Bankrate, one of the great free resources out there today, had one of its real estate related articles featured on the front page of Yahoo! Finance and it contains ten mistakes that you must know if you’re looking to buy a house. As you may or may not know, I went through the home buying process  a little over half a year ago and struggled through the process learning as I went along. While I was lucky to avoid some of these mistakes, I didn’t avoid them all and this is a must-read for those of you looking for a home this spring.
1. Understand how long the process takes
In a sizzling housing market, I spent a month looking and a month closing – both are considered ridiculously fast. I’ve known people to have their homes listed for months and people who have looked for over a year before they were able to buy the home they wanted. There are a lot of things to negotiate and a lot of procedures you must go through (inspections!) before things can get settled.
2. Don’t expose your hand
In any negotiation, letting the other side know how badly you want something is always a bad idea. The seller will always be cordial and friendly, whether it’s because they want to sell you a house or because they’re simply nice people, but don’t view them as your friend. Don’t let them know how badly you want the house because it will probably cost you money. They may not want to take advantage of your friendliness but their real estate agent will.
3. Don’t skip the pre-approval
A pre-approval is necessary because it lets you know how much money you can afford and it lets the seller know you have access to enough funds to pay for the home. With how long the closing process takes, the last thing they want to do is start it with someone who doesn’t already have pre-approval. Pre-Qualification is not enough, anyone can get one of those, pre-approval is the critical one.
4. The appraised value isn’t necessarily the market value
With how high home prices have soared, many times an appraisal will be inflated so that the buyer can get the loan (if appraised after a contract is signed). If you get it appraised before you submit an offer, understand that the value listed is not gospel. You may want to get second and third opinions, if time permits, just so you gain confidence in the number.
5. Timing the market “bursts”
Market timing doesn’t work with stocks and it probably doesn’t work with real estate. Timing the market year by year is difficult but within a year the trends are well known. We are embarking on the slowest home sale period of the year. The combination of the holidays, schools having already started, cold weather in northern states, and a host of other factors means home sales should slow these few months. The best months are late summer and early fall when families want to get into school districts and the weather is nicer (not too hot, not too cold).
6. Don’t hire the wrong agent
Don’t jump to use a friend or family member, unless you’ve heard word of mouth reviews otherwise. Bankrate has a good acronym: “Remember the SEED qualities in an agent: smart, empathic, experienced and dedicated will usually get the job done right.”
7. Remember the little things…
Pick a house like you would an apartment with respect to location. Is it in a good neighborhood? How’s the commute to work or school? How about your taxes, association fees, etc?
8. Read the contract and get every bit of fine print explained
With every contract you ever sign, read it careful and be sure you understand every single word. If you don’t understand it, have your agent explain it. If they can’t, don’t sign! It’s a stressful and exciting time but don’t let the excitement cloud your judgement. Don’t ignore parts of the contract to save a few minutes because it will affect you for many many years to come. Read and understand EVERYTHING.
9. Sell before you buy
When buying a new house, sell the first one before buying the second. Having to make two mortgage payments is murderous.
10. Not completing your due diligence with a criminal search
“In many states, agents are not obliged to tell you if there is a sex offender or other unsavory resident in a neighborhood you’re eyeing unless you ask.” Scary.