Expert's Top 10 Real Estate Blunders

By Robert Jenson (c) 2008

Buying and selling real estate in today's tumultuous, highly demandingmarketplace is not for the faint of heart. While tricks of the trade aboundto give buyers and sellers a leg up on the competition, there are also anumber of basic pitfalls buyers and sellers should be aware of lest theycommence their real estate venture on shaky ground.

First and foremost, do your homework before hiring a REALTOR®, either as alisting or buyer's agent, as not all are created equal. Interview at least3 real estate professionals, and come prepared with a list of questions youplan to ask. What is their track record? How do they market listings?What services do they provide as a buyer's agent that their competition doesnot? Due diligence is key to finding a representative prepared to work notjust hard - but smart - on your behalf and who will be available to answeryour questions along the way.

For Sellers

It's also wise to have listing paperwork and disclosures completed at leastone-week before your house officially goes on the market. This way youragent can have photos complete, flyers ready, Internet ads up and running,etc. on the very first day your listing hits the market. Also be sure toget a copy of your home's MLS listing from your agent so you can avoid acostly error. It's entirely possible a bedroom was missed, or something wasoverlooked. Work as a team to make sure our home's listing is accurate...andthat the description is inspiring!

Those whose homes have languished on the market for longer than anticipatedshould start thinking outside of the box and contemplate making a "ReverseOffer." Consider that one buyer who has been back for a second or possible3rd look, but hasn't pulled the trigger. Make them an offer! Yes you, asthe seller, should put something in writing and submit it to the buyer'sagent. This will create an opportunity for the buyer's agent to sit downwith his or her client and potentially help close the deal.

House still for sale 4-weeks later? It's time to take a hard look at theprice. Your greatest number of showings will happen within the first 3-4weeks of a listing hitting the market. This is because there is already apool of qualified buyers waiting for new homes to come on the market thatmight match their criteria. So, if you've had no bites by week 4, it's timeto increase your exposure by making a price adjustment. Repeat again every4-weeks, or sooner depending on how urgent or motivated your situation is.

For Buyers

Also early on, if you intend to secure a mortgage loan you'll want to getpre-qualified, which determines how much you can afford. It allows you tomove swiftly when you find the right home - especially when there are otherinterested buyers. It also indicates to the seller that you are serious andcan afford to buy the property. If you plan to cover the transaction incash, you'll then need to provide advance proof of available funds.

Buyers should also spend the time needed to shop for the most favorablerates and terms. A difference of even half a percentage point can mean aconsiderable savings over the life of a loan. For example, the difference inthe monthly payment on a $100,000 mortgage at 8 percent vs. 7.5 percent isabout $35 per month. Over 30 years, that's $12,600.

Once the finances are in order, there are many other things to consider whenbuying a home, including its resale potential. For example, inneighborhoods with attached three-car garages, a two-car or detached garagemay adversely affect the home sale and future value. Number of bedrooms,floorplans, location, and proximity to noisy streets are among other factorsthat can prove problematic for a future sale.

The bottom line? Take a macro approach to evaluating homes before signingon the dotted line.

What blunders should buyers and sellers avoid at all costs? Consider theseall too common property pitfalls:

Buyer:

--Not Getting Loan Pre-Approval: Many buyers want to find the "perfect"home before having their credit pulled, which can backfire when an offer ison the table and time is of the essence. It's wise to get pre-approved fora loan even before you view your first home. Your credit report may containinaccurate information that you were not aware of, which can be a timeconsuming process to rectify. Or, you might not like what loan program youqualify for, or you might qualify for a higher loan value than you thought.Ultimately, you will need a pre-approval letter with your offer, so doyourself a favor and do this in advance. It's free, after all.

--Having Unclear Goals - Create a realistic idea of the property you'd liketo buy. What features are most important to you? Make two lists: one of theitems you can't live without and one of the features you would enjoy. Refinethe lists as the house hunt progresses, but remember that no place is goingto be 100% perfect. It is going to be up to you to put the finishingtouches on and call it home.

--Forgoing Home Inspections - After your offer is accepted, set up a homeinspection. It's not uncommon to find problems, including leaky roofs,cracked walls, insect infestations and foundation problems. Hire a reputableinspector, and negotiate to get you the most for your money once theinspector's report is final. If you negotiate repairs as part of thepurchase, ask for a "walk through" before finalizing the paperwork to assureall issues are resolved to your satisfaction. Also inquire about homeprotection plans as part of the purchase, which may save you money in theshort and long-term future.

--Not Shopping Mortgages - A difference of even half a percentage point canmean a considerable savings over the life of a loan. For example, thedifference in the monthly payment on a $100,000 mortgage at 8 percent vs.7.5 percent is about $35 per month. Over 30 years, that's $12,600. Be asmart consumer and comparison shop for the most favorable mortgage rates andterms.

--Not Using a Buyer's Agent - Purchasing a home could be the most importantand complex financial transaction you engage in, and going it alone isrisky. Indeed, a buyer's agent can save you time, hassle and thousands ofdollars. Take time and care when selecting a real estate buyer's agent -find someone you can trust, and that you have a good rapport with.

Seller:

--Overpricing - Every seller naturally wants to get the most money for hisor her product. The most common mistake that causes sellers to get less thanthey hope for, however, is listing too high. Listings reach the greatestproportion of potential buyers shortly after they reach the market. If aproperty is dismissed as being overpriced early on, it can result in laterprice reductions, which reflect poorly on the listing. Overpriced propertiestend to take an unusually long time to sell, and they end up being sold at alower price than they likely would have had they been priced properly in thefirst place.

--Limiting Showings - Are you serious about selling your home? Then youneed an open door policy and to ensure the home is ready to be shown at thedrop of a hat...even if you're not around. Pack up your valuables andprovide an outdoor lockbox that real estate agents may access at theirdiscretion. Most showings are fairly spur of the moment, and you don't wantto miss out on any qualified prospect.

--Failing to Stage: When attempting to sell your home to prospectivebuyers, do not forget to make your home look as pleasant and fresh aspossible. Plant flowers, wash the windows and screens, put on a coat of newpaint, lay new carpet, add furnishings and décor items, eliminate clutterand remove personal photographs from around the house. It's time to showoff your beautiful home and make someone else feel completely at home in it.First impressions are critical, so ensure the junk is packed in boxes, andall boxes are put in storage vs. the garage so the prospective buyer canproperly evaluate and appreciate that part of the house, too. Clean out theclosets, so they look bigger.

--Offering Repair Credits - Would you buy a Ferrari with bent rims, stainedrugs and cigarette burns in the seats, even if the seller was offering a"repair credit"? Doubtful, as the buyer would have an understandable poorimpression of how the vehicle was treated and assume the worst. When sellinga home, eliminate any need for such credits in advance. Even before you listit for sale, hire professionals to inspect the roof, pool, and otherstructural elements, and for termites and other important buyerconsiderations. Make ALL repairs before you list the house on the market tothwart anticipated objections in advance.

--Being Ill-Informed: It is extremely important that you are well-informedof the details of your real estate contract. Real estate contracts arelegally binding documents, and they can often be complex and confusing. Notbeing aware of the terms in your contract could cost you thousands forrepairs and inspections. Know what you are responsible for before signingany contract. Can the property be sold "as is"? How will deed restrictionsand local zoning laws affect your transaction? Your real estate professionalshould ensure you know the answers to these kinds of questions, which cansave you a considerable amount of money

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Please contact me, Robert Jenson, for more information on this or any otherreal estate related matter at Rob@TheJensonGroup.com or through my Web sitelocated at www.TheJensonGroup.com.