Buyers Beware: 6 Dumb Mistakes to Avoid
The buyers were an anesthesiologist and his wife, a homemaker. They were moving from another state because he had joined the staff of a hospital.
After five hurried flights to the new area, however, they found nothing to please them. So the wife finally had a 90-minute lunch with the agent in which she gave a frank and full description of their differing housing expectations.
Armed with the new information, the agent soon found a property both partners liked: a seven-acre plot inside a grove of expensive custom-built homes. The doctor got the trophy address he was seeking, and his wife got the chance to build a new home in a secluded setting with a pond and ducks.
“It may seem silly, but you’ve got to talk to your agent about your dreams,” said Barbara L. Avery, the Prudential Realty broker-associate who represented the couple. “A home is a lifestyle, it’s not just a box.”
It was only after she learned of the couple’s divergent housing hopes, including such emotional components as prestige and privacy, that Avery could reconcile their interests and scout the right place. Before that, they wasted many hours searching.
Why do buyers withhold their true desires from their agents? Occasionally it’s because they distrust an agent’s motives, Avery said. But more often it’s related to the buyers’ own failure to clarify their emotional preferences, she said.
Engineers, computer specialists and others in technical fields, who spend their work hours dealing with facts, are especially unwilling to reveal feelings that can power their housing decisions, according to Avery.
“I really have to dig to find out what these people want,” she said.
Withholding information on your housing goals from an agent who is worthy of your trust is one common error committed by purchasers. Here are five others:
No. 1: Picking a buyer’s agent in a casual manner.
Home sellers often interview several agents. But buyers are typically more casual in their selection of an agent, said Laura J. Bennett, who sells homes through Re/Max. They may happen upon an agent by calling about an ad or dropping by an open house.
But Avery recommends that buyers interview at least three potential buyers’ agents--and ask for references--before selecting one. Buyers should also remember that rapport is an especially key ingredient.
“This is the biggest investment of your life. You have to be able to open up and talk to the agent,” Avery said.
No. 2: Failing to give the agent an “ace” card to negotiate well for you.
By now, most buyers know the importance of visiting a mortgage lender before going on a home-hunting tour. Many get pre-qualified for a loan, meaning they have a good sense of what they can afford. That helps them avoid false hopes.
But there’s a step beyond pre-qualification: pre-approval. This involves the lender’s taking a close look at the prospective borrower’s credit history, income and debts. The outcome is usually a letter virtually guaranteeing that the lender will make a loan up to a certain amount.
Why is a pre-approval letter a valuable ace in the hand for the buyer’s agent when negotiating a home deal? Because it makes the buyer a near certain bet in the eyes of a seller, who may then yield more on price and terms, Bennett said.
No. 3: Selecting a lender on the basis of price alone.
Competition is intense among mortgage lenders, so there’s no reason a buyer can’t find the best possible mortgage rate packaged with competent and caring service on the part of a lender.
Evaluating lenders solely on the basis of price can, however, put the buyer in a jam at closing time. Some lenders will lure buyers in with low rates but fail to follow through in a timely fashion, Bennett cautioned.
“I’ve heard a lot of horror stories. Some people shop so much for rates, they forget about service. Then they wind up with all their furniture in a moving van and a delay at closing,” she said.
How to tell which lenders will return phone calls and process documents on time? Real estate agents should have a good feel for the reputations of lending shops in the area, Bennett said.
No. 4: Choosing an inappropriate neighborhood or home site.
“You need to think carefully about how you’re going to use the home with your lifestyle,” said Cecelia Wheeler, an associate broker for Executive Realty Inc., an independent realty firm.
Wheeler, who works solely with buyers, has sold hundreds of homes during her more than 30 years in the business. She is sometimes shocked at inappropriate housing choices. For instance, she tells of a young acquaintance who recently had her first baby and yet bought a house on a heavily traveled artery. The woman failed to consider how dangerous the setting could become once her baby became a preschooler.
“I was just floored she would buy on a busy street,” Wheeler said.
Families with young children also err if they don’t fully investigate the local schools serving a neighborhood, including a visit to the principal’s office, Wheeler said. In addition, they should scour a neighborhood in search of playmates, either by counting kids’ bicycles or by knocking on doors, she said.
Smart buyers will also investigate what’s ahead for the community on the basis of local planning and zoning decisions. That way they won’t be shocked a couple years later when an apartment tower rises near their little bungalow, for example, Wheeler says.
No. 5: Becoming “house poor” to the exclusion of other interests.
If housing leads a buyer’s priority list, he or she may be willing to reach to the top of the affordability range to obtain a princely property rather than a more ordinary one.
But many people also want to accommodate other priorities, like a passion for skiing or scuba diving, which take discretionary income. For those with multiple interests, Wheeler offers this advice: “Don’t overstretch and lay down your last dollar.”
Martin is a syndicated real estate columnist. Distributed by Universal Press Syndicate.
