Buying a home is a big step for people. A lot of homebuyers - first-time buyers especially - underestimate the number of ways they can inadvertently sabotage their purchase, especially if they make poor financial decisions leading up to the deal’s closing, or not fully understanding the different factors involved with purchasing a new home. Eric Figg with Real Executives said that one of the biggest mistakes home shoppers make is to start looking at properties before they have qualified for financing. Because they don’t have a good idea of their budget, they often get discouraged when the homes they love turn out to be beyond their price range. “I have seen many buyers become disillusioned with the buying process after finding a home they love and either not being able to afford the payment or not qualifying for the loan at all,” Mr. Figg said. “Sometimes the home they have chosen won't qualify for the type of loan they were approved for, due to condition or location of the property.” Another drawback to skipping the credit pre-approval process is that many sellers want to see an approval letter from a lender before they accept an offer on their home. That delay may be enough to cause the buyer to lose the home they want, Mr. Figg said. A delayed approval letter isn’t the only way buyers often put themselves at a disadvantage. Submitting a less competitive offer is another common misstep by home shoppers. Mr. Figg added that he has seen a lot of buyers submit a lowball offer in an effort to get a bargain on a home. “This tactic may result in two outcomes most buyers have not considered,” he said. “It often angers or insults the seller, causing them to not want to work with that buyer. It also will almost always extend the negotiation period, allowing more time for other buyers to "jump in" and make an offer.” In some cases, the only way to be competitive is to prepare to offer more than the appraised value of a home. Derek Hedden, a Broker Associate with REcolorado, advises his clients to have cash on hand so that they can make a generous offer on the home they really want. “In today's market in Denver, plenty of cash on hand is a must if you plan on buying in the metro area under $350,000,” he said. Other buyers make the mistake of making a large purchase on credit before the home sale is finalized. Whether the buyers are excited about furnishing their new home, or decide the time is right to buy a new car or a boat, doing so will alter a buyer’s debt-to-income ratio, and keep them from qualifying for a home loan. “We are our own worst enemies and we usually realize this in hindsight,” explained Mike Rich of eXp Realty. “Moral of the story- ask your Realtor/Lender before making any big purchases." Derrick Bailey, an agent with Keller Williams, said that other buyers make the mistake of choosing a home inspector based on fees rather than their qualifications. Doing so may save the buyers a couple hundred dollars up front - but ultimately result in a buyer being stuck with costly home repairs down the line. “Here, more than any other time, you really get what you pay for,” Mr. Bailey cautioned. “Not only do bargain barrel inspectors miss things, but most buyers fail to understand that how the report is presented can also make or break inspection negotiations.” With so many potential landmines involved in the homebuying process, the best step a home shopper can take is to work with a qualified real estate agent who can advise them throughout the process.
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