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General Information
20 Mistakes to Avoid When Buying or Selling
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Buying Mistakes
- Looking for a house without getting pre-approved by a
lender:
When you are pre-approved, you are effectively a cash buyer.
This makes it much easier to negotiate with the seller. Do not
mistake pre-approval with pre-qualification; pre-qualification
is only the first step in gaining pre-approval. Ask your Banker
or real estate agent for details.
- Failing to check out the neighborhood
thoroughly before buying:
How do traffic patterns change depending on the day, or even
the time of day? Are there any future developments in the works?
Is that nice green space down the road actually zoned for high-rise
development? Ask around - check it out first.
- Making an offer based upon the asking price, not the
actual market value:
Do your homework. What have similar properties sold for in the
immediate area? How long were they on the market? How does this
one compare? Is it over-priced, under-priced, or fair value?
Ask your real estate agent for an up-to-date market summary.
- Letting "first impressions" affect your decision too
much:
There are entire books written on how the first impression of
a home is the single most decisive factor affecting many purchasers'
decision to buy. Don't let bad décor or messy housekeeping scare
you away from a structurally solid home that meets all your
needs. Remember, you are buying the house, not the furnishings.
- Buying a home without a
professional house inspection:
When buying a house, consider getting a professional property
inspection. Not only will you know what you are buying, but
these reports will protect you from unforeseen nasty surprises
in both the short and long run.
- Assuming that the Bank's quoted
mortgage rates are written in stone:
Like many industries, banks are experiencing increased competition
and are often willing to negotiate mortgage rates. Depending
upon the market and profit spreads, it is sometimes possible
to negotiate substantial savings. Ask your Banker or real estate
agent for details.
- Not shopping for home insurance until you are ready to
move:
If you wait until the last minute, you will be rushed in finding
insurance. Allow time to shop around and get the best deal.
- Signing documents without reading them:
Do not wait until the last minute before reading the documents;
there probably will not be time. Try to get copies of all documents
early on in your home search so that you can peruse them at
your leisure.
- Making verbal agreements:
Not only are they harder to enforce, but any written contract
you sign will override a verbal agreement. Contract law says
that verbal agreements are not enforceable when they deal with
Real Property. Always get it in writing!
- Not knowing your rights and obligations:
If you do not know your rights, then you can be taken advantage
of. If you do not know your obligations, you may inadvertently
cause friction between yourself and those with whom you are
about to enter a contract. Both your real estate agent and lawyer
are great sources of information concerning this - make use
of their expertise and resources.
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Selling Mistakes
- Pricing Incorrectly (too high or too low):
Make sure you determine the
market value of
your home correctly: If your asking price is significantly higher
than what the market is currently bearing, many potential buyers
looking for your style of home will view similar but lower priced
homes first. Not only does this limit the pool of potential
buyers but it also increases the chances that your home will
sell for less than its actual value. This is due to the "discount"
often associated with properties that have been on the market
for a longer than average time. Buyers are often overheard asking
their Agent... "What's wrong with that home? It's been for sale
forever".
Alternatively, if your asking price is too low, you are literally
giving away your hard-earned equity just because you did not
know what the market would bear.
- Failing to "Showcase" your home:
A little work can improve the
first impression of your
home a thousand-fold. First impressions are lasting impressions
and can dramatically affect a property's perceived value.
- Mistaking a Bank's appraisal or a new Tax Assessment
as your home's actual market value:
These processes are based on general guidelines such as lot
size and square footage, not the specific qualities and improvements
of your home. Using either of these as a baseline could cause
you to over-price or under-price your property. It requires
detailed background knowledge of all recent neighborhood sales
as well as homes currently for sale in order to estimate value
accurately. Ask your real estate agent for a detailed market
evaluation.
- Choosing the wrong real estate agent or choosing a real
estate agent for the wrong reasons:
It is critical that you have full confidence in your real estate
agent's experience and abilities. You want a real estate agent
who can explain the whole selling process to you, has a good
feel for the market, has access to potential buyers and offers
sound advice on how to improve your chances of selling. Try
to avoid choosing a real estate agent on the basis of which
one gives the highest estimate of your home's value. In order
to achieve the best sale price within a reasonable period of
time you need an accurate indication of what the true market
value of your property is. Knowing this allows you to properly
price your home, thus maximizing your chances of selling and
allowing you to make your future plans with the sure knowledge
that your goals can be attained.
- Failing to take current market conditions/trends into
account:
Is it a Buyer's market, a Seller's market, a Balanced market?
What do future trends look like? Ask your real estate agent
for a full analysis.
- Not taking advantage of market fluctuations: The Big
Picture...
Moving up in a market downturn? If your $150,000 home has dropped
10% in value, so has your $300,000 dream home. Yes, you lose
$15,000 on your current home, but you save $30,000 on your next
purchase! Always keep in mind the big picture.
- Using "Hard Sell" during showings:
No one likes being pressured. As well, buyers might wonder why
you are so anxious to sell. Let your home speak for itself.
- Mistaking "Lookers" for "Buyers":
Many people who look at homes for sale may just be getting a
feel for the market, seeing how others 'showcase' their homes,
or even just looking for decorating ideas. Your real estate
agent deals with these situations on a full-time basis and has
the experience needed to separate the "Lookers" from the actual
"Buyers".
- Relying too heavily on advice from the Buyer's Agent:
The interests of buyers and sellers are often opposing. In an
agency relationship
it is very difficult for one real estate agent to look out for
the interests of both the buyer and the seller. You want to
make sure you are familiar with Real Estate relationships and
the difference between being a client or a customer before accepting
advice from an agent or entering into any formal relationship
with an agent.
- Limiting the marketing and exposure of your property:
Part of what a good real estate agent does is to ensure that
your property is showcased and marketed in the best and most
productive manner possible. Not allowing a "For Sale" sign on
the front yard or limiting viewing times can dramatically reduce
the number of prospective purchasers seeing your home and have
a serious impact on your bottom line.
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