Estimated read time: 4-5 minutes
The spring homebuying season is here and with it comes the opportunity to make the biggest purchase of your life.
With so much money on the line, even small mistakes can turn into big financial hits. Here's a summary of the biggest pitfalls to avoid and why not having a Realtor on your side can cost you.
Pitfall 1: Missing inspections
Radon, meth and mold: You know you should inspect for each when buying a home. You should also research building compliance, zoning, insurance, HOA documents, tax issues, title, utilities, property boundaries and much more.
"Due diligence goes far beyond the home inspection and evaluating the physical condition of the property," said Adam Kirkham, president of the Utah Association of Realtors. "Buyers should also look into the numerous tax, legal and environmental issues that affect property."
Failure to catch problems before the purchase can lead to costly issues later. These can include extensive repairs, HOA assessments and boundary disputes. Or you may find you aren't able to rent out or use the property as you intended.
A Realtor will help you avoid these pitfalls by providing information and resources, repair negotiations and referrals to inspection experts.
"A Realtor's access to relationships to find the right inspector for a particular house or project is really helpful," Kirkham said. "Consumers can spend a lot more than they should inspecting the home if they call the wrong contractor."
Pitfall 2: Overpaying
Buyers often struggle to know how much to offer on a home. Offer too little and you'll lose the house. Offer too much and you could overpay.
"Many buyers don't know what offer to begin with — whether to offer above or below list price because they don't know how fast the market is moving," Kirkham said.
Armed with firsthand knowledge and real-time neighborhood data, your Realtor will determine a property's fair market value and use the information to craft a competitive offer.
"It takes experience to understand when a seller says something what it actually means," Kirkham said. "Having someone negotiate through that is really helpful and can save you money on the price and add value in concessions."
Kirkham also cautions against relying on websites that use algorithms to calculate property values.
"Without the human element, you risk relying on data that may not be accurate for each and every home and miss out on the nuances of a neighborhood," Kirkham said. "That happens a lot, and the chance of overpaying is high."
If a property is likely to have multiple offers, it's important to establish ahead of time how much you're willing to pay. You don't want to lose a property you really wanted or, conversely, get too emotionally involved and pay significantly more than intended.
–Adam Kirkham, president, Utah Association of Realtors
Pitfall 3: Mismanaging a bidding war
Even though the market has slowed, it's still a seller's market and bidding wars are common for the best properties. Depending on conditions, you may want to offer a short time frame for inspections, waive contingencies, or pay above list or appraised value.
"If a property is likely to have multiple offers, it's important to establish ahead of time how much you're willing to pay," Kirkham said. "You don't want to lose a property you really wanted or, conversely, get too emotionally involved and pay significantly more than intended."
A Realtor will help establish a negotiation strategy, discuss the possibility of using an escalation clause and manage the paperwork involved in a bidding war.
Pitfall 4: Not acting fast enough
In all markets — especially competitive ones like this — time is of the essence.
"Some properties always sell very quickly," Kirkham said. "Buyers should get pre-approved for a mortgage so they're ready when the right property goes up for sale."
To help you act quickly, a Realtor will monitor listings and send you information about new properties that meet your specifications. They'll also take the hassle out of scheduling showings and provide guidance about how fast to make an offer.
"Timing is everything," Kirkham said. "You can miss out on the right home in a matter of days or hours because buying and negotiating on a home is a fluid activity that changes by the minute."
Pitfall 5: Paying too much for a mortgage
Shopping for a mortgage can be overwhelming, so many people use the first lender they talk to. But that could cost you since you can save a lot when you shop for a loan.
If you don't know where to start a Realtor can refer you to trusted lenders so it's easy to get quotes from several providers.
"Make sure you're comparing apples to apples when you're reviewing loans because fees are sometimes labeled differently," Kirkham said. "A Realtor will help you compare so you know what you're looking at."
A Realtor also has information about grant opportunities and special loan programs.
"There are many mortgage products and knowing the differences and who offers those can save thousands," Kirkham said. "You could lose a lot of money by not knowing about a special mortgage product or down payment assistance program."
For more tips and resources, visit UtahRealtors.com.
