Purchasing a home should not be entered into lightly. If you buy a home and choose the wrong contractor, you could spend the rest of your money correcting his mistakes. You should be just as careful when you sell your home. If you inflate the price beyond it's real value, the house might never sell. These mistakes are common in the housing market and Real Estate, a real estate publication, developed a list of mistakes how to avoid them.
Here are a few of the homebuyers' mistakes:
- Improperly "Flipping" properties -- Prospective homebuyers would buy a home, renovate it and sell it at a higher price point. However, most owners realized that they bought a home from someone who was exiting the housing market at its peak and had difficulty reselling the home at a high price. Don't be afraid to research the homes original price before you sign on the dotted line.
- Overlooking resale characteristics -- Most homebuyers wanted to choose flooring, countertops, and cabinetry for a new home. Be mindful that prospective buyers might not like the previous homeowner's taste and could choose to design their own home. Don't go overboard with renovations.
- Beware of the developers' freebies -- A few developers offered to throw in free condominium assessments, flat-screen TVs or other freebies to entice buyers into signing a contract. These give-aways were a sign that the market was slowing down. Increased competition and a lack of buyers forced most developers to use incentives to obtain more contracts. It's hare to say, "No" to free television but conscious of why it's free.
- Not understanding closing costs -- Most homebuyers found out too late that large sums of money are needed to pay state, county and city transfer taxes. If the transfer taxes can't be paid the transaction is void. It's wise to research how much money is needed to pay transfer taxes and who pays them.
Here are the sellers' mistakes:
- Overpriced homes -- Many sellers realized, after several months of having their house on the market, that they couldn't sell their house at a high price point. It's important for sellers to realistically price the home to sell in the current housing market.
- No longer showing the house after the contract is signed -- Many sellers took their homes off the market once the contract was signed. But many buyers got a case of cold feet and didn't follow through with the purchase. Continue to show the home until the buyer closes the deal.
- Refusing to pay the buyers? closing costs -- A few homebuyers asked for and received givebacks from sellers (closing costs were the most popular.) However, most sellers had not developed a strategy for giveback requests. Seller should formulate a plan to handle these requests.
The housing market can work for you if you avoid these homebuyers' and sellers' mistakes. For more information, visit our Home Buying section.