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Common Mistakes in Real Estate

 

General Mistakes

  • Trying to buy or sell "at the right time" [1]
  • Failing to understand agency and how it can affect negotiations

Typical Buyers' Mistakes

  • Trying to work with more than one agent [2].
  • Failing to prepare financing [3].
  • Failing to consider the location [4].

Typical Sellers' Mistakes

  • Trying to sell your own property [5].
  • Setting too high a price [6].
  • Failing to prepare for showing [7].
Avoid these and other mistakes. Price your home right by finding out what your home is worth. Check on a house price by asking Dot what the home down the street sold for. Find out how much you can afford in monthly mortgage payments or how much your new mortgage might cost using our handy calculators. Read Dot's advice about choosing a realtor, and remember that the services of a realtor are free for home buyers.


[1] Let's face it, anyone who owns a home is a property investor. However, unless you are a property investor by profession, your main reason for owning a home is to serve your own interests and those of your family, by providing the space and facilities you need or desire. Trying to "time the market" implies that you have lost site of that primary focus and begun to major on a lesser issue. If you sell when the market is low, remember you will also be buying when the market is low, and if you sell when it is high you must also buy when it is high. You will still need a home to live in. Relax, it will average out. Similar reasoning, within limits, can be applied to mortgage rate highs and lows. The only genuine exception is for first-time buyers who are moving from a rental situation to a mortgage situation, but even then it is usually best to get into the market as soon as you have your deposit, since the long term property trend is upwards. For an investor it makes sense to buy when the supply of property is high and mortgage rates low, and to sell when demand for property of your type is high and rising, not when it is low or falling. For the rest of us, our particular needs and opportunities should dictate what we do, even if our home is a major investment.

[2] Many buyers, in an effort to remain in control of their buying process, and to avoid a commitment to any particular agent, try to proceed on their own. You can do this by examining the ads in the paper, driving around until you see a property you like, and phoning the number on the sign. The agent will gladly show you the home, but what do you do when it comes to making an offer ? The agent who showed it will be more than happy to help you, and will probably suggest doing so in order to earn both the selling and buying "ends" of the commission.
As a buyer, having an agent costs you nothing, so you could have had an agent of your own help you with the work of finding the right home. Through the MLS she would have access to properties never advertised in the papers, and to the most recent listings well before the general public hears of them. She would also be a negotiator on your side, contracted to serve your needs when the time comes to put in an offer. She can do a comparative market analysis to tell you how reasonable the asking price is, give you background on how long the property has been listed, and help you set the right initial offer price and terms.
Unless perusing for sale ads, and cruising the neighbourhood to attend open houses is your idea of how to spend an ideal weekend, doing it all yourself just makes no sense. If this is what turns you on, then by all means do so. But if you do find a property on your own and you have an agent helping you, be sensible and bring your agent in before the negotiations begin. For the rest of us, who regard the searching as work, and want the process over as soon as possible - get yourself a buyer's agent.

[3] If your financing is in place you know what you can afford and you will avoid wasting time on properties in the wrong price range for your needs and ability. Often you can make a lower offer attractive if the seller has greater assurance the deal will go through. This can make all the difference when there is a close competing offer. A good buyer's agent will insist you have an adequate down payment and mortgage pre-approval before beginning to work with you.

[4] Look for property which is well located for your needs with respect to schools, shopping, transportation and recreational facilities. Pick a good area and buy the cheapest house on the street. You will be better off financially when the time comes to resell than if you had purchased the best house on the street in a lower priced neighbourhood. This is so even if the prices are the same and the house in the higher priced neighbourhood has less to offer. When the time comes to sell, that house should fetch a better price.

[5] This is not always a mistake, but it most often is. It is almost guranteed to be a mistake when the market is slow, or slow for your type or price range of property, or if you are in any hurry to sell. See the information pages on selling and FSBO for a more detailed treatment of this subject. If you are determined to pursue this route then at least do it as an informed seller.

[6] The market evaluation seems too low, so what could be the harm in going for the most we hope we might get, especially considering all the money we've spent on the place ? The most crucial time in selling a property is the first few days after it is listed. During this time all of the unsatisfied buyers who might have an interest in your property, and do not want anything else currently available, come to see it. At no other time are you likely to get so many people interested at the same time. This is when multiple offers can come in and trigger a competition among interested buyers to raise the price to the highest level, maybe even more than you are asking. If your price is too high, buyers' agents will be less likely to recommend it, people will be discouraged from even looking, and many will often be discouraged from making an offer. You will then be faced with successive price reductions in an effort to spur interest. The buyers' agents will know this and will recommend to anyone with interest that they come in with a low offer. Time has gone by, you are more desperate to sell, and your negotiating position is compromised to the point where you end up accepting less than the original evaluation. That is what is wrong with setting too high a price. It is happening all the time.

[7] It may seem like unnecessary work which adds little or no real value to your much loved home, but a little time and money spent on preparation can make a big difference in the value you receive for it. Building curb appeal with a clean, tidy, well presented front yard and fresh, clean outside paint is crucial to getting people inside, and the more people come in, the greater your likelihood of a good offer. First impressions count for a great deal, but the second impression should be no less. A clean and tidy home free of children, food and clutter, which shows signs of proper care will attract more and better offers. Little things which you may be blind to but which your agent will notice can make many thousands of dollars difference in the end. Heed your agent's advice.

 

Site owner: Dot Turner, Sales Representative, Team Realty K W Inc, Brokerage 519-741-1400

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