Whether you are purchasing for the first time, wish to
upgrade your current residence, or are relocating to a new
area, many questions arise, as do emotions. Everyday
purchasers make life-altering decisions. Any errors
that occur as a result of a lack of planning can seriously
hamper your financial standing, and even unduly affect the
long-term happiness of your family.
To
outmaneuver and avoid common errors, take into account the
following common pitfalls when purchasing:
1)
Paying too much
Without
the aid and assistance of a professional Real Estate Agent,
Buyers often pay far more than fair market value. It is
not uncommon to hear horror stories where thousands of
dollars were wasted because the local real estate market was
unknown to the Buyer. Market
areas are not always similar - what you sold your last home for does not
necessarily equate to equal pricing structures in your new
neighborhood. Your Real Estate Agent will know what is
locally considered good value for investment dollar. If you
are relocating to a new city, engage the services of a local
Real Estate Agent who intimately understands the fluctuating
market trends and will provide a comparative market analysis
on the home you wish to purchase.
2)
Too much of a fixer-upper
You've
heard the stories or maybe even made the comments
yourself, “It’s only cosmetic, and It won’t
take too much money to fix that, We can renovate on the
weekends", or "I didn't realize it would be that
much of a project.”
Nightmares happen when you take on more than you can handle.
Purchasing a fixer-upper can equate to replacing everything
and still ending up with a very expensive brand new old car!
3)
Wrong type of neighborhood
Once
you locate a home that appears to fit your family's needs, take
a second look! If you originally viewed the property on a
weekend, drive by during weekday rush hour. Check with the
local municipal authorities to see if a major highway plan
is in the works - one that will produce a backyard oasis of
incessant noise. Investigate airport extensions and shopping
center improvements. Heavy traffic blaring into your quiet
serenity can destroy your solitude.
Consider
your outdoor lifestyle. Do you hold family barbecues, enjoy
sitting outside, or invite family and friends to vacation
with their recreational vehicles in your backyard? In many
cases, excessive traffic noise can hamper a quiet
conversation by the creek. You many also find out for the
first time just how lightly you sleep. There are also the
potential toxic fumes leaking from vehicle exhaust. Do you
want your children and yourselves breathing this in? It may
take only a month or two to realize the grave mistakes
you've made.
4)
Buying outside of your budget
We are
all familiar with more funds going out than what is coming
in. Kids these days always want the best regardless of
whether they can really afford it or not.
Careful
budgeting is the order of the day! First time buyers
should be
warned that it is very easy to buy beyond your means, as you
count on dual incomes until the new baby arrives. It is
better to buy the home you need and can comfortably afford
than experience being forced to sell and buy down. House
rich and cash poor is not the way to experience life!
On the
opposite end of the scale is purchasing a home that offers
less function and feature than what you really need.
Inevitably, you will end up purchasing the right home and
have to bear the cost of reselling and moving again.
5)
Over or Underestimating Your Housing Needs
A
$10,000+ mistake can occur when you purchase with only the
immediate timeframe in mind. You opted for no family room,
and three months later are delighted to learn your first
child is on its way. Or your children all leave home in the
same year and now you find yourself rambling around in empty
rooms! On the other hand, when parents downsize too early,
they find their adult children have rebounded with a few
extra additions! Consider all your options carefully. Saving
your hard earned money is a definite plan!
6)
Retirement & Condo/Apartment Living
You are
now both retired from the workplace and are beginning to
contemplate that a smaller residence is just what the doctor
ordered. No more high maintenance yard work, shoveling snow
or too many rooms to clean. A year after moving to what was
once just the right size for the two of you, you find
yourself missing those workshop projects that the family
loves to receive, or tending the garden you spent years
creating. Purchasing a condo or
apartment too early for your lifestyle is a grave error that
can be avoided.
Determine
your needs realistically:
- Are
the retirement activities in line with your lifestyle?
- Are the local amenities close by?
- Do you prefer an Adult or Senior community?
- Do the Home Owners' Association rules forbid small pets?
- Are you in the same age bracket as the current residents?
- Is it a couple oriented building, or singles only?
- What are the noise restrictions?
- Can hanging baskets and lawn chairs decorate your balcony?
- How many parking stalls per unit?
