will cost less money to work directly with the listing agent or the developer’s sales representative

That would seem to make sense, but the seller or developer has already agreed on a commission for selling the property.  If you have an agent, your agent shares the commission with the seller’s agent.  If you don’t have an agent, the seller’s agent keeps the entire commission.  There’s no savings to the seller or developer, so there’s no savings passed on to you.  The only difference in these two scenarios is that in one, you have your own agent looking out for your interests.  In the other, you don’t.

Not setting a budget

It’s so easy to fall in love with your dream house.  People get caught up in the moment and think because they qualify for a certain mortgage amount, that they will be able to afford it.  But, making yourself “house poor” can derail things like children’s education, travel and entertainment expenses, and retirement savings.  Plan a realistic budget and stick to it.

Financing More Than You Can Handle

Mortgage brokers are in the business of making money.  They will tell you how much you’re qualified to borrow, not how much you can afford to borrow.  They may not take into account your specific circumstances; that is your job.  We all have financial obligations, aside from our mortgage.  What are they?  Elderly parents that you help financially or children who need help with expenses?  Money for travel or entertainment from time to time?  According to experts, your total monthly debts, including your mortgage, should not exceed 36 percent of your income after taxes.  Do the math and stick to your budget figure.

Not knowing the neighborhood

A neighborhood may seem fairly quiet at 2:00 in the afternoon on a Wednesday, but how about Friday night at 10 PM?  Make sure you visit the neighborhood at various times.  Pay particular attention to the neighbors’ homes closest to the home you are considering.  Do the next door neighbors use the garage as a practice room for their teenager’s up-and-coming rock band?  Does the house behind you have several outdoor dogs that love to bark?  Pay close attention to the upkeep of yards, homes and common areas throughout the neighborhood.  Your Exclusive Buyer’s Agent will tell you if there is a homeowners association and, if so, how much the dues are.  When considering resale, the upkeep of the neighborhood matters.

Buying the most expensive house on the block

You’ve found it and it’s beautiful!  But no matter what the circumstances, if you’re surrounded by homes that have lower home values they will lower yours.  The rule of thumb is steer clear of homes that cost 50 percent more than neighboring dwellings.

Not doing an inspection

A thorough home inspection is an essential part of buying a home.  Skipping this step could be a costly mistake.  Home inspections typically run between $300-$600 and usually include a check of the heating and air conditioning systems as well as plumbing and electrical work.  What’s typically not covered includes termite, radon, asbestos, mold and lead inspections.  Find an inspector through recommendations or the American Society of Home Inspectors.

Forgetting about closing costs

Buyers pay the majority of the closing costs when purchasing a home.  Closing costs can be 2-5% of the home’s purchase price.  A mortgage lender should provide you with a specific estimate of what costs will be.  Keep in mind they include such things as origination (points) on a loan, escrow fees, title and homeowners insurance, legal costs, property taxes, fees to record your need deed, and notary fees.