Buying a house can sometimes mean buying its problems. From noisy neighbors to black mold to leaky gas tanks, there’s a lot that can go wrong. Here are the five biggest mistakes buyers make. Every homebuyer should take note to avoid an expensive mistake.
Waiting for prices to come downAs smart as you think you are, you cannot sharpshoot the real estate market. You never know when the best time is. Prices ebb and flow, and occasionally, like right now, they go down a lot. Nobody knows when the tide will turn, and based on historic data, it always does. The best you can do is buy within the low, and we're definitely in the low right now.
You also need to keep the interest rates in mind. If you wait for prices to come down by 10%, and interest rates go up by a half a point, your monthly payments will be the same. Historically speaking, this also makes now a good time to buy. The people I would advise not to buy right now are those who don’t plan to stay in their homes for very long. If, however, you are ready to make a long-term commitment, now is as good a time as any to buy a home.
Picking the wrong town Every town has a personality, and the town that you live in should match yours. Transient, stable, young, old, liberal or conservative, families or couples? Buying a house ought to be at least a five-year proposition for you to recoup the costs of the actual move, so you need to be careful you don’t find yourself stuck in the wrong town for five years.
Don’t plump for a town arbitrarily: Try picking up and dropping off at the local school, if that’s what you’ll be doing every day for the next five years. Buy a cup of coffee on Main Street on Sunday morning; see if it is a pleasant experience. Get school data online at homefair.com; you'll find test scores and college acceptance rates. Good schools also mean good future values.
Don’t buy a nice house on a not-so-nice block. This will protect your investment as well as ensure you have a good living experience. The block determines value more than the actual home. It is always better to move into the worst house on the nicest street.
Not asking to see the last six months of electric and water billsYou should check to see if they match what you were told, so you'll have a realistic idea of what you'll be spending. If the heating system in the house is old, it may bleed money, which will mean one of two things: High bills or the high costs of replacing it. If you are already stretched on the mortgage, this could land you in real trouble.
For other last-minute issues I highly recommend you do the final walk-through five days before closing, not the day before. This gives the homeowner time to fix anything else you find wrong before you seal the deal.
Falling in love with the décorFinding the right décor is the easiest improvement you can make once you buy a house. If the house is decorated in a way you find very appealing, you may find yourself instantly smitten and forget the things you are really looking for in the house. Conversely, a house with unappealing décor may scare you away. Try to think more in terms of the floor plan than the surface stuff. Try to take in the size, the condition and natural light situation.
Don’t nickel-and-dime the seller over the chandelier. If you're interested in buying fixtures, furniture or other objects, negotiate the price after the contract is signed. Discussing this during the initial negotiation will get in the way and could cost you the sale.
Buying a money pitDon't buy a fixer-upper if you don't know how to fix it up. A lot of people get themselves into situations like this. They think, “Ah, how hard can it be?” Little do they know ...
Money pits always cost you more than you think. A small kitchen renovation usually costs between $25,000-$40,000. A standard bathroom renovation can cost you between $15,000-$25,000. Even painting a house costs between $7,000-10,000.
If you’ve bought a house that is in a state of total disrepair, you could end up doubling the original sticker price. Be realistic when you go into it about what you can and cannot achieve.
With a glut of properties to chose from in the market right now, there should be no reason to make any of the above mistakes. You just need to be aware of them.
Barbara Corcoran is the real estate contributor for the Today Show and a columnist for New York’s Daily News. She founded The Corcoran Group, one of New York’s largest and most prestigious residential real estate firms. Barbara’s Web site can be found at barbaracorcoran.com.