5 Mistakes Home Buyers Make in a Buyers' Market

5 Mistakes Buyers Make in a Buyer’s Market

July 17th, 2010 by Anne West
Categories: Buying a home, Real estate

Home Buying Mistakes If you have even a passing interest in the real estate market you know that we are, and have been for the last couple of years, in a buyer’s market; there are more houses for sale than there are buyers and, as a result, buyers are in the driver’s seat.

In this environment you would think buyers could really make out. And they can. But they can also lose out by committing one or more of the following mistakes:

1. Trying to time the market

When home prices have been declining, it is tempting for buyers to wait as long as possible to make an offer in hopes that prices will decline even further. But just like trying to time the stock market, this strategy rarely works. It’s impossible to predict when prices will reach the bottom until they start rising again. And once a home is priced to what the current market will bear, buyers will make offers. Now that sellers have become more realistic about list prices, many properties are actually selling quickly. And recently there have been more multiple bid situations, with some would-be buyers walking away empty-handed. The best strategy is to work with a real estate agent to make an offer based on what comparable homes are selling for.

2. Believing interest rates will stay low

Interest rates are still at 40-year lows right now, but that will not last forever. In fact most economists agree that rates will begin to rise sometime later this year. That will affect not only your monthly payment but also your purchasing power, or how much you can afford. For example, if interest rates rise 1% point, this almost offsets a 10% drop in price…so while you’re waiting to see if prices are going to go down any further, you may be shooting yourself in the foot. You could end up paying a higher price AND a higher interest rate.

3. Not getting lender pre-qualification

Things have changed since the real estate bubble burst. Lending standards are much tighter, both in terms of credit scores, down payments and salary history.
If you are planning to purchase in the near future (or even if you’re just looking), go ahead and contact a lender to see how much you can afford and get pre-qualified for a loan. That way, when you see the home of your dreams, you’ll be able to move on it.

If you are working with a Coldwell Banker agent you can quickly get pre-qualified by a PHH Home Loans professional, without any commitment to get your loan from them. Of course, their rates are very competitive and their service is outstanding.

4. Waiting for something better to come along

It’s ironic. In a seller’s market buyers are falling over each other to buy any house that even remotely meets their criteria. But in a buyer’s market, when there’s so much inventory to choose from, there’s always this nagging feeling that something better might come along, even if the house has everything you are looking for. Like a coach, a good real estate agent will guide you in prioritizing your housing needs and wants and ask questions along the way to keep you focused on your priorities. When you do finally find THE ONE, she’ll help you negotiate the best deal.

5. Thinking you’ll make a killing by buying a short sale or foreclosure

It IS possible to get a good deal by buying a distressed property, but be aware that these kind of transactions have their own set of challenges (too numerous to cover here), and they often don’t turn out to be quite as good a deal as they seem on the surface. Make sure you hire a real estate agent and an attorney who are experienced in this kind of transaction, so they can guide you through the process, negotiate the deal and help you avoid making costly mistakes.

If you have the financial wherewithal to purchase a home and are fortunate enough not to have a property you have to sell first, you have an excellent opportunity to get a great deal on your dream home. Just be careful not to blow it by making one of these costly mistakes.

Tags: home buying tips, Real estate

This entry was posted on Saturday, July 17th, 2010 at 9:25 am and is filed under Buying a home, Real estate. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.