9 pitfalls to avoid
No matter how you look at it, buying a home is a major life-changing investment. It can be even more expensive for some when too many people rush into traps, such as:
- Overpaying for the home they want
- Losing their dream home to another buyer, and
- Worst of all, buying a property that does not meet their needs.
A systematic approach to the process of buying a home will help you avoid these common pitfalls, which will not only help you cut costs, it will help you buy the home that really suits you. This section describes the nine most common and costly pitfalls, and how to identify and avoid them.
Nine pitfalls for BUYERS
1. Buying blindly
What price should you offer when completing an offer to purchase a home? Is the seller’s asking price too high or is it a good investment? If you have not done market research to understand comparable home values, making an offer will be like making a blind bet. Without the right knowledge of the market, you could easily offer too much or miss the opportunity to make a competitive offer on a property that is worth its weight in gold!
2. Buying the wrong property
What are you looking for in a home? A simple question with a not-so- simple answer. Many buyers are brimming with emotion and excitement at the idea of buying a new home, only to discover they are the proud new owners of a property that is too large or too small. It may take longer to get to work than they thought or more extensive repairs may be needed. Take the time to clearly think about what you need and what you want. Put it in writing, then use this list to help you evaluate each home you visit.
3. Legal issues
Make sure you obtain proof from the start of negotiations that the seller in fact owns the property you want to buy, that it is exempt from any mortgage liens or legal liens and that a complete title search will be conducted. The last thing you want is to find out that the property is not free of mortgage liens or other legal entanglements or there are other owners or leases to abide by.
4. Non-compliant designation
In your offer to purchase, make sure you ask for a certificate of location that specifically outlines the boundaries of the property. If this certificate does not accurately reflect the current situation. For example, if the size of a balcony was increased or a swimming pool was added and is not included in the certificate, the financial institution will not accept the certificate.
5. Undisclosed repairs
Do not expect the seller to draw up a full list of everything that needs to be repaired or checked. You want to maximize your investment—so does the seller. Make sure you perform a thorough home inspection early on in the process.
6. Not being pre-qualified
A pre-approved mortgage is quick and easy to obtain. Once you are pre-approved for a mortgage, shopping for a home can be stress-free and enjoyable. This way, you’ll be ready to act when you find your dream home.
7. Breach of contract
If the seller fails to comply with the letter of the contract by failing to make promised repairs, or if he or she changes the spirit of the contract in any way, this can end up postponing the signing. Agree to an amount beforehand as compensation if, for example, repairs are not made as planned. Make a list of the points that are subject to an agreement and track the progress of each step.
8. Hidden costs
Make sure you identify and plan all costs – large or small – well enough in advance. When a transaction is set to close, unexpected costs suddenly pop up once the total amount has been set, such as contributions, etc. Ask us to draw up a list in writing of all the fees and charges that you are expected to cover.
9. Get ready for the signing
Make sure that the documents reflect your complete understanding of the transaction and that nothing has been added or removed. Is the interest rate correct? Has everything been covered? If you rush things on the day the deed is signed, you may find yourself at an impasse at the last minute with no ready solution, which could compromise the terms of the agreement, the financing or the sale itself.