Home buyers are an increasingly rare breed these days. Many who were eager to buy a house raced to take advantage of federal home-buyer tax credits. When those government perks expired in April, home sales essentially went into deep freeze, plummeting to levels not seen i more than a decade, according to the latest numbers from National Association of Realtors.
Still, the Realtors project that nearly 4 million existing homes will sell in 2010. First-time buyers, without the burden of a home to sell, could benefit from the foul market-and the record low mortgage rates.
but woe to the overconfident buyer. Here are five common missteps that first-time home buyers make
1. Snubbing the real estate agent
With so many websites offering a mass of data on listings, who needs an agent? Most people, actually. Finding a house and figuring out comps-the price of comparable homes on the market-is the easy part. Managing the nuances of offers, inspections, financing and all the other pivotal steps to buying a home is where many new buyers tend to get tripped up.
When you hire an agent to act as your “buyer’s representative,” she’s obligated to put your interest first, even if her commission is paid by the seller and based on the sale price. Skeptical? That’s all the more reason to find an agent on your terms. Ask friends and acquaintances for referrals and interview two or three candidates before deciding.
2. Guesstimating how much you can afford
Many buyers mistakenly take a do-it-yourself approach to financing. They use online calculators to estimate how much house they cn afford, dive into the house hunt and then get a dose of cold water when lenders refuse to qualify them for that amount. The process is so different than it was four or five years ago. Not only are lenders reading loan applications closely, they’re verifying employment and running credit checks multiple times during the process.
Make a date with a mortgage broker or banker before you get serious about your home search. Also, the costs of buying and owning a home go well beyond the sticker price. While online calculators do take into account property tax and insurance, it’s up to you to account for maintenance costs, moving fees and association dues.
3. Letting charm cloud your judgment
No one will fault you for falling hard for a charming older home. But, unless the house has been painstakingly remodeled or you’re prepared to pay for repairs and upgrades, an old house can quickly lose its allure. Don’t be so smitten with the big windows and vaulted ceilings in the living room that you neglect to notice the exposed wires, shoddy roof and other structural problems.
If you’re considering an old home, don’t let the inspection be your last line of defense. Negotiate a long diligence period, this will give you time to get real estimates from contractors and back out if needed.
Of course, new homes aren’t without their drawbacks. Recently, many newly built homes experienced serious problems with Chinese-made drywall, for example. Proceed with care whatever the home’s age.
4. Focusing on the house, not the hood
In hindsight, many buyers say they wish they’d taken their due diligence a few steps further to really get to know all the perks, quirks and hassles of living in a particular place. You can always fix up the house, but there’s no easy remedy for annoying neighbors, oppressive homeowner association rules and marathon commutes. If you are a first-time buyer you’re not aware of all the things you should think about that aren’t about the house.
Spend as much time as you can in your future neighborhood, ideally on different days and times. Eat in the restaurants, catch a movie, test drive your commute.
5. Making arbitrary offers
With housing inventory running high and sales at record lows, in most markets, there’s no shortage of houses for sale and sellers desperate to get out from under them-all the more reason to hold out for the right house and the right price. But when you find that perfect house, don’t assume you can lob a lowball offer or make unreasonable demands. Even in hard-hit markets, nice houses in desirable neighborhoods are fetching multiple offers.
If the house has been on the market for months, you probably don’t need to worry about other buyers lining up behind you. Make an offer based on recent sales for comparable homes, foreclosure activity and market trends, and don’t be afraid to start the bidding low. If the house is fresh on the market (or recently foreclosed) and other buyers are circling the block, put your best foot forward but don’t get suckered into a bidding war.
Todd Rodocker specializes with First Time Home Buyers, Seasoned Buyers and Investors. He can be contacted at firstname.lastname@example.org or visiting UtahRealEstateStore.com www.SearchUtahFineHomes.com By phone at 801-694-0903.