10 Deadly Buyer's Mistakes

1. Not getting pre-qualified before submitting an offer.

This is the first step you should do. Speak with your lending institution and become pre-qualified for a mortgage. This will determine the price range that you can afford. In addition, the lending institution will also hold the interest rate for 90-120 days (depending on the institution) so that you will be protected from an increase in the interest rate. Also, if the rate goes down, you will automatically be eligible for the lower rate.

When you submit an Offer to Purchase, one clause that is almost always inserted in the Offer to protect the Buyer is that the offer is conditional upon the Buyer obtaining financing within 5 days after acceptance of the offer. During negotiations, the Agent representing the Buyer is invariably asked if the Buyer has been pre-qualified. If he has been, then this condition usually presents no difficulty and the focus shifts to other aspects of the Offer.

You are in a much better bargaining position if you have done your homework and obtained pre-qualification for your mortgage.

2. Eliminating a Home Inspection

It’s difficult to be objective about a home you have just decided is your dream home. However, there can be issues that go undetected during your first walk through that will be picked up by a qualified home inspector.

Again, your Real Estate Agent will insert a clause in the Offer to Purchase which makes the Offer conditional upon a home inspection. This clause is inserted to protect you from issues that you may have overlooked.

3. Not relying on a Realtor to help you in your Search.

If you limit yourself to searching for your home on the Internet (mls.ca), adverts or open houses only, you will miss a great deal of homes . Many homes on the Internet or in magazines have already been sold and you are dealing with information that is out of date.

Your best course of action is to call me and get added to my free Instant Access program which e-mails you all new listings that match your criteria as soon as they are posted on the board. I would much rather have you see a home and decide it is not for you than miss the opportunity and wonder if that was your dream home that just sold to someone else.

Also, when I e-mail you all the new listings, I am also listening to all the other agents who indicate what new homes are coming on the market. By being aware of your requirements, I can often alert you to a home that will be coming on the market in the near future. This pro-active approach can often allow you to be the first in to view a home and could quite easily keep you out of a bidding war.

4. Looking for Only “The Perfect House”

No matter which home you decide to buy, there will always be some compromises that you will make. A good start is to list the features that you must have and others that you are willing to sacrifice or compromise on. This will help your search become more objective and eliminate some homes almost immediately. Buying a home is mainly a process of elimination, not selection.

5. Not Considering Long Term needs

Consider what your housing needs may be in 3-5 years and make sure the home you are contemplating buying will meet those needs. Of course, there may be unforeseen circumstances that may change those requirements, but try to predict your needs as best you can for the next 3-5 years. The average length of stay in a home is approx. five years so you also want to make sure that the property you purchase will still appreciate in value while you own it. Be careful of buying a property that you may have difficulty in selling in the future.

6. Not Considering Insurance Needs

When you purchase a home, you will need to insure it against all the normal perils. Obtaining insurance with a home that has one or more of these items can be difficult (but not impossible):

1. Aluminum wiring
2. 60 Amp service (as opposed to the standard 100 amp service)
3. Knob and wire tubing ( some still exists)
4. Oil tanks

You will need some special help from your Realtor in dealing with these issues. Your insurance company may not insure you until corrective action has been taken on these items.

7. Not Purchasing Title Insurance

Title Insurance costs approximately $200 for an average home. It covers items that are not shown on a survey and also lawyer’s mistakes. It is purchased from your Lawyer. There is another article in this website that deals extensively with Title Insurance.

8. Not Knowing Total Costs Involved

It’s very upsetting for a new home owner to learn that he is short several thousand dollars upon closing because he did not understand all the costs involved. I prepare a spreadsheet for my clients, before they purchase, which details all the costs involved in purchasing a home so that there are no surprises on closing day. The spreadsheet gives a range of prices that are in the area that my client is contemplating a purchase and all the associated costs (land transfer tax, lawyer’s fees etc.)

9. Not Following Through on Your Own Due Diligence

You may have several concerns or special requirements that must be addressed before you purchase a home. These may include closeness to schools, bus routes, crime rates, environmental conditions, closeness to shops, highways, GO Station, day care facilities. Make a list of these concerns and address them before you place an offer on the home. I would be glad to help you with those issues.

10. Not Choosing a Real Estate Agent who is committed to making sure all your needs are Addressed.

This could easily be the deadliest mistake of all. Your Realtor is your business partner while you make one of the most expensive investments that you are likely to make in your life. Make sure your realtor is honest, business like and competent. He must always place your needs first and be willing to help you with any aspect of the buying process. It’s only common sense to use a Realtor as his services are usually free to the Buyer. And, of course, I’d like you to consider me to be that Realtor for you.