9 Common Buyer Traps
"A systemized approach to the homebuying process can
help you steer clear of these common traps."
No matter which way you look at it, buying a home is a major investment. But for many Buyers, it's a more expensive process than it needs to be, because they fall prey to a few of the many common and costly mistakes, which trap them into...
- 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.
9 Buyer Traps To Identify, and Take Charge Of
1. 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 the money will be there when you find the home of your dreams.
2. 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.
3. 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.
4. Undisclosed Fix-ups
Sellers might not disclose every physical detail requiring attention. Both you and the Seller are out to maximize your investment. Ensure that you conduct a thorough inspection of the home early in the process. Consider hiring an independent inspector to objectively view the home inside and out, and make the final contract contingent upon this inspector's report. The inspector should be able to give you a report on any item that needs to be fixed, with an associated, approximate cost.
5. Inaccurate Survey
As part of your offer to purchase, make sure you request an updated property survey which clearly marks your boundaries. If the survey is not current, you may find there are structural changes not shown (e.g. additions to the house, a new swimming pool, a neighbour's new fence which is extending a boundary line, etc.).
6. Contract Misses
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. Agree ahead of time on a dollar amount for an escrow fund to cover items the Seller fails to follow through on. Prepare a list of agreed issues, walk through them, and check them off one by one.
7. Unclear Title
You can have your lawyer search title to the property early on, so you will own your new home free and clear. The last thing you want to discover when you're in the back stretch towards closing is that there are encumbrances on the property such as tax liens, undisclosed owners, easements, leases, etc, that cannot be rectified in a timely fashion..
8. Hidden Costs
Make sure you identify and uncover all costs - large and small - far enough ahead of time. When a transaction closes, you will sometimes find fees, for this or that, sneaking through after the 'sub'-total; fees such as loan disbursement charges, underwriting fees, etc. Understand these in advance by having your lender project total charges for you in writing.
9. Rushing the Closing
Take your time during this critical part of the process, and insist on seeing all paperwork the day before you sign. Make sure this documentation perfectly reflects your understanding of the transaction, and that nothing has been added or subtracted. Is the interest rate right? Is everything covered? If you rush this process on the day of closing, you may run into a last minute snag that you cannot fix without compromising the terms of the deal, the financing, or even the sale itself.