I just had some dental work done yesterday morning and I'm still terribly groggy from all of the medicine! Fortunately for me, I have a little bit of down time with my properties as my problem property closed yesterday (YES!) and my other rehab is currently under contract with just a couple of remaining hurdles before we close next month. It's safe to say that I'm holed up with a new video game and lots of Netflix this weekend. If you know me, you'll know that sitting still is pretty hard for me. Wish me luck!
I feel like I've written a lot recently about some of the snags that both buyers and sellers encounter when buying or selling a home. I don't mean to beat a dead horse, but these are obstacles that could hinder anyone from securing the home that they really want. It is very important to try to remove the emotional entanglements that can be present when shopping for a house. That is not to say that an emotional connection isn't important. Of course it is. That is what draws you to a home and motivates you to buy! However, in order for your transaction and process to be as ergonomic as possible, you should want to approach every aspect of buying or selling a home as pragmatically as possible. After all, your end goal is to BUY or SELL the home. You stand a much greater chance of doing so successfully if you approach the prospect as logically and efficiently as you can.
Here are 8 things that can absolutely kill a deal when buying or selling a home and how to avoid them. These problems come from an article entitled, "8 Blunders That Will Kill Your Real Estate Deal (And How to Avoid Them)" from AgentAce. These are separated into blunders from Buyers and blunders by Sellers.
1. Not Budgeting Properly
This one is very typical and it's easy to let your emotions get the better of you. Most people are aware of their budgets as far as monthly mortgage payments go. Especially if they have already spoken to a lender about their limitations (WHICH YOU SHOULD DO BEFORE YOU BEGIN THE PROCESS). However, a lot of people are unaware of the expenses that come with their closing costs. These are inspections, attorney fees, lender fees, etc. These charges can be rolled into your loan, but it is not common. You must keep in mind that these things will be costly. You can usually count on at least $3,000 that comes out of pocket. Your agent can always negotiate that the seller help with buyer's closing costs. It's always helpful if they will, but they do not have to. One way to overcome this is to offer slightly over the list price and ask for seller's concessions towards buyer's closing costs. One other common problem that some buyers face is that they fall too hard for a home that they can't afford and they convince themselves that they can make it work. Often times, they simply cannot. Or they can, but it will greatly impact their quality of life. Remember to be practical here. Numbers don't lie.
2. Not Getting their Financing Secured Before Submitting Offers
I just wrote another post about this recently. Please read it if you have the time! It is entitled, "Want to Buy a House? Please Get Pre-Approved." Getting Pre-Approved is vital. Not only is it usually required now to even submit an offer, but it also shows you what your limitations are. You cannot try to buy a home that your lender will not finance. Securing your finances before you begin will save you a ton of time, worry and speculation. Buying a home is not a lottery, it is a game of merit. Your lender will only lend to your according to your personal financial health and nothing more. If you do not secure your financing before making offers, you run the risk of losing earnest money deposits (good faith deposits) that must accompany your offer. Your Realtor can always make your contracts contingent upon obtaining financing, but many sellers and their listing agents are not keen to accept offers from folks who are yet to be approved for a mortgage.
3. Not Negotiating Responsibly and Without Consideration
Again, it really helps to be pragmatic here. A person selling their home simply wants it to be sold. If you want to buy a home, that it also your prerogative. So, if your want their house, you need to consider their terms and comply. Yes, many sellers are in distressing situations and need to sell quickly and at a discount. These are where you will get a great deal, however, it will likely not be exactly what you want! Therefore, when you negotiate, you need to make a reasonable offer. They will either accept your offer or counter you at more preferable terms that originally present. That is what negotiating is, not getting exactly what you want. It is essentially lessening the burden on either party until satisfactory terms have been achieved. Selling your home is a more of an emotional toll than buying one, and it is just generally decent for those buying the home and their representative to remember that and proceed with tact. It is also likely that the person selling that home is also in the process of trying to relocate or buying a different home and they are facing many of the same struggles as those who want to buy their home.
4. Missing a Deadline is Costly and Can Totally Destroy Your Deal
This one hurts. If you are using a Realtor (WHICH you ABSOLUTELY SHOULD! Especially if you're buying because your agent's commission is paid by the seller!) this shouldn't be such a concern because one of the major components of their job is to navigate those contracts successfully. However, it is still common for everyone to get busy and miss a deadline. Sometimes, you can have things scheduled for third parties (like an inspector or an appraiser) and they miss their dates by accident. If that happens too late, you just missed your opportunity to either walk away from a bad deal or renegotiate based on your findings. It is imperative not to miss these deadlines. It is contract law to perform according to these contracts and if you do not, you can lose on two different fronts. Firstly, you might have to leave that transaction. If you do this and you are outside of your contingencies you will lose your earnest money and the money that you have spent on inspections, etc up to that point. Secondly, you can be sued for non-performance if you do not hold up your end of the bargain. This is not terribly common as it is not economical to sue in most instances. However, the threat still looms if you do not perform.
