Common Mistakes When Buying Real Estate
1. Not getting pre-qualified for a mortgage
Before looking for your next home take the time to get pre-qualified by the bank or mortgage broker you choose. This can save you hours of searching for homes you can’t afford or worse, writing your offer on a home and then finding out you don’t qualify for financing. Pre-qualifying gives you peace of mind, helps narrow your search criteria, and most importantly, gives you a negotiating edge by being able to alleviate the sellers’ concern over financing. The latter is especially important should a competing offer surface.
2. Not shopping for mortgage terms
Rates are negotiable! A Bank or mortgage broker will sharpen their pencils to get your business especially if you have a good credit rating. Posted rates should be viewed as a starting point. Ask for the best rate possible and don’t be afraid to shop around. Your lender should be prepared to compete! Also, ask whether the lender will cover appraisal fees if required, and ask about buy-out fees, penalties, payment options, portability etc. Knowing the answers to these questions before you sign can save you thousands of dollars over the life of the mortgage.
3. Not getting professional inspections
The cost of an inspection will be money well spent! Nobody wants to purchase a home only to find out later there are defects, latent or otherwise. A home inspection, septic inspection, and water quality testing are paramount (and sometimes required by lenders). If the inspection identifies major issues you may be able to negotiate the purchase price to cover costs of remediation, ask the homeowner to rectify the problem before closing, or simply walk away. And if no major issues are found, even better, you can purchase with the confidence you won’t have any unexpected surprises when you move in!
4. Not using a professional real estate agent
Your Realtor will offer expert advice on what to look for, assist you in making wise financial choices by ensuring the price you pay is in line with market values, assist you in writing an offer and advise you of what conditions you should include, negotiate on your behalf, and guide you every step of the way. AND in most cases, using the services of a Buyer Agent doesn’t cost you a thing! Why would you not use the services of a qualified Realtor?
5. Buying first before selling
Most of us do not have the financial means to carry 2 mortgages at the same time and the advantages of selling first and buying after are ample. By selling your current home first, not only will you know, in advance, exactly what you can afford to spend on your next home, you will also be in a stronger negotiating position. Selling your home first allows you to place fewer conditions on your purchase & make your offer more attractive to a seller. Sellers will often expect a premium price on offers that are “subject to sale” because they will have to wait for your home to sell before theirs is sold. If you find an attractive home, chances are other buyers will also find it attractive. If you’ve already sold your home, you will be able to negotiate and compete with confidence.
6. Not knowing the full cost of home buying
There are many costs associated with buying a home that is not included in the purchase price. Knowing all the costs associated with your purchase, in advance, will help you budget and ensure you are not surprised by unexpected additional costs. Some of the additional fees and costs you may encounter include Inspection costs, appraisal fees (if not covered by the lender), legal fees, property transfer tax, moving expenses, strata fees and levies, mortgage fees, and/or penalties, and more. Purchasing a new home? Watch for tax on top of the purchase price, landscaping, fencing, appliances, window coverings.