Top Five Buyer Pitfalls In Real Estate And How To Avoid Them
Top Five Buyer Pitfalls In Real Estate And How To Avoid Them
By Alex Bracke
Over the years as a real estate agent, I have identified various stumbling blocks in the home buying process for Buyers in the Northern Virginia real estate market. Here are the top five pitfalls that buyers fall into in the real estate market today and how to avoid them.
Working With The Wrong Lender
The biggest one on the entire list of top five pitfalls that buyers fall into in real estate is working with the wrong lender. When we make an offer to the seller, we have to include the date that we plan to settle. In many states, that is a pretty flexible date: either a plus or minus 30 days in some instances. But in Virginia, we play by a little bit different set of rules. We are able to settle early if everybody is ready. If you, the buyer, are ready, and the sellers are ready then we can settle early but we cannot settle later. And so, the problem comes in that a lot of these lenders are not really familiar with Virginia's contracts. Or, they are just maybe not as good as they ought to be and they end up running late. By no fault of yours, this gives the opportunity for the seller to nix the deal with you, take your earnest money deposit and kick you to the curb.
At Valor Group, we want to make sure that the lender you are working with is on-point and they are going to get the job done on time. It is critical that the lender gets the job done on time so that we do not risk losing the house of your dreams.
Going Into Home Buying Without Pre-Approval
The second pitfall that buyers fall into in real estate is going into the home buying process without a pre-approval in hand. Buyers need pre-approval to ensure that they are able to afford the home that they are ultimately looking at. Although the pre-approval process may take only a day or two, our market moves so quickly that in that day or two, oftentimes, the house of your dreams may get swiped out from under you. And you have to watch another family move into your dream home, simply because we didn't have our ducks in a row.
At Valor Group, we tell our clients that it is critically important to have a pre-approval from a lender in hand before going into the home buying process. Make sure you have that pre-approval from a lender in hand before you think you are going to need it because, invariably right, if we are planning on buying a house in March or August, or whatever the month is, it seems like it always happens that you end up finding an amazing deal or something in the month or two before then. So, we want to be ready, even before we think we are going to need it, just in case. It is better to be prepared and not need it than need it and not be prepared.
Opening New Lines of Credit And Making Big Purchases
Once you have a contract with a seller, one of the things you do not want to do is to make any big purchases. In particular, you do not want to open any new lines of credit. Now, the way we have seen this play out at times is, you go out, we negotiate a deal with a seller, you land the house. You are under contract and we are moving towards settlement. You are very excited about it and you go out and you buy a bunch of new furniture, or whatever that may be- new appliances. Many times, you end up putting those on credit, which, obviously the lender is running your credit and making sure everything is in order to buy a house. If you open a new line of credit, it is possible that you may sink that deal right then and there.
At Valor Group, we tell our clients, as a rule of thumb, to not open any new lines of credit. If you are thinking about opening a new line of credit or you need to do it, talk with your lender first. Further, part of what the lender is looking at is even cash on hand. So, even if you are paying for something in cash, that can still cause you hiccups along the way.
Remember, if you are looking at spending anything more than $500 whether on credit or cash while under contract on a home and you have not settled on the home yet, just run it past your lender first to avoid causing you any problems.
Visits To The Home
The fourth pitfall that buyers fall into in real estate is visits to the home. Now, I get it. I have been a buyer before under contract on a home. You get excited and that is normal. You want to show your parents the home. You want to show your spouses' parents, your family and your friends. You want to bring contractors in to measure for carpet, then blinds and all these visits to the home. But every time we visit the home, we are spending negotiation capital. And, that is finite. We do not have endless amounts of negotiation capital.
At Valor Group, we tell our clients that they are better off to wait until home inspection. It usually happens within the first seven to ten days anyway. Home inspection also lasts for two to three, sometimes even four hours. You have several hours of a window to have people in there if you need to or want to. That way, we do not use up negotiation capital. It is better to save that negotiation capital and use that time at the home inspection wisely. You will save yourself the ability to negotiate on the really big things that do matter further down the line.
The last one on my list of top five pitfalls that buyers fall into in real estate is sales offers that are going to be presented to you as a buyer in the process. This is a mistake I made years ago when I bought my first house. I will never forget it. I made the mistake of clicking on one of the offers to link me up with mortgage offers. I will not name the lending company but it is named after a specific tree.
So, I clicked the link that said, "Yeah, it looks like you've got good rates. Tell me more about it." And four and a half years after clicking that link, I was still getting calls from mortgage lenders trying to sell me on their mortgage. That was a valuable lesson I learned that not always is everything as it seems. When you click the "Hey, tell me more about this" button you may be inadvertently signing up to get your phone rung for years and years later. Any good real estate agent can point you in the direction of people who are really good at what they do: lenders, vendors, title companies, handyman or whatever you need. At Valor Group, we have a preferred vendors list. These are not folks that we have ownership interest in necessarily. We do not get any kind of financial incentives if you decide to work with them. We recommend them only because they are just really good at what they do. So, just be careful on some of those online sites when you are clicking the button "Tell me more about this" or "Hey, yeah, this looks like a really good interest rate." A lot of it is clickbait and you may regret for four and half years afterwards having made that decision to click the button. Be cautious and certainly lean on the experts you surround yourself with to give you the best referrals possible.
If you have any questions, never hesitate to reach out. I am Alex Bracke, Team Owner of the Valor Group of Pearson Smith Realty. I am always happy to help. For inquiries, you may call my direct line at 571-393-1082 or email [email protected].