Here’s a shortlist of mistakes that I help clients avoid. Keep these in mind if you don’t want to lose sleep, money, or the house of your dreams. Of course, every transaction is unique, so feel free to reach out to me regarding your specific property questions and concerns.
#1 Buying Over Budget
Have you heard the phrase “house poor”? This is what smart homebuyers avoid. They don’t take on a mortgage payment that wreaks havoc on their budget and lifesyle. Create a home budget that is emtionally comfortable and takes into account long-term maintenance and capital expenses. Also, consider what you spend on shopping, travel, hobby, and leisure activities each year. Mortgage brokers calculate the highest amount you can qualify for based on your income and debt levels, but you can always choose to borrow less than what your lender will permit.
#2 Inadequate Property Research
Inadequate research can come in a variety of forms, from forgetting to do radon and water tests, to failing to investigate underground oil tanks, to assuming you can install a pool or addition without visiting town hall. A lack of property research is generally the result when buyers fail to use an experienced Realtor. Documents can remain unread and important questions can be left unanswered. Inadequate research also takes the form of not seeing enough properties, exploring too few neighborhoods, or not analyzing market, urban planning, demographic, property expense and sales data.
#3 Failing to Evaluate Scarcity
If you are buying the type of property that everybody wants and there aren’t enough of them currently on the market (or likely to come on the market), you are acting within a condition of scarcity. If this is the case, be prepared to act aggressively in terms of your offer price, timing, and terms. So, how do you assess scarcity? Data analysis can reveal inventory levels, market times and how much other buyers have recently paid per square foot for specific property groups. Experienced Realtors also know how to evaluate the scarcity of specific property floor plans.
#4 Comparing Apples to Oranges
Homes come in all shapes and sizes and are used for different purposes, often dictated by class, familial status, culture and financial objective. Owner occupied homes should never be compared to investment properties, and single level apartments in hi-rises should not be compared to townhomes. Properties convenient to town and transportation trade differently than those that require a car. Design, material, landscaping and lot quality expectations for large luxury homes should be higher than those for smaller homes located in middle class neighborhoods. Comparing apples to oranges is also rampant when you take advice from neighbors, co-workers and family members unfamiliar with the town where you plan to live. Make sure to understand when information and anecdotes from others do not apply to your situation.
#5 Skimming Documents
Buyers and sellers generally have attorney representation in CT transactions. However, don’t let your attorney and Realtor do all the reading for you. When you are purchasing property, it is important to read every document that you receive and make sure all your questions are answered. Sellers present potential buyers with contracts, CO’s, maintenance records, etc. that are often challenging to understand, so you must take the time to decipher this information and call upon experts when you need help. Buyers of condos and PUDS will have even more paperwork to review than a single-family home. The condo resale package will include a lot of information such as resale terms, budgets, rental rules, insurance policies, and bylaws. Do not skim these documents.
#6 Choosing a Lender Before you Choose a Realtor
Your lender is an important part of your buying team and your selection can make the team stronger or weaker. An experienced Realtor will have insight about which lender is best for your type of transaction. If you are buying a condo, local lenders are best, since they might have more knowledge of the specific loans that work with the various types of condo communities. If you have excellent credit, you should compare all types of lenders and try to avoid fees. There are risks when you don’t choose a lender that is responsive, transparent and knowledgable about the local market. If you are competing with other buyers, the type of lender you choose can help you win the deal.
I have 19 years of full-time experience in the real estate industry. Every transaction creates an opportunity for a better life. Let’s minimize risk and maximize gains. Call Patricia Rattray at 203-570-2096.