When you’re working with homebuyers, especially first-time homebuyers, you should be aware of very common mistakes buyers make. You’ll serve your clients optimally if you give them advice about pitfalls to avoid. Plus, it’ll make your life much easier and save you a few headaches.
Here are seven mistakes you shouldn’t let your buyers make.
Not finding out their credit score
The best house-hunting intentions will all come to a halt if the buyers do not have a credit score sufficient enough to obtain a mortgage. Most lenders will not approve a mortgage if an applicant has a credit score below the good to excellent range.
It’s a good idea for would-be buyers to get their credit reports about a year in advance of house hunting. Credit reports can be wrong, depending on the source the buyers choose, and it might take time for them to correct their scores.
Not getting pre-approved for a mortgage
Prospective homebuyers should get pre-approved for a mortgage before they start to look, for two reasons.
First, it avoids heartache if they aren’t ultimately approved for a mortgage once they’ve found the house of their dreams. It lets them know of any issues in approval upfront, so they can rectify them.
Second, if you’re in a hot real estate market, the first person to make a bid may have an advantage. Pre-approval lets your clients have a chance at making the first bid.
Not having a viable budget
Most homebuyers are savvy enough to budget for their mortgage costs. But they may be ignoring the other costs of homeownership — property taxes, state and local taxes, utilities, upkeep and private mortgage insurance (PMI). And that’s just for after the purchase.
Before the purchase, homeowners should plan on appraisal (between $200-$425) and inspection costs (the national average is around $325).
Homeowners need to budget for all homeownership costs and have money saved up for repairs. They also, frankly, should have a cash cushion of at least three months’ income in case of unexpected costs early in their homeownership.
Not getting a sense of the neighborhood
Neighborhoods matter. Homebuyers need basic information about the neighborhood. Each neighborhood has it’s own mini culture. Will they feel at home among their neighbors?
They can walk around on the weekend to get a sense of it. A couple of things buyers should ask are:
- Does it have open green space, parks and hiking trails, (if that’s important to them)?
- Will they be close to major highways and public transportation?
- Is the neighborhood safe, or does it have crime issues?
- Are the school districts good?
- How is shopping?
The answers to these questions will help them decide if the neighborhood is the right fit. This is especially important for buyers who are relocating to a new area.
Not deciding on the kind of home they want
Homebuyers should make a list of the type of home and property they want, suitable for their budget of course.
Otherwise, they can spend unnecessary time and effort looking at homes or properties unadaptable to their budget. Fixer-uppers may be a good starting point due to a limited budget, but the daunting aspect might quickly wear on them.
It also helps to have your client make a list of must-have and negotiable home qualities. This will eliminate future financial strain as their budget will need to adapt to their growing wants and needs.
Not knowing what their land is zoned for
If homebuyers purchase land, it’s essential they know how it is zoned. Zoning regulations change frequently, so they need to know of any recent changes, and they shouldn’t rely on older paperwork.
Zoning can be a real issue if they want certain additions to the property later. It can also be an issue if they have a home-based business or want to start one at some future point.
Don’t let them fall into the trap of buying a property with zoning that will not accommodate their dreams.
Not getting the inspection results before they fall in love
It’s not uncommon for homebuyers to see a house, fall in love with it, and essentially, make the decision before they really know the property’s true condition.
A house and grounds can look fine with no visible problems, but have issues an inspection will surface. These issues can include costly structural concerns and health concerns that may make the house uninhabitable.
No homebuyer should make a final decision until the inspector has ruled.
Homebuyers often make mistakes if they’re not adequately guided. Choosing a home is a major life decision. It’s easy to overlook essential steps, especially if they are first-time homebuyers.
These seven steps are your means of providing good service and making sure you’ll get through the sale without a hitch. Your clients will thank you for saving them from the mistakes they should never make.
Megan Wild is the editor of Your Wild Home in Philadelphia. Follow her on Twitter or Facebook.