According to the Today Show's Real Estate Contributor, Barbara Corcoran, there are at least five mistakes home buyers should work to avoid prior committing to a purchase of a home. By not doing so, the new homeowner could find him/herself paying far more than anticipated. They are as follows:1) Waiting for prices to come down.
Nobody knows when the tide will turn, and based on historic data it always inevitably does. The best you can do is buy within the low and we're definitely in the low right now.
You also need to keep the interest rates in mind. If you wait for prices to come down by 10%, and interest rates go up by a half a point, your monthly payments will be the same. Historically speaking this also makes now a good time to buy. The people I would advise not to buy right now are those who don’t plan to stay in their homes for very long. If, however, you are ready to make a long-term commitment, now is as good a time as any to buy a home.
2) Picking the wrong town.
Every town has a personality, and the town that you live in should match yours.
Buying a house ought to be at least a five-year proposition for you to recoup the costs of the actual move, so you need to be careful you don’t find yourself stuck in the wrong town for five years.
Don’t plump for a town arbitrarily: Try picking up and dropping off at the local school, if that’s what you’ll be doing every day for the next five years. Buy a cup of coffee on Main Street on Sunday morning; see if it is a pleasant experience. Get school data online at homefair.com, you'll find test scores and college acceptance rates. Good schools also mean good future values.
The block determines value more than the actual home. It is always better to move into the worst house on the nicest street.
3) Not asking to see the last six months of electric and water bills.
Check to see if utility bills match what you were told, so you'll have a realistic idea of what you'll be spending. If the heating system in the house is old it may bleed money, which will mean one of two things: High bills or the high costs of replacing it. If you are already stretched on the mortgage this could land you in real trouble.
4) Falling in love with the décor.
If the house is decorated in a way you find very appealing you may find yourself instantly smitten and forget the things you are really looking for in the house. Conversely a house with unappealing décor may scare you away. Try to think more in terms of the floor plan than the surface stuff. Try to take in the size, the condition and natural light situation.
5) Buying a money pit.
Money pits always cost you more than you think. A small kitchen renovation usually costs between $25,000-$40,000. A standard bathroom renovation can cost you between $15,000-$25,000. Even painting a house costs between $7,000-10,000.
If you’ve bought a house that is in a state of total disrepair, you could end up doubling the original sticker price. Be realistic when you go into it about what you can and cannot achieve.
With a glut of properties to chose from in the market right now, there should be no reason to make any of the above mistakes. You just need to be aware of them.
Barbara Corcoran is the Real Estate contributor for the Today Show and a columnist for New York’s Daily News. She founded The Corcoran Group, one of New York’s largest and most prestigious residential real estate firms. Barbara’s Web site can be found at http://barbaracorcoran.com.
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