Monday, August 25, 2014 / by Teresa Dipeso
When it comes to buying or selling your home, what you don't know can cost you, literally.
Whether it's not doing your research or getting too emotionally involved, making the wrong choices can wind up costing you tens of thousands of dollars.
To avoid this fate, check this list of 15 of the biggest real estate mistakes made by both buyers and sellers — and make sure you don't commit any of them.
On The Buying Side
Not researching the neighborhood: Is this some place you really want to live? What amenities are nearby? How is the school district? What does the traffic and street activity look like when you drive by it at different times of day, like Sunday morning and Monday evening rush hour?
Not getting an inspection: This is one of the biggest investments you'll ever make, and you'll be living with it for years to come. Don't pinch pennies — shell out $400 for an inspection. Make sure you know exactly what you're signing up for.
Buying (or not buying) based on the decor: Paint color can be changed. Tiles and cabinets can be changed. What you want to look at are the bones of the house. Will it meet your needs? Does it flow well? Does it have enough space?
Buying the priciest home on the block: Hate to break it to you, but the most expensive home on the block isn't a good deal. It will only depreciate over time, and you could have trouble selling it when buyers can see plenty of more reasonably priced options in the same neighborhood.
Being unrealistic with your budget: Just because you qualify for a $250,000 mortgage, that doesn't mean you can afford it, especially when you factor in the other costs that come with homeownership. Be real and only look at houses you can realistically afford.
Being unrealistic about your DIY abilities: Will you really (truly) want to tear down that wall to make a master suite or gut the entire kitchen to make it work for you? Don't let too much HGTV and delusions of grandeur drive you to buy an ongoing project you'll regret taking on.
Making a tiny down payment: If you can't put down 20%, you'll face private mortgage insurance (aka PMI) payments and a higher monthly mortgage payment overall. It may be worth saving up for an extra year or two to reduce your long-term costs.
Buying when you're not ready: Are you ready financially (like having that decent down payment) — but also, are you ready emotionally? Are you sure you want to stay in this area for years? Does your income feel stable? Are you prepared to take on all that yard work and the repairs you avoided as a renter?
On The Selling Side
Not keeping resale in mind when renovating: The custom changes that make your house work better for you may not appeal to potential buyers. Not everybody loves that bright green paint color — no matter how much you personally adore it. Make sure any big changes you make will increase, rather than decrease, your home's value.
Sticking around during the open house: No one wants the current homeowner hovering over them as they tour the house — it's a lot of added pressure and can prevent them from giving the honest feedback that could ultimately help you sell your home. Go out for lunch and let your Realtor handle showings.
Waiting to list til warmer weather: Yes, most people house hunt in the spring and summer, but that's also when most people list their homes. List yours when it's available and you'll reach those buyers who need a home now and aren't finding much on the market.
Setting the price too high: What your home is worth to you and what it's worth on the current market can be vastly different. Take a good look at comparables in your area and make sure you're being realistic about your home's value.
Not doing enough marketing: Just putting up a "for sale" sign isn't enough. Talk with your realtor about other options, like online listings with virtual tours to attract buyers who aren't looking in the classifieds.
Not getting a real estate agent: Unless you've had plenty of prior experience, going the "for sale by owner" route is probably not a smart bet. Realtors can give you crucial insights, marketing advice and, most importantly, can get your property on the multiple-listing service (or MLS), which gets it in front of other agents. (You can, however, hire a "discount agent" who will just list your property on the MLS but offer little advice. Not recommend for first-timers.)
Not staging your house: You need to help buyers envision themselves in your home. This includes removing any clutter and overly personal items (like family photographs) and making sure furniture flows well and demonstrates the purpose of each room.