I’m going to be in the market for my first home soon and there’s so much to learn about. What are the most common mistakes that buyers make?
Buying your first home may seem daunting, but educating yourself about the process is a great first step. After all, buying a home is one of the most important purchases most people make, and it brings a lot of unique challenges.
As I’ve often written in this column, a registered real estate broker or salesperson has expertise and knowledge that can help navigate the buying process.
But when buyers aren’t clear about their expectations or don’t take the time to understand what they’re signing, it can lead to misunderstandings. Those are common mistakes that buyers make, and here are the steps you can take to avoid them.
When you sign a representation agreement with a brokerage, it’s a binding contract that applies for a specified period of time in a specific geographic area. In addition, under the “holdover clause” you could be required to pay commission to the brokerage even after the representation agreement expires. So signing an agreement is not something to be taken lightly. Before you sign, take the right steps to ensure that you’re both on the same page.
Before you agree to work with a representative, make sure that you are comfortable with them and their approach to the process. Consider talking to a few candidates before you make a final decision. It’s also a good idea to contact references and find out what they liked or didn’t like about their experience.
When you’ve settled on a representative, you might be tempted to sign a representation agreement right away to get the ball rolling. But before you do that, you should make sure you have a mutual understanding about what you’re looking for and the steps you’ll go through together as you search for a home.
Make a list of the ‘must haves’ and ‘nice to haves’ that you’re looking for. Maybe you need at least three bedrooms and convenient transit access, but a finished basement and a second bathroom is a ‘nice to have.’ Either way, clarifying what you want ahead of time will make the process go more smoothly.
Once you’ve chosen a representative and discussed your expectations in detail, review the buyer representation agreement to ensure it meets your needs. Taking the time to understand what you’re signing can avoid potential problems later on.
If there’s something you don’t understand, ask your broker or salesperson to clarify. Don’t sign until you’re comfortable with the whole agreement. Ultimately, if you’re not sure, consider seeking legal advice. Also keep in mind that the terms of the agreement are negotiable.
Once the search for a home has begun, there’s a good chance you’ll have some exciting and emotional moments. That’s only natural, but it’s important to keep your emotions in check so that they don’t disrupt your careful planning. That’s another mistake many buyers make.
When you’ve found the “perfect” place, it can be tempting to spend more than you planned or skip a home inspection to win a bidding war. Don’t.
The deal could end up failing if you can’t secure financing, or you could be forced to scramble to find extra financing to fulfill your obligations under the Agreement of Purchase and Sale.
Or, you could move in and find significant deficiencies that would have been identified by an experienced home inspector.
It can be costly to make rush decisions in the heat of the moment, and too many buyers don’t take the time to build a clear, mutual understanding of their expectations and obligations before they go on the house hunt.
Avoiding these common mistakes will help ensure that you have a positive buying experience.