Mar. 24, 2004
Everybody makes mistakes. After all, we're only human. Some mistakes are bigger than others, though, especially when it comes to the real estate market. Make a mistake on either the buying or selling side and it could end up costing you a pretty penny in the long run. Here are eight insider tips to help you avoid making expensive mistakes when buying or selling a home:
1. Take the emotion out of the transaction. Buying or selling a home should be like any other business transaction — clear, concise, and without emotion — but this is your home we're talking about, right? Making an impulsive decision when caught up "in the moment" could cause you tough-to-fix problems later. Buyers and sellers will often make emotional or impulsive decisions that cost them money and time, so having a third party like a REALTOR® to balance things out is a wise move. Be sure to stick with tough standards when selecting a Realtor, just as you would when hiring an attorney, your child's pediatrician or an accountant. Smart up-front decisions will pay off at closing day.
2. Base your asking price on market value only. Sellers will usually base their pricing on how much they paid for or invested in their home, but this can be an expensive mistake. If your home is not priced competitively, buyers will reject it in favor of larger homes for the same price. At the same time, the buyers who should be looking at your house won't even see it because it's priced over their heads. The result is more time spent sitting on the market, and the perception that you're selling a house that nobody wants.
3. Dress up (your home) before you go out. A house with overgrown shrubbery, tires in the front yard and old lawn furniture strewn about is a huge red flag for the buyer. While that description of disarray might be a little extreme, keep it in mind when you get your home ready to sell. The bottom line is that sellers who don't make repairs and who don't clean the house inside and out chase away buyers.
4. Avoid "over-improving" your home before the sale. On the flip side, don't make the mistake of doing thousands of dollars in upgrades that are the wrong upgrades, especially if you think you'll recoup the cost. This is where that third party — your REALTOR® — can come in very handy. One seller in Austin, looking to increase the value of her home, asked her REALTOR® what upgrades she should do prior to selling. Her Realtor told her that nice appliances would do the trick — but that was it. She had the appliances installed and, though she's not looking to sell anytime soon, is confident that it was money well spent. Consult with your Realtor before making any improvements; the National Association of the Remodeling Industry (NARI) is another good source of information.
5. Take the first offer seriously. The first offer you get might be the best of the lot, so don't discount it. Many sellers make the mistake that the first offer received will be one of many to come, but holding out for a higher offer might never happen. One seller waited and waited — and the first offer was considerably higher than any others they got. Remember that real estate is the hottest early in the selling process; after that, its appeal diminishes over time. The phrase "get it while it's hot" definitely applies here.
6. Get a market analysis before you buy that dream home. Before you make an offer to buy, you need to know what the market value of the home is to make sure you're not overpaying for it. Ask your REALTOR® to prepare a Comparative Market Analysis, which shows what similar homes have recently sold for. A CMA can give you the difference between the asking and selling prices.
7. Have a complete home inspection done well before you buy. Buying a home is the biggest purchase you'll probably make, and it's a decision that's usually made after spending maybe 30 minutes looking at the home. That's why an inspection is crucial, whether the home is brand new or whether it's 100 years old. Your REALTOR® can recommend several inspectors and will help negotiate if any repairs need to be made as part of closing.
8. Get your financial house in order. Knowing how much you can afford to spend goes a long way toward peace of mind when you're looking for that dream home. And getting pre-qualified by your lender before you start looking will put you way ahead of other offers on the table — especially if those buyers still need to
obtain financing.
Follow these tips, and the dream of homeownership — or moving up to a bigger house — will be yours in no time. All it takes is a little common sense and being aware of potential pitfalls when it comes to buying and selling real estate.
