Those who don't learn from history are doomed to repeat it, the old proverb goes, so as the real estate market marks time before firing up again in the spring, 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:
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 a 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.
Exposing your hand
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 step
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.
Assuming 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.
Timing the bubble "burst"
Thousands 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. In almost all sections of the country, the bubble remains "intact." 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. Always take the approach that real estate is a long-term investment.