THE SIX DEADLY SINS: BUYING REAL ESTATE WITHOUT REMORSE

You’re in love at first sight:    With your first home.     You can’t wait to get started.   You know exactly how you’re going to redecorate.   You pay the seller her earnest money.   You sign the dotted line.   Then it hits:   Buyer’s remorse.   You panic, you bail, and you’re out $1000.

It’s an opportune time to buy, but if it’s your first time or even your next time, know what you’re getting into.     It can be very costly to be uninformed.     I want your money to go into a fun project in your new home–not down the drain after a serious case of buyer’s remorse.    Spare yourself remorse by NOT doing these six things, homebuyers:

Not getting mortgage preapproval.   Do things the old-fashioned way.   David Hanna, managing partner of Chicago’s SourceOne Realty Meet says to avoid online quotes and short chats with loan officers.     Instead, meet personally with a seasoned loan officer before you even begin looking.   This is especially important for first-time homebuyers.     Your loan officer will educate you about all of today’s loan programs, and rates change daily.    A good loan officer knows when to lock in the best interest rate.  Also, don’t confuse preapproval with prequalification.   The difference:   Preapproved means you have a loan commitment; prequalified means you have a loan estimate.   Once you’re preapproved, you’ll know what you can afford.   You’ll also be attractive to sellers. Preapproval gives you more power to negotiate.

Not working with a real estate agent.   Who is representing your interests?     Buying a home these days is more complicated than ever, and you need the guidance of an ethical real estate professional.   Interview a few realtors and get a feel for their personality.   Do you feel pressured by this person?   Are they listening to you?   Do they seem more interested in their own needs than yours?   Don’t be bullied into a transaction by an aggressive and unethical agent.   Trust your gut feelings.   This is likely going to be the largest purchase you’ll ever make.   Do it with an agent you like and trust.

Not investigating the tax credit.   Do you know about the First-Time Homebuyer Credit?   If not, do your homework, or you could lose out on an $8000 tax credit for a home closed by November 30, 2009.   Want to know more? Contact me.

Underestimating the “mundane” aspects of homeownership.   Do you want the conveniences of city living, where you need not own a car?   Consider where you work and your commute time.   If you fall for a home in the suburbs but work in the city, figure out what your commute time will be.   You may decide living in the city is more convenient.   On the other hand, suburban living might be a better match, and perhaps you work in the suburbs. Do a trial run during rush hour before signing anything.   You might have remorse when you find you’re spending more time than expected commuting in stressful traffic, not to mention all types of weather.

Being influenced by others’ opinions.   This is especially true for younger buyers.   Don’t be pushed into buying in the location your family might want you to be.   They won’t be paying the mortgage, nor will your friends or anyone else.   This is your decision.   Be true to yourself and your means.   Your neighborhood might not be as hip as you’d prefer, but do you really want to live beyond your means?     Work within the limits of your preapproved loan amount and with a trusted realtor.

Focusing too much on the deal.   Watch out for “short sales,” advises David Hanna.   Short sales are foreclosed homes owned by the financial institution.   They appear as good deals on the surface, but can be a nightmare.   These transactions are long and tedious, and there is no guarantee the deal will close.   The former owners may not have been able to afford upkeep, so it could be a fixer-upper.     You might get the house for less up front, but how much sweat equity will you need to invest to get that home in shape?     You may find a more traditional approach is a safer way to go in these times, and inventories are plentiful.   Negotiating the old-fashioned way with motivated sellers not in default means you’ll probably get a home in better condition.