Buyer Traps and How to Avoid Them
"A systemized approach to the home buying process can help you steer clear of these common traps, allowing you to not only cut costs, but also secure the home that’s best for you."
No matter which way you look at it, buying a home is a major investment. But for many homebuyers, it can be an even more expensive process than it needs to be since they fall prey to at least a few of the many common and costly mistakes which trap them into either:
· paying too much for the home they want, or
· losing their dream home to another buyer or,
· (worse) buying the wrong home for their needs.
A systemized approach to the home buying process can help you steer clear of these common traps, allowing you to not only cut costs, but also secure the home that’s best for you.
9 Buyer Traps
1. Bidding Blind
What price should you offer when you bid on a home? Is the seller’s asking price too high, or does it represent a great deal. If you fail to research the market in order to understand what comparable homes are selling for, making your offer would be like bidding blind. Without this knowledge of market value, you could easily bid too much, or fail to make a competitive offer at all on an excellent value.
2. Buying the Wrong Home
What are you looking for in a home? A simple enough question, but the answer can be quite complex. More often than not, buyers have been swept up in the emotion and excitement of the buying process only to find themselves the owner of a home that is either too big or too small. Maybe they’re stuck with a longer than desired commute to work, or a dozen more fix-ups than they really want to deal with now that the excitement has died down. Take the time upfront to clearly define your wants and needs. Put it in writing and then use it as a yard stick with which to measure every home you look at.
3. Unclear Title
Make sure very early on in the negotiation that you will own your new home free and clear by having a title search completed. The last thing you want to discover when you’re in the back stretch of a transaction is that there are encumbrances on the property such as tax liens, undisclosed owners, easements, leases or the like.
4. Inaccurate Survey
Ask your lawyer about requesting a survey to be attached as part of the offer. This might affect title insurance down the road. You can ask for the survey but it does not have to become part of the offer. Always ask for an updated property survey which clearly marks your boundaries and where the house sits on the lot, with all improvements. If the survey is not current, you may find that there are structural changes that are not shown (e.g. additions to the house, a new swimming pool, a neighbor’s new fence which is extending a boundary line, etc.). Be very clear on these issues. A survey and sketch of survey are not the same.
5. Undisclosed Fix-ups
Don’t expect every seller to own up to every physical detail that will need to be attended to. Make sure you or your agent ask the seller specific questions about repairs that have been made, electrical upgrades, the roof, or basement leaking. Ask if they had been planning any repairs to the home. If asked they must disclose. Both you and the seller are out to maximize your investment. Make the offer conditional upon an inspector’s report. Hire an independent inspector who is a member of the Home Inspectors Association, to objectively view the home inside and out. Ensure that you conduct a thorough inspection of the home early in the process. This inspector should be able to give you a report of any item that needs to be fixed with associated, approximate cost.
6. Not Getting Mortgage Pre-approval
Pre-approval is fast, easy and free. When you have a pre-approved mortgage, you can shop for your home with a greater sense of freedom and security, knowing that the money will be there when you find the home of your dreams.
Get an idea of your monthly payments
If a seller fails to comply to the letter of the contract by neglecting to attend to some repair issues, or changing the spirit of the agreement in some way, this could delay the final closing and settlement. Make sure your lawyer is aware of items to be repaired prior to closing and if necessary have a set amount to hold back to cover items that the seller fails to follow through on. Prepare a list of agreed issues, walk through them, and check them off one by one. Visit the property 24 hours be closing and go through the house very carefully. Do not hesitate to ask questions.
8. Hidden Costs
Make sure you identify and uncover all costs - large and small - far enough ahead of time. You will need to know fees above the cost of the actual home: such as loan charges, lawyer fees, land transfer tax,
proportionate share of property taxes already paid, etc. Understand these in advance by having your lender and or lawyer project total charges for you in writing.
9. Understand what is in your offer
9. Understand what is in your offer
Take your time during this critical part of the process, and insist on going through the offer carefully before you sign. Make sure this documentation perfectly reflects your understanding of the transaction, and that nothing has been added or subtracted. Make sure it has the closing date you want and any conditions that are necessary. Is everything covered? Don't rush the paperwork.
