10 Buyer Traps & Trips – 10 Ways to Avoid Them

Of all the major purchases that we make in our life time, buying our homes, especially our first home, is an emotional decision. True for even for the most analytical among us. Major purchases require doing a little homework and getting prepared. The more you know, the less emotional about the purchase you will be. The more you know, and the less emotion going into your decision, the more comfortable you will be in your final decision. Decision making, calm and confident, will greatly enhance your home buying experience.

So many potential buyers will delay their dreams!
• Worried that they will commit costly errors that cause them to over pay for the home they want.
• Worried about making a final decision. Those buyers put at risk loosing their home to another buyer, while they are “still thinking”. Lost to a buyer that was prepared and ready to make a decision when he viewed the right home.
• Worried about making a poor, regretful decision by selecting the wrong home for their needs and budget.

Let’s take a look at Ten Traps and Trips of the home buying process. Let’s get educated on the terms and procedures, and take the mystery out of the process.  You’ll cut costs, and feel confident moving forward when you’ve found “the one”!

1. Pulling Numbers From Air – What’s a good price to offer? Where should you start the bidding on the home you want?  Is the seller “dreaming” with the asking price, or does it the price represent a seller that has priced well for the current market?  If you haven’t looked at the other homes on the market, priced similarly, you won’t recognize a good price when you see it. That’s good information. Next, you need to see what similar homes have sold for in the recent past. Not two years ago, not last year…..recently.  If there are no recent “apples to apples” comparison, look at last years’s price, and adjust to the current market. Without obtaining the knowledge of “market value”, you could easily offer too much, or fail to make a competitive offer, an offer too low, on a home that represents an excellent value!!
2. Right House, Wrong Reason – So, what type of home do you want? Seems like a simple question doesn’t it? The answer can be a bit more complicated than you think. Many buyers find themselves overwhelmed by the options, and swept up in the excitement. Not thinking this through can push you into owning a home too far from the grandparents, or with an hour commute to the office. A fantastic kitchen with an hour drive to the office may or may not be worth it in the long run. Only you can decide.   Remember, no home is perfect, and nearly everyone ends up with some compromises. That’s fine. But take the time to analyze the “must haves”, and “wants” of your new home. That way, you’ll know it when you see it.
3. Owner’s Policy of Title Insurance – Take the time to explore the option of obtaining an Owner’s Policy of Title Insurance. Different states, and different areas within an individual state, can vary on who, by “regional norm” pays for an Owner’s Policy to a buyer.  Nevertheless, as a homeowner, you need to know that, while generally rare, problems with title from before you owned the home can come to the surface later.  Lost heirs, forgeries, misfiled documents and other mistakes can cost you a bundle later as you fight to maintain control of ownership of your home. The cost, payable at closing, is a one time fee, and can save you headaches, heartbreak, and money later, if needed.
4. Inspect, and Inspect Again – Sellers are required to disclose information about the home for the potential buyer to review. But you have to wonder if everything relevant makes it on to the disclosure. Sellers don’t mean to be intentionally untruthful, but, they can forget.  Many homeowners just get used to, or learn to live with, a defect that they no longer consider a defect, but a “quirk”.  Be sure to hire an independent inspector who will provide you his findings in writing. Keeping in mind that no home is perfect, your inspector should be qualified to point out to you the difference between problems that need corrected, and maintenance chores for the “honey-do” list that you can tend to after you own the home. Then, after any requested repairs are made, re-inspect, prior to closing. Ask your agent how to ensure that you can review the home, prior to closing, to insure that the repairs are made, professionally, and in a “workmanship like manner”. Depending on the items needing attention, this may be as simple as scheduling a visit a couple of days before closing, or sending the inspector or other professional to the home to verify the work has been performed properly. You can save yourself a bundle of headaches with this one piece of advice.
5. Mortgage Pre-Approval. An Absolute Must – Don’t even look at homes until you have a loan pre-approval. Realtors enjoy the process of taking “ready to go” buyers to homes. Home shopping can be enjoyable.  But, if you don’t have a loan in place, you can’t enjoy the process, knowing that you may or may not qualify for “the one” when you see it. Shopping with a loan in place will give you the confidence to move forward when you do find the home of your dreams.
6. Not Getting a Home Warranty- Sellers will often offer a home warranty to provide the buyer of their home peace of mind, should there be any “surprise problems” with appliances or the home’s operating systems for the first year after the title transfer.  Some sellers do not understand the value of meeting a buyer’s request for a warranty.  If the seller doesn’t want to provide a warranty, the buyer can most certainly buy it themselves. Things break, and even the best home inspector can’t make predictions on when an appliance may quit. Warranty plans and coverage vary, but generally speaking there is a $50 - $100 deductible per occurrence and the warranties can cost approximately $400 - $500. The deductible is certainly less than replacing a hot water heater or dishwasher that worked fine at closing,  then breaks a couple of months after buying the home. Warranties can be renewed yearly.
7. Missing the Contract Deadlines – As a buyer, you need to be aware of the contract dates and deadlines.  Be sure to provide your proof of pre-approval and loan commitment on time. Be sure to have your home inspection, and requests for repair to the seller, delivered on schedule. Failing to do so could cost you money and your home by voiding the contract.
8. Survey Issues – As part of your purchase contract, be sure that there is a provision for, at minimum, a lender’s survey.  This survey will ensure that there are no encroachments on “your” new property.  Larger pieces of land, unmarked, need a marked survey so that you know exactly where to find the boundaries. Be sure you know where your lot ends, and the neighbor’s begin.
9. Uncover the “Hidden Costs” of your loan – A good mortgage consultant will go over all the costs of your loan….large and small. Your lender will provide you with a Good Faith Estimate, outlining all the costs associated with the closing process.  Be sure to review the costs, and make sure no unexplained and unexpected fees are sneaking into your settlement costs.  Ask questions if you don’t know why you are paying a “disbursement charge” or what “EPA Endorsement” means. There is a good reason, but it’s ok to ask if you don’t know why.
10. Closings are Final. Know What you are Signing – During the closing, the title company representative or attorney conducting the closing will review the paperwork with you. Be sure to obtain a copy of all documents that you sign. At closing, be sure to review the documents in front of you, insuring that what you are signing is in line with your understanding of your loan (FHA, Conventional, Fixed, or Adjustable Rate) and your quoted interest rate.  Your mortgage consultant should be available to answer any questions. At minimum, she should be a phone call away. You should receive your settlement statement to review 24 hours prior to closing. You and your realtor should each review the statement for accuracy.

Now, you’re ready to go find your dream home!