Don’t Do This! MASSIVE Mistakes Home Buyers Are Making

Homebuyers are making some huge mistakes when it comes to buying a home. With the changes the real estate market has gone through over the last few years, some tactics and strategies have changed for sure. But there are also some basic things that must be done and some of them are being overlooked. And this is what we're going to talk about in today's video. I'm Shawn Shackleton, your resource for all things real estate here in the Scottsdale and Phoenix market. Now, first up is not doing enough research before you move. Now, it doesn't matter if you're moving across town or across the world. Research is a critical component when you're making a decision about buying a home. However, both seasoned and first-time homebuyers can underestimate the importance of this research, both for the area they're looking to move to, as well as thoroughly understanding the process. Now, first-time homebuyers might be a little unsure of exactly what they need to research, while seasoned homebuyers might assume they already know everything. And if you don't thoroughly do your homework, you will not understand about market trends. And I'm talking about the market trends that are going on in the area that you're looking to move to. Because you might be moving from a place that's maybe in a buyer's market into a place that is a seller's market. And if you don't know this about the market you're moving to, you might miss out on a house or two before you really understand what kind of competition you're up against. You also need to understand how the process will go. What does the inventory look like? And by that, I mean, how many homes are on the market? This will give you a really good understanding on what you should expect regarding timing. You also need to understand once you get the home under contract, how long is it normal for the home to close? Here in Arizona, it's typically 30 to 45 days. And of course, that's always negotiable. We in Arizona also don't use attorneys, which is very different for other people when they're coming from a state that does use attorneys. Having an understanding of the timelines in the contract is also really important. Now, I never expect my buyers to absolutely have this memorized, but I do go over it at length with them so that they understand how this process is going to take place and what to expect when. I have just found that the more information that I can give them and the more they understand, the less stressful it is throughout the entire process. Then there is the research on the neighborhood you're looking to move to. This is important for a lot of reasons. First up is I believe you need to love where you live. Let's just say you fall in love with a home, but you don't do your research about the neighborhood developments that might be coming, school districts or the crime rate. This could put the investment that you just put into that home at risk. So understanding all of this is really important. Another mistake I see is when buyers make really emotional decisions when it comes to buying the home. Now, I will say that buying a home is one of the most emotional and stressful things people can do. I mean, as far as stress, it is right up there with death and divorce. And it's really easy to get attached to a property that just feels right. And it's easy to get a little competitive if you're up against multiple offers or let it go when maybe you should have hung in there. I have seen both first-time homebuyers and seasoned buyers make this mistake and let their emotions completely drive their decisions, which ultimately leads to choices that they might end up regretting. So when you are looking for a home, it is best to keep your emotions in check the best you possibly can. Now, trust me when I say I know this can be hard. You are looking for a place where you are going to be spending the bulk of your time, where you are going to invite family and friends over to make memories. Just make sure you try to keep everything in perspective. And if you do, you'll end up making the right decision. Another mistake I see is when buyers completely ignore the total cost of homeownership. Now, when you're buying the house, it is really easy to only focus on the purchase price, your down payment and your closing costs, which if I'm being honest, are sometimes forgotten about as well. But you also have to consider the full scope of all the costs associated with homeownership. These costs can include ongoing maintenance, utilities and potentially an HOA fee. Then you have property taxes and homeowners insurance. Now, if you've got a mortgage, those fees are likely going to be incorporated into your overall mortgage payment every month. But there's things that you have to budget for. And if you've paid cash for the house, you will have to remember to pay those fees all on your own. Now, something that you need to be aware of about your homeowners insurance. This can change every year. And more recently, it really has for everyone across the US. What does that mean to your monthly payment? It means your monthly payment for your mortgage could go up. This happened to us this past year. Now, it didn't drastically change our payment, but it did increase our payment. And there was not much we could do about it. Now, to my knowledge, having your homeowners insurance affect your mortgage payment for most. This was a first this past year. I know it was for us. Now, if you don't account for these additional costs, then it can lead to things being more expensive because of deferred maintenance and the overall deterioration of things on the home. And if you don't continually maintain things on your home when you go to sell it, this is when sellers are often surprised when the inspection report comes back thinking that they had nothing wrong with their house. Yet the inspector just found a list of things that needed to be addressed. And guess what? This is when it starts to cost you as well. Now, this next mistake has happened a lot more frequently over the past few years, purely based on the speed of our market. And that is rushing the process. In the ultra competitive market that we have just come out of, many buyers felt pressure to act quickly so that they didn't lose the house. And while that speed was a necessity, you still have to make sure that you are not making the decisions too hastily and just agreeing to everything that the seller wants. You have to still take into consideration what that really means for you. Ultimately, cutting corners like waiving an inspection