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The Three Deadly Mistakes Everyone Should Avoid

Deadly Mistake #1: Thinking you can't afford it.
 
Today, buying the home of your dreams is easier than ever before.  Many people who thought that buying the home they wanted was simply out of their reach are now enjoying a new lifestyle in their very own new home. 
 
Buying a home is the smartest financial decision you will ever make.  In fact, most American and Canadian home owners would be financially broke at retirement if it wasn't for one saving grace - the equity in their home.  Furthermore, mortgage rates are more flexible today than ever and tax allowances favor home ownership. 

Real estate values have always risen steadily.  Of course there are peaks and valleys, but the long term the trend is a consistent increase.  This means that every month when you make a mortgage payment the amount that you owe on the home goes down and the value typically increases.  This owe less-worth more situation is called equity build-up and is the reason you can't afford not to buy.
 
Even if you have little money for a down payment or credit problems, chances are that you can still buy that new home.  It just comes down to knowing the right strategies, and working with the right people.  See below.
  
 
Deadly Mistake #2:  Not hiring a buyer's agent to represent you.
 
Buying property is a complex and stressful task.  In fact, it is often the biggest single investment you will make in your lifetime.  At the same time, real estate transactions have become increasingly complicated.  New technology, laws, procedures and competition from other buyers require buyer agents to perform at an ever-increasing level of professionalism.  For many homebuyers, the process turns into a terrible, stressful ordeal.  In addition, making the wrong decisions can end up costing you thousands of dollars.  It does not have to be this way!
 
Work with a buyer's agent who has a keen understanding of the real estate business and who is on your side.  Buyer's agents have a fiduciary duty to you.  That means they are loyal to only you and are obligated to look out for your best interests.  Buyer's agents can help you find the best home, the best lender and the best inspector.  Best of all, in most cases, the buyer's agent is paid out of the seller's commission, even though he/she works for you.
 
Trying to buy a home without an agent at all is, well... unthinkable.
 
 
Deadly Mistake #3:  Getting a cheap inspection.
 
Buying a home is probably the most expensive purchase you will ever make.  This is no time to shop for a cheap inspection.  The cost of a home inspection is very small relative to the home being inspected.  The additional cost of hiring a certified inspector is almost insignificant.  As a homebuyer, you have recently been crunching the numbers, negotiating offers, adding up closing costs, shopping for mortgages and trying to get the best deals.  Do not stop now.  Do not let your real estate agent, a patty-cake inspector or anyone else talk you into skimping here.  
  
NACHI front-ends its membership requirements.  NACHI turns down more than 1/2 the inspectors who want to join because they can't fulfill the membership requirements. 
 
NACHI certified inspectors perform the best inspections by far.  NACHI certified inspectors earn their fees many times over.  They do more, they deserve more, and yes they generally charge a little more.  Do yourself a favor...and pay a little more for the quality inspection you deserve.
 





What Really Matters

Buying a home? The process can be stressful.  A home inspection is supposed to give you peace of mind, but often has the opposite effect.  You will be asked to absorb a lot of information in a short time.  This often includes a written report, checklist, photographs, environmental reports and what the inspector himself says during the inspection.  All this combined with the seller's disclosure and what you notice yourself makes the experience even more overwhelming.  What should you do?

Relax.  Most of your inspection will be maintenance recommendations, life expectancies and minor imperfections. These are nice to know about.  However, the issues that really matter will fall into four categories:

 

  1. Major defects.  An example of this would be a structural failure.
  2. Things that lead to major defects.  A small roof-flashing leak, for example.
  3. Things that may hinder your ability to finance, legally occupy or insure the home.
  4. Safety hazards, such as an exposed, live buss bar at the electric panel.
Anything in these categories should be addressed.  Often a serious problem can be corrected inexpensively to protect both life and property (especially in categories 2 and 4).

Most sellers are honest and are often surprised to learn of defects uncovered during an inspection.  Realize that sellers are under no obligation to repair everything mentioned in the report.  No home is perfect.  Keep things in perspective.  Do not kill your deal over things that do not matter.  It is inappropriate to demand that a seller address deferred maintenance, conditions already listed on the seller's disclosure or nit-picky items.





Pre-Listing Inspections

Eventually your buyers are going to conduct an inspection. You may as well know what they are going to find by getting there first. The author points out that having an inspection performed ahead of time helps in many other ways:

  • It allows you to see your home through the eyes of a critical third-party.
  • It helps you to price your home realistically.
  • It permits you to make repairs ahead of time so that ...
  • Defects won't become negotiating stumbling blocks later.
  • There is no delay in obtaining the Use and Occupancy permit.
  • You have the time to get reasonably priced contractors or make the repairs yourself, if qualified.
  • It may encourage the buyer to waive the inspection contingency.
  • It may alert you of items of immediate personal concern, such as radon gas or active termite infestation.
  • It may relieve prospect's concerns and suspicions.
  • It reduces your liability by adding professional supporting documentation to your disclosure statement.
  • Alerting you to immediate safety issues before agents and visitors tour your home.

Copies of the inspection report along with receipts for any repairs should be made available to potential buyers.



         
Is Your Inspector Really Qualified?

Licensing of home inspectors only sets a minimum standard.  Much like being up to code, any less would be illegal.  Imaginary people, children, psychics (who claim to "sense" if a house is OK) and even pets can be home inspectors.  That is why NACHI front-ends its membership requirements.  NACHI turns down more than 1/2 of the inspectors that apply to join because they can't pass their examination or fulfill their membership requirements.