As you all know, I rarely invite guest authors to this forum as I consider it a bit of a cheat, but when Alex Capozzolo, of Brotherly Love Real Estate in Philadelphia, contacted me out of the blue (or should I say brown, given the wildfires?) to contribute to his blog, The Roundup, I happily complied to his request knowing just how difficult it is to publish regularly.
Here was Alex's question: "What are the biggest Real Estate buying and selling mistakes?
That's a hefty topic to answer in a few sentences (which is all I had) but gratefully, Alex extended his invitation to several other Agents around the nation, and so today's Perspective is more about what they had to say . . . . So listen up! It's full of good, practical advice and I hope you enjoy it as much as I did.
Real estate is like ice cream. When it’s good, it is really good. However, if things heat up and the transaction gets complicated, you may find yourself struggling to continuously lick away the now water-like cream from encompassing your hand in an attempt to save your dessert, and save your real estate deal. We have all been there! At times, a real estate deals can go south for reasons that are completely out of your control. Have you ever heard of “title issues”. They are real. Consider them a 105 degree day to your freshly scooped Ben & Jerry’s nondairy sorbet.
Many of us have experiences different real estate ups and downs. Today, we hear from 17 real estate experts who will share their top mistake when buying and selling real estate. These are experiences shared by real estate investors, as well as real estate agents. All of which are experts in their field.
1. Loan Availability And Options As A Home Buyer
“The biggest mistake buyers make when looking to purchase their first home is not seeking qualified advice regarding loan availability. Buyers should seek advice when purchasing homes based on income, credit and other standards, which change frequently. This will assist with landing on a purchase price that is doable for them, and realistic.”
2. Be Aware Of Closing Costs
“As a realtor, it’s my job to make sure homeowners are aware of the closing costs they should anticipate. This is often one of the biggest mistakes homeowners make when selling their home, especially in the San Francisco Bay Area where owners typically pay the 6% fee for both real estate agents on the transaction. Other large closing costs for sellers to remember might include moving costs, concessions to the new buyers, and home inspections.”
3. Inspections, Back Up Offers, And Broader Search
“There are a few recommendations that were not done by the buyer and turned out to be mistakes for them. 1) Complete the full set of inspections recommended. 2) Not to put in a back up offer. 3) Allow the agent to open them up to different areas on their search.”
4. Choosing The Right Lender
“Choosing the right lender is paramount to a successful real estate transaction. I have let buyers continue on too long with their lender who was not performing instead of insisting they work with someone else. Buyers have almost lost homes because of the incompetence of their lender.”
5. Thorough Walk Throughs Of Properties
“My biggest mistake when I bought real estate investments for myself was not spending a little more time walking through an owner-updated house. The signs were there that they did a really poor job and covered up a lot of major issues with the house. However, I did not take the time to really look, and made some costly assumptions.”
6. Stay In Your Lane
“Getting outside of our company’s lane and being too experimental. We built a spec home that turned out to be a disaster.”
7. Recognize The Gifts
“Not recognizing the “gift” when it comes along, whether it’s the right house, or the right price. When Buyers or Sellers continue to move the bar throughout the transaction, it makes it difficult to deliver a satisfactory result. Clarity and integrity are key components to a successful outcome; gratitude is the cherry on top!”
8. Communication Is Key
”Without a clear line of communication, mistakes are unavoidable and inevitable. You will never have control over all third parties involved in a transaction. Please do your best to give people what they want. You’ll typically get what you want in return.”
9. Work With Experts
“Don’t sell your home by yourself! Sellers sell for thousands lower when they skip the Realtor.”
Jeff of Upnest
10. Seize The Moment
“The biggest mistakes I have made over 42 years of investing in the Denver area are the houses or properties that I failed to buy when I had the opportunity and the properties that I sold instead of holding on to.”
11. Screen Your Tenants
“When I first began buying rentals, I did not do every bit of due diligence. I got bad tenants because of it. Some simple background checks and checking of references personally could have saved me a lot of hassle…and money.”
12. Double Check Your Renovation Costs
“My company AZ Home often renovates houses to make a profit. It’s super important to make sure your purchase price allows for enough margin in the case that either the house repairs go 15% above the original budget or that the house resells for 15% less than originally planned. Never do a house flip project that can’t allow for those extra precautionary hiccups.”
13. Offer With Confidence
“One of the biggest mistakes my first time homebuyer clients make in the current market is not being willing to submit aggressive enough offers for a property. We’re constantly in multiple offer battles and some clients miss out on a great home because they can’t get their mind around having to go over the top with purchase offer amounts, earnest money deposits, appraisal concessions, etc.”
14. Do Extra Due Diligence When Buying Out Of State
“We purchased a property out of state and did not visit it since the acquisition price was very low. Looking at satellite images of the lot, there appeared to be a run-down cabin on the property and we marketed the lot accordingly. Unfortunately, the GPS coordinates given to us by the county assessor were off and the cabin was actually situated on the neighboring lot. By the time we realized this, we already had a buyer and had to renegotiate the deal.”
15. Evaluate The Kitchen
“After all of the projects I’ve tackled in my real estate career, my biggest mistake was not looking into the kitchen enough before starting a renovation. We found out later on that the sewer line beneath the kitchen floor was collapsed. Not the easiest fix on a renovation, and not cheap either!”
16. Deeply Review The Title And Legal Description Of Properties
“My biggest mistake did come while I was helping a client purchase an investment property. They were buying a condo that was supposed to come with a parking space. The parking space was actually part of the negotiations; the sellers used it as leverage over the other comps in the complex. My clients agreed with the valuation of the space, and closed on the purchase. Months later, their tenant kept getting towed from the space that was supposed to come with the unit. As it turned out, the unit had been removed from title years earlier. I missed that when reviewing title work, and the legal description. While we were ultimately able to recover some cost for my client, I got very lucky. That mistake was on me, and could have caused a lot more trouble than it did. Will never make that mistake again!”
17. Location, Location, Location
“Location is huge, home values rise much higher in areas where growth is high and more desirable.”
18. Factor In Additional Costs
“So many people buy to their maximum and forget to factor in the cost of moving and repairs/renovations AFTER the sale. Many new-built home owners forget they have to cover the windows after they pay to move.”
That wraps up our deep dive into the mistakes and mishaps shared by 18 real estate experts. Real estate is an industry where you can prepare as much as you can, but learning by doing is sometimes the best way to experience the hurdles, get through them, and learn from them! Feel free to share your thoughts with us on your top mistake that you have experiences when buying and selling real estate.
Julie Gardner, has been writing The Perspective for 18 years and has published more than 670 essays on life and real estate.