Buying a home can be a very exciting and overwhelming adventure. Purchasing a place to call your own is a defining life experience for many, and opens up so many opportunities to explore your creativity. If you are in the process of looking for a new home—congratulations! There are many exciting things to come. Among the excitement, however, it is quite common for some mistakes or mishaps to occur. Whether you’re new to home buying or you consider yourself an experienced real estate shopper, there are some mistakes and circumstances that can occur in the process of acquiring and purchasing a house. Here are some of the more common home buying mishaps to look out for:
1. Buyer has lack of perceived credibility after foregoing financial pre-approval.
Getting pre-approved for a home loan is one of the many important steps for potential home buyers. If a buyer believes oneself to be qualified or deserving of a loan, one may forego the pre-approval process for the more quick and easy pre-qualification. There is, however, a very important difference between a mortgage pre-qualification and pre-approval. If you make an offer on a home without being pre-approved for an appropriate loan, you may be misperceived and therefore denied by the selling party involved. If you are confident in your financial ability and ready to responsibly purchase a home, it is always a good idea and a strong recommendation of ours to get a mortgage pre-approval. This will save you the hassle of last-minute approval from a lending company when you’re in the heat of a home offer process.
2. Homes are not safe to be insured due to previous insurance claims.
Before you are able to complete a home purchase, you must have insurance on the home you wish to buy. In most cases, if the home is in poor condition or there have been many previous damages or unsafe occurrences, you would be aware of those situations before agreeing to purchase the house. In other cases, the past of the home isn’t so clear. If you attempt to insure a home that has previously had many problems and insurance claims, insurance companies may be unwilling to provide the necessary coverage on the home.
3. Passing on a proper home inspection leads to unfortunate surprises.
A proper home inspection can lend insight to previous home issues and help avoid insurance mishaps as mentioned in the preceding statement. A home inspection before closing is vital to responsible home-buying and considered one of the basic steps of buying a home. During a home inspection, a professional inspection company will go into the house and take note of anything concerning to the future stability, safety, and comfort of the home. The inspection company checks for any large issues which could incur repair and replacement costs so that the homebuyer can consider those costs in the offer. A buyer’s awareness of previous, current, and potential future issues in the foundation or sustainability of a home is so important in avoiding costly repair surprises after the purchase. It is better to invest in a home inspection early on than to wait and see what potential issues lie within a home.
4. Low home appraisals make it tough to afford the asking price.
Regardless of a seller’s asking price for a home, the home has a standardized value based on its location, age, size, and specific amenities. Before any lending company will dispense a mortgage on a house, they will require the selling party to pay for a third-party home appraisal. The worth of the home is determined to give mortgage companies an idea of how much they could sell a home for in the case that a buyer defaults on their loan. A financial institution will not provide a mortgage higher than the amount of the home’s appraisal value. If the home appraisal comes in lower than the asking price, a few things may happen. The home seller first has the option to lower their asking price to meet the expectations of the appraisal. If a seller stays firm on their asking price regardless of the appraisal, a buyer might either have to pay the difference in cash or walk away from the purchase. If the seller has an experienced Realtor on their team, they are more likely to set a realistic asking price and therefore avoid this issue.
5. Homebuyers don’t consider renting as a potential option.
Buying a home is a very serious and exciting commitment. While buying a home is often a logical next step in a person’s life trajectory, some people might be better off considering renting first as a more financially realistic and geographically flexible option. Because renting is often looked down upon, it is tough to know when it might be a better option than buying. While there are many rewarding opportunities in owning your own home, it is always smart to wait until you’re 100% ready before embarking on this journey. There is nothing wrong with renting for a few years while you learn what you like about a home, who you like living with, and where you prefer to settle down.
Overall, buying a home can be a smooth and confident process with the help of a professional Realtor on your team. While mishaps are common, they are less likely and easier to avoid when you have a trusted group of professionals looking out for you. If you have experienced any other home-buying mishaps we should know about, please tell us in the comments below!
Here are additional articles that'll help you become a smarter homebuyer:
Home Buyer's Preliminary Checklist by Just Close
Top 10 Problems Home Sellers Try to Hide by Xavier De Buck
What to Consider Before Buying Your First Home by Bill Gassett
How to Prevent a Home Closing Failure by Paul Sian