Buyer: be Aware

By: Kevin Bilberry

There is nothing worse than going into an important situation and having it turn out far different than you imagined. If you are getting ready to buy, or are maybe already in the process, make sure you don't blow it by being too naive.

One big mistake buyers make is getting too excited about a home. If you love it too much, you might overlook some of its imperfections. You might decide you can actually afford more of a mortgage than you really can. Both of these set you up for serious future problems. Also, if a seller sees how much you want the house, they aren't going to accept your low-ball offer. They'll ride it out and bring you up to their asking price. It is far smarter to keep your cool, and point out to them all the flaws you spot. You could make a good offer, but put some repairs on your conditions. And don't be afraid to get inspections, and always ask the Realtor® about any issues you think may exist. What seems like your dream house may not be so perfect, and you need to be objective enough to see if it isn't measuring up, and flexible enough to let it go if you have to.

Eager new buyers often try to start the buying process too soon. Yes, it's exciting to see a home that seems to match your criteria perfectly, but if you haven't seen the bank to get pre-approved yet, you are jumping the gun if you try to make an offer. You're probably thinking that you don't want it to get away on you, but the reality is, you don't even know what kind of mortgage a bank will cover you for. There are a lot of things the bank or lending institution considers when deciding how much of a mortgage you are good for, and a lot of it might not be things you've considered. You may feel fine about scrimping to make a higher mortgage payment, but the bank might not see it that way. They have a formula for weighing your income against your debts and expenses, and that will decide your mortgage, not your willingness to survive on potatoes and instant noodles. Also, you may be thinking that great new job will help you pay that steep mortgage, but the bank sees it as an unstable income because it's too new. So before you get too serious about any homes, do yourself and the sellers a favor and visit the bank to start the pre-approval process. This will tell you the price-range you should be looking at.

Another mistake a lot of people make is to think that investing in real estate will make them a quick buck. We see stories of the one month millionaire and get all excited. In reality, any real estate investment is a long term investment. Flipping for a profit is rare, and takes either a lot of sweat equity along with renovation money, or is pure luck in good timing. But markets rarely change so fast that within a couple of months you could make a large profit with little effort. If you are buying, expect that you will be investing time and money into regular maintenance. And if you want to make hundreds of thousands in equity, get comfortable, because it'll probably take many years.

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