Top ten Home Buyer Mistakes

Dated: January 12 2020

Views: 297

  1. It's your money - your life - make it your decision - so don't count on others. 

 

Buying a home or an investment property will most likely be the most important money decision you make in your life. At the end of the day only you will be accountable for the decision you make.  Be careful not to be over influenced by friends and family and the short term excitement about a neighborhood, family members or advisors opinions, or indeed someone else's perspective.

 

It will be no consolation when someday; when you discover that your purchase decision was not the wisest, that you are able to blame an overzealous realtor, friend or advisor.

 

  1. Not setting objectives

 

In order to make a wise decision, it would be best to work on a list of things you want and need in a home, a community, and in your lives.  Go over this list with your spouse.  I keep a notebook next to my favorite reading chair and am constantly making notes of things Gail and I want I in our next home. My father used to carry a 3 x 5 index card in his wallet. He was always pulling it out and jotting notes on it. When he finally retired to Fort Myers and settled on a house, he and my Mom were sure that what they bought met their needs - for the long term.

 

It's very easy to get deterred from unclear objectives, but not so easy when you have worked on them a while and committed them to writing.  You are less easily swayed by that outside hot tub that makes you forget about your every day want of a walk in pantry if you can refer to your list.

 

I know what you are thinking: "But when I see a house with a certain feature (a balcony off the master bedroom for instance) that I didn't know I could have, then my list of needs and wants changes."  Fine, then alter your list, it's written on paper, not stone. But if it is not in writing at all you will have trouble prioritizing your needs and wants.

 

 

  1. Moving Too Quickly

 

You pull up to the home with the Realtor, a cool breeze is whistling though the nearby Australian Pines; a young mother is pushing a baby in a stroller down the side walk past the house; the lawn has just been cut and the salvia is in bloom: what a perfect house! You walk to see the canal in the back. Mullet are jumping and a baby manatee breaks the surface and actually winks at you. 

 

When I walk into these scenes, I look for Chevy Chase (Cue the deer!). Real estate against love this rare confluence of events. It makes the buyers get emotional and forget about the practical.

 

Take your time when you've found the house you love. Come back many times at different times of the day and different weather.  Walk the area, talk to neighbors, look at tax records, look at crime rates. Do your home-work and pull out your objective lists.

 

Take your time.

 

  1. Failing to look at alternatives

 

If you have made your choice and you have decided that you can spend "x" dollars, now look at all your alternatives. Where else can you spend the same amount of money?  Where else can you invest? Where else can you live? 

 

Looking at alternatives is a critical step that may eliminate many of the emotional mistakes buyers make. And it may just turn up a better alternative.

 

 

  1. Worst Case  Examination

 

My attorney Jack Donenfeld once told me I paid him to look at the worst case scenarios and prepare for them. I would be all excited about a deal I was doing, and he would splash cold water in my face. 

 

If you can't do this yourself, find your own Jack.  What if you lose your job? Your health? What about a hurricane, flood, or power outage? Divorce?

 

If you can sleep well after looking at all the worst case scenarios;  proceed with caution.

 

 

  1. Not looking at total cost

 

In South Florida and in the condo market this advisory is especially pertinent.  Condo fees may be falsely low. What happens when all the condo owners that can’t afford their payments default? What will you have to pay?

 

What is the insurance cost on this pre 1992 home not built to hurricane standards? What does it cost to cool this house? How about assessments, taxes, and upkeep?

 

A newer home with a higher price tag may just be a lower cost home in the long run.

 

  1. Not getting a home inspection

 

There is nothing worse than moving into a home and finding out that there is a major capital expense that you will incur that could have been avoided with an inspection and a home warranty. I would insist on both. Even on new homes.

 

  1. Counting on market  trends

 

Years ago we could count on growth to make up for any mistakes we made. Don't count on them now. Don't buy what is going to be - buy what IS.

 

When you look out the window at a preserve you may envision wildlife and greenery, meanwhile the developer that buys this two years from now is envisioning a five story apartment building. 

 

There is something to be said today for being the last one to the party.  At least you know what the party is all about by then.

 

  1. No Weasel  Clauses.

 

It is a very simple matter to make a contract with what we call a weasel clause. A typical weasel clause reads: "This offer subject to my attorneys’ approval." But it can be subject to an inspection, financing, or engineer's report. The important thing is, there may be things that you find out after you have locked up a property that will alter your decision to buy,  or the price you are willing to pay. Give yourself an out in case something happens.

 

 

  1. Use your professionals. Many mistakes are made because a realtor, attorney, engineer, or applicable inspector was not consulted. Get an air-conditioning guy in, a plumber, have the septic system inspected: you are welcome to trust the seller, but this is YOUR home, YOUR decision, get your OWN information and make your decision from a position of strength. Do not be penny wise and pound foolish, it will be better to spend a few thousand dollars on a home that you are NOT going to buy that hundreds of thousands of dollars on a home that you don't want.  

 

Blog author image

Gregg Fous

Real estate has been my passion since I took my first Al Lowery class on real estate investing in the 1970’s. I vowed during that class that I would buy one property a year. Over the next five ....

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