5. Not Knowing Your Market
Sellers need to do some research on their market to make sure that they are offering their house at a fair price. A lot of FSBO (For Sale By Owners) do not research their market and try to sell their home at what they think it is worth. They do not consider market factors that have a negative or positive impact on their home and they can either come up short on their sale or they'll never get it sold because it is too pricey. Also, many folks depend on valuations from different websites like Zillow, Trulia, etc. These valuations are simply not accurate. I have written posts about this problem, as well. It is entitled, "An Educated Rant About the Zillow/Trulia Merger." To avoid these problems; HIRE A REALTOR. Another major facet of their expertise is pricing your property to sell at a competitive and fair price. Real estate prices are NOT fixed. They fluctuate depending on external factors and your hired professional is there to price your home based upon what the market imposes.
6. Making the Wrong Improvements
If you are selling and your home is not in great shape, you will probably want to make some repairs. Of course these repairs are costly. There can be a lot of repairs that seem silly, but are actually lender requirements to ensure the safety of their borrowers. These are things like correct electrical, smoke detectors, roofing, etc. Rather than spending money of cosmetic improvements, you should really try to repair the more integral issues that might be present. Most buyers already have the notion that they are going to want to improve things after they have moved in. There is no reason for the seller to spend hundreds on a backsplash when they have a giant tree out front that might make the property hard to insure. Plus, when you make more practical improvements, the selling Realtor will appreciate this more than cosmetic improvements and they will relay this confidence to the buyer.
7. Not Marketing Correctly
Again, this is another reason to use a Realtor. Many people that sell (read: attempt to sell) their home on their own think that putting a sign in the yard will do the trick. That's just not the case. Sure, maybe someone in the neighborhood has kids that want to by near their parent's house, but that drastically reduces your pool of potential buyers. More savvy sellers will post their homes on sites like Craigslist and Zillow, but the potential buyers on those sites are minuscule compared to the exposure your get from listing your home with a Realtor. You guessed it; I also wrote an article about this. It's entitle, "Selling Your Home With a Realtor Nets You More!" You can have 1,000,000 people see your home on the internet, but if they are not in the market to buy a house, then what's the point? When you list your home with a Realtor, they will immediately put that house on the MLS. The MLS is, of course, where buyer's agents are looking. And buyer's agents are hired by people who are motivated, qualified and ready to buy a new home!
8. Not Disclosing Know Property Problems
This one is especially present when people are selling on their own. Your state should have a form know as the Property Condition Disclosure Statement. This is a form that gives the seller the opportunity to divulge any and all known problems with their property. By law, if you are aware of any major problems, you are to make it be known to the buyer. Otherwise, you are withholding vital information and can be sued. A lot of folks that are selling their properties without an agent are not aware of this and will overlook this. This can come back to bite you if the buyer finds out that later that you misrepresented facts in the buying process. Realtors always publish a PCDS statement with their listings. In fact, we have to. If we do not accompany a listing with one, we get fined. This is to protect every one in the transaction. It is helpful for both the buyer and the seller because it lays it all out there and reduces the likelihood of hidden dangers. In some instances, sellers can be exempt from a PCDS. This would be if they have not ever lived in the home or have not lived in the home in the last year or more. Also, foreclosures and other REOs are always exempt, in which case the term caveat emptor (buyer beware) really comes in to play.
Hopefully after reading this you will be more knowledgeable in a few of the common mistakes that can occur in a real estate transaction and how to avoid them. This may sound like a very self-serving post, but you can truly avoid most blunders if you just hire a good Realtor (LIKE ME!). Your Realtor is there to protect you and help you avoid costly mistakes. Yes, your Realtor will get paid a decent commission, but it is thanks to their knowledge and expertise that they will keep you from purchasing the wrong property or getting entangled in a bad transaction that will cost you FAR more than any commission.
If you or anyone you know needs any help buying or selling a home, please let me know! I'll be more than happy help! If you would like any further information about anything real estate related, let me know!
Troy Franklin Gandee