- Can you perform minor car repairs?
- Is the personal and building security systems to your
liking?
These
are just a few of the questions that require answers before
you enter into a binding contract. Discuss these questions
with your Real Estate Agent, allowing their expertise to
guide you to just the right home - one that meets all your
personal needs, and one that also fulfills your dreams.
7)
Overlooking Schools and Children
Is your
new home close enough for the children to walk to their new
school, is there bus service just down the street, does the
school offer academics suitable to your children's needs, or
is it right next door and you have reached a point in your
life where you would prefer quiet solitude?
Caught
up in the passion of your new home, it is easy to overlook
and undermine these questions. After six months of taxiing
your children to and from school, you may find yourself
experiencing the need for more freedom. By graduation, your
children may find that had they attended another secondary
school, the university prerequisites would have been
fulfilled. You may thoroughly enjoy sitting alone in your
private backyard only to find recess noise and the school's
outdoor gym activities hamper your need for solitude.
Determine the answers with your Real Estate Agent before
signing on the dotted line!
8)
Yard Maintenance
The
thought of your own swimming pool, the manicured lawns, or
the beautiful English garden in full bloom. It
is
lovely to look at, but do you want to spend the time
required to keep everything in top working order? Do you
have the funds required to hire a full-time landscape
architect? In some cases, you may be better suited for
townhouse living where yard maintenance is part of the
contract, and the local recreation center offers swimming
and exercise programs tailored to your lifestyle needs.
9)
Title Searches
Encumbrances,
right of ways, easements, tax liens, builder’s liens,
leases, an undisclosed co-owner....
Avoid
all potential difficulties by having a title search
performed as early as possible. Protect your investment by
purchasing Owner's Title Insurance.
10)
Property Surveys
Review
the original property survey:
- Is
the neighbor's fence where is should be?
- Is the home too close to the property line?
- Is there room for the addition you are planning?
- Are zoning regulations violated?
Discuss
these details with your Real Estate Agent. Have visible
survey posts inserted into the ground so you can see if
there is room for that new workshop or pool.
11)
Municipal By-Law Restrictions
Educate
yourself! Consult with your Real Estate Agent and local
municipal authorities to learn of any abnormalities and
restrictions that apply to the property. Can you run
your commercial business from home? s there a senior's
residence next door that prohibits noise after 9:00 p.m.?
Can you park your recreational vehicle in that driveway?
12)
Structural Defects
Consider
a professional home inspection. Careful examination by a
professional will remove all doubt! Is that tiny crack in
the foundation a repair nightmare or merely settlement? Are
the walls infested with termites? Does your budget have room
for thousands of dollars in reconstruction costs?
For a few hundred dollars you can obtain an extensive
inspection report that will point you to any structural
defects in the building. Write your purchase
contract subject to a satisfactory home inspection.
13)
Unexpected Costs
It is
not unusual to reach settlement stage only to find that
hidden expenses have occurred. Such items as real estate
taxes and homeowner association dues may be pro-rated, while
hazard insurance and taxes must be paid in advance. Avoid
stressful discoveries by asking your Real Estate Agent for these figures in
advance. NOTE: Should your settlement date alter, so do some
of the pre-paid expenses.
14)
Hidden Lender Costs
Avoid hidden and questionable costs at application time -
tax service fees, courier fees, underwriting fees, loan
disbursement charges, or mark-up on court documentation fees
- by asking your lender to list exactly what fees are
included on the federal settlement forms and what additional
fees may be charged at closing.
15)
Seller Errors
It is
not uncommon to find that repairs have not been made, or
other contractual obligations may delay settlement. Plan a
walk-through of the property, contract in hand, and check
off each item.
16)
Closing Your Transaction
Occasionally
the closing date will be jeopardized just days prior to
settlement. Arrange a 60-day locked-in interest rate at
application time.
Homeownership is the largest single investment you will most
likely make during your life. It is in your best interest to
be educated. Pay close attention to every detail and you
will win at the real estate game. Your Real Estate Agent's
responsibility is to make sure you succeed by avoiding the
top sixteen errors Buyers most commonly fall prey to.
After all, your Real Estate Agent's reputation depends on
referrals generated from 100% client
satisfaction!
top
