Buying a piece of property in LA, especially for the first time, can be exhilarating. However, amidst the euphoria of owning a new home, there are costly mistakes often made by property buyers as a result of a lack of proper understanding, which could turn their joy into a property nightmare. Here are the top 5.
This is arguably the biggest mistake one can make when buying real estate anywhere, whether it’s your first time or your hundredth. This doesn’t apply much to property companies as it does to real estate agents but you have to be very careful all the same. Because the entry barrier to becoming a real estate agent or running a real estate business is very low, you often find newbies on the other end of the table who know next to nothing about the state laws. This has nothing to do with the number of years he or she has spent as a real estate agent but has everything to do with the experience he or she has gathered during those years. An agent who has spent five active years in the business can have more experience than one who is fifteen years into the same business, based on several factors.
Another thing you need to take note of is “why” you’re hiring him or her. If you make the mistake of giving that job to someone simply based on a relationship, you’re heading for doom. Trusting an agent blindly because he or she is a family member or friend is definitely a wrong move. Don’t get sentimental.
Budgeting, when it comes to buying a house, is one of the most critical things you need to tackle before you begin your hunt, and this must be done as early as possible, with a lot of thought given to it. Knowing how much you can afford to spend on a property would save you a ton of stress and unnecessary expenses. Since the internet is now replete with more listings than one can ever need, it is very easy for property buyers to peruse the internet excitedly in search of a new property. More often than not, property buyers, especially those buying their first property, make the mistake of diving into the pool of unending listings on the internet before carefully considering the amount of money they are willing to invest in their new property.
This singular act, as simple as it sounds, can cost the property buyer a lot of money, and possibly wreck him or her financially. Don’t let the bank be your mortgage adviser. Plan your finances all the way to the end with your real estate agent or financial planner, starting with the down payment and closing costs, up until the last mortgage payment is made. Plan your budget alongside your investment portfolio (if any), monthly cash flow, available assets, revenue, disposable income, and any other vehicle that contributes to your net-worth. Don’t forget to add up future expenses too, for example, home inspection, general maintenance, and other things like furniture, placemats, shower curtains, air fresheners, big appliances, surge protectors, dishware, first-aid kits, etc that you need to set in place before finally moving into that home.
This tops the reasons for making the most unreasonable decisions when buying a home. Buying one simply because you have grown fond of it, or you fell in love with it, at first sight, is one of the silliest reasons to buy a house, except, of course, you collect houses or it was once in your family and it means a lot to you. Many property buyers have fallen into the trap of liking a property so much that they forget the reason for the property search in the first place. This seldom happens to real estate investors and rehabbers because they would most likely tear the building apart or renovate it completely. Homebuyers, however, should be extra careful when searching for the property of their dreams. Many times, this comes to you as “gut feeling”. This is not to say that you should ignore those feelings when you have them, but be sure about the outcome of your actions before you take them. The property market has more than enough similar options for you to pick from, and you should go through the selection stage with a trusted real estate professional.
This may not seem like much to you, but to someone else, those extra thousand dollars could have gone into something more fulfilling. Due diligence must be carried out before committing your hard-earned money to a property. Before making the big purchase, ask to see a copy of the appraisal. Some sellers do not go through that process and often overprice their properties. If the seller doesn’t have an appraisal report, request to come with your appraiser. If the seller is honest and ready to sell, he or she will allow you to go ahead. This report will come in handy when it’s time to negotiate, and sometimes, you might not have to negotiate the price but the terms. Whatever works best! On the flip side, some sellers try to do everything by themselves, and this leads to them asking for a price below the market value, unknowingly. If you recognize such deals, and you are interested in the property, you could carry out an appraisal and compensate the owner later, or do what works best for you. However, it would be nice to value that relationship over the unforeseen interest. Who knows, you might need his or her help later on.
While it is known that some people do not inspect their property before making a purchase, others do but employ amateurs to do the job meant for the professionals. It is utterly wrong not to inspect your property before making a purchase, but what’s worse is spending a lot of money to hire an unqualified inspector. Anything from electrical wiring and plumbing to the structure itself can go wrong with the property in the next few weeks or months, and then, it would be more expensive to fix. The only condition where you can afford not to inspect the property is if it has just been constructed.