Buying a home is a major investment. A major decision. At the end of this process, buyers are equity rich and cash poor. For many buyers, they will be poorer because this has become more expensive process than it needs to be. For many buyers, this is expensive because they fall prey to few common and costly mistakes.  

A decision that could turn into a costly mistake

• By paying too much for the home they want
• Or by losing their home to another buyer
• or worse, buying the home based on emotions and find later that their needs are different than wants

1. Bidding Frenzy: You saw the home, you liked it. Now, what price should you offer for this home? How do you know that asking price of the home is too high or too low? If you offer a price based on your emotions, very likely, you are playing blind in a Teen Patti game. You may win if you are lucky, but very likely, someone who has done the research of the comparable home sales in the recent past is likely to make more ‘knowledgeable’ offer. Without the proper information (not data), you’d either be bidding too high or perhaps, too low. What should you do? Never get into the one, unless you are ready to overpay.
   

2. Buying based on emotions: You saw the home and you liked the décor in the family room. You fell in love with what you saw but forgot that you want to have a kitchen with gas stove and not electric. And the kitchen is little smaller than what you want. The ‘WOW’ factor as you get in the door made you forget what all you are looking for in YOUR home! You bought the home purely on emotions. And after a month, you do feel had you had little more room in the kitchen! What should you do? Concentrate on fundamentals, not feelings.
   

3. Not getting mortgage pre-approval: You saw the home, you liked it. It’s THE HOME for you and you want to make an offer. You did research and you know that the price you are willing to offer is right. You think you can afford it – based on your basic conversation with a friend who happens to know a lender. This was when the mortgage rates were in 5s. Now it is in 6s. And suddenly, THIS HOME is out of reach for you!!! What should you do? Do your math correctly and have some buffer – just in case…
   

4. Unaware of Disclosures: You saw the home, you liked it. The listing agent guided you through a document called ‘Seller’s Disclosure’. There was something called French Drain. Lovely words. You go ahead with the purchase and then you realize what this French Drain puppy is. Little too late, though. What should you do? Request the disclosure from the sellers if available and try to understand what the sellers have to say about the home.
   

5. Skip home inspection: You saw the home, you liked it. You want to close as soon as possible. The listing agent suggest that you can reduce the time between offer and closing by skipping the home inspection. And, well, it’s just 2-year old ranch. What can go wrong? You go ahead with your purchase and soon realize that roof needs some work. What should you do? A thorough home inspection is an integral part of purchasing a home. Not only it protects you from investing in a home, it will also reveal any structural or mechanical defects the home may have.
   

We will look at some more common (and costly) mistakes in my next article.  

In the meantime, if you are interested in attending my First Time Home Buyers Seminar, please click here for more information.

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