or waiving the appraisal could end up costing you more money down the line. Now, I will say over the past few years, to help my clients secure a home, I would write into the contract things like, as long as no major defects are found. And I would do this to protect my buyers from not being able to back out of the contract should during the inspection period something major pop up, like the entire roof needs to be replaced or all of the pool equipment is shot, or quite honestly, anything else that my clients deemed as major. Once we got that inspection back, my clients could then make the decision whether they wanted to proceed or not. But never did I ever have a client buy a home without doing an inspection altogether. This is something that I would never suggest to any buyer. It is really important that you understand exactly what you're getting into before you buy the house. Now, when it came to waiving the appraisals, this is only something that I would do if I knew that the lender could get the appraisal done within our inspection period. So that if the value came back too low, my client still had an out in the contract. Now, here's what you need to know if you're going to be doing any of these types of things. You must be working with an experienced real estate agent who understands all the ins and outs of the contract so that you are protected. Then they need to be able to explain it all to you so that you understand the risk and you are comfortable with it. Which leads me to my next mistake, which is either skipping the fine print or not understanding the fine print. Real estate transactions have a lot of paperwork. You have contracts, disclosures, and loan documents. First time homebuyers will feel overwhelmed and might inadvertently overlook a few things. While seasoned buyers might feel like they've already been down this road and know everything they need to know, not realizing that things might have changed since the last time they bought a home. It is important for you to understand what you're agreeing to before you sign anything. Do you have contingencies in the contract? Have you shortened the inspection period? Is your earnest money not refundable after the inspection period? You need to understand all of this and how it might affect the timelines in the contract, which then puts your money at risk. Something else I see buyers making a big mistake about is not planning for the future. Homebuyers often focus on their immediate needs, finding that home that fits the lifestyle that they live right now. However, it's critical to consider how your needs might change over time, whether it's a possibility of growing a family, a change in job locations, or eventual resale. Both first time and seasoned homebuyers need to think about the future when buying a home. And if you don't, you could find yourself needing to sell and move much sooner than you had previously anticipated. Now, I probably see this most often when it comes to people buying second homes. Oftentimes, these buyers will come in looking for something a little bit small, maybe three bedrooms, two baths, but in a great location. I will then talk to them about their family. How big is it? Do they have a lot of friends that they plan on inviting to come visit them while they're here? If they tell me, yes, they do plan on having friends and family come visit them, the next thing I will tell them is, I would buy something a little bit bigger than you maybe would have thought, as long as it's within the budget. Because as soon as your friends find out that you have a home in Arizona, they multiply by 10. Now, if they stick to their original plan, I usually get a call in about two to three years with them telling me, I need to sell my house because I need to buy something bigger. All my friends are coming and the house is just a little bit too small. Or they decide to make Arizona their primary residence and wherever it is that they lived prior, that becomes their second home. Now, this next mistake can cost you a lot of time, money and frustration. And that is failing to adjust your expectations. Real estate markets change often. And the way things went the last time you bought a home is probably not the way that things go now. We could have different documents, different requirements and different timelines. Then you add in how the actual market is doing, which then changes how contracts are written and what is expected of both buyers and sellers. If you are set on replicating your past buying experience or duplicating an experience that you heard about, you could struggle if you don't adjust your expectations. This also includes adjusting what you are expecting to get in a home at a specific price. As the market changes, all of these factors change. And if you are too rigid through this process, it is going to be very hard to meet that idea that you have in your head. Be open to seeing some things that might not be exactly the perfect home for you, but might be close. The reality is that everyone has to compromise on something in their home, even those that design and build a custom home specifically for themselves. Now, this mistake will come back to bite you when you want to sell your house. And that is not considering future resale value. When buyers are out looking for a home, they can get really emotionally attached to a home that maybe is newer with all of the finishes that they've ever wanted. Or maybe it's not newer, but it's been completely updated exactly the way that they would do it. However, there are some very important things to keep in mind from an investment standpoint. And that is what every house is. I don't care if it's a primary home or a second home. You have to think about any objection that the house has when it comes to selling it in the future. It could be in a great neighborhood, but back a busy street or have two-story homes all around it. So your backyard has no privacy. Neither of these are ideal for selling the home down the line. If the floor plan is not straightforward and it makes it hard to envision where furniture placement should go, this could be a challenge as well, which could lead to you needing to have the home staged so that buyers can visualize how the space would work for them. Some of these might not be deal breakers for you, but it could be to the next buyer, which will have an effect on your overall ability to sell the home for top dollar quickly. Now, if you'd like to see what homes to completely avoid, make sure you take a look at this video. As always, I thank you for watching and I'll see you next time.