mistakes to avoid in real estate in 2006
Those who don't learn from history are doomed to repeat it,
the old proverb goes. With the real estate market in a down cycle, it's a good time to mull over some of the more common things
"not-to-do" to clear a trail for a happy home sale or purchase.
Here are my picks for 10 mistakes
to avoid in 2006:
Timing the "bubble burst"
of apprehensive sellers and buyers have been playing this game since the late
1990s, trying to time their sale to either beat the "pop" and gain optimal
profits, or to swoop in and pluck up cheap property after a burst. This is a year when the seller's market has turned into a buyer's market in many sections of the country, with inventories up and prices either leveling or falling. But the slowdown is unevenly spread across the country, and so is the amount of panic in your local real estate salesperson's eyes. But nowhere has there been a dramatic "pop" -- and you probably shouldn't expect one. Historically, for the most part,
real estate bubbles don't pop, they just slowly deflate and the market levels
off then surges again in the near future. A lot of fast-buck speculators are learning the hard way in 2006 that rapid appreciation in prices is not guaranteed. Always take the approach that real estate
is a long-term investment.
Not understanding the length
of the buying/selling process
You know what happens when you make decisions based on optimism,
time-on-the-market averages and generous promises from agents --
ye old Murphy's law kicks in. The home-selling process is often
more extensive than you think, from the early planning stages to
protracted negotiations to oft-delayed closings. Sellers can take
months before they formally accept a buyer's offer. Financing can
get held up, buyers have tough time selling their old house, rough
edges discovered in the final walk-through must be smoothed, etc.
Give yourself a couple extra months to complete the deal.
Never let love for a house cloud your vision. Try to contain
your enthusiasm. Otherwise, the sellers and (or) their agent will know they've
hooked a live one and assume you may forgive certain flaws because you know the
place is right for you. You can scream "yes!" when you get back out
in your car.
Skipping the loan preapproval
For buyers, getting preapproved for a mortgage gives you a clear
idea of how much you can safely borrow, plus it addresses credit-rating
issues and kick-starts other financial paperwork. What's more, it
identifies you as a serious buyer. Sellers with a hot property should
demand nothing less than proof of preapproval from the potential
buyer's financial institution. No sense in wasting time on time-wasters.
the appraisal equals actual value
In theory, appraisals are objective
estimates of value. But several different appraisals can yield several different
numbers. For example, an appraisal that's been done for a possible refinance may
have been slightly inflated to encourage that refinance. So sellers, before you
put your home on the market, have an agent do a comparative market analysis to
better indicate the home's worth. And buyers, get similar "comps" from
your agent. But realize the true value of a house is what someone is willing to
pay for it.