Today, I don’t work in real estate, but I was an agent for many years during my 20s and early 30s. First, I worked directly with buyers and sellers, and then I used my license to cut the cost of buying investment properties for myself.
Those years taught me how to easily navigate the real estate, appraising and mortgage industries. I also saw first-hand what savvy real estate buyers did right, and where others made blunders that hurt their finances.
Click to read more about common real estate myths you should know.
Here are five home-buying mistakes that I never knew before becoming a real estate professional.
1. Skipping a Mortgage Preapproval
Before becoming a real estate pro, I didn’t know all the benefits of a mortgage preapproval. It’s a written commitment from a lender to give you a loan for up to a certain amount for a set interest rate during a period, such as six weeks. It’s based on a deep dive into your financial situation to evaluate your credit, income, assets and debts.
Having this information can save you the disappointment of falling in love with a home that isn’t in your price range. Plus, it tells an agent and seller that you’re a legitimate buyer.
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Depending on a seller’s circumstances, being able to close quickly could be a big advantage. They might accept your offer instead of a higher one that would take longer to close.
So, don’t get sidetracked with online searches, open houses or tours with real estate agents until you’ve set a price range for what you can afford — and have a mortgage preapproval in hand.
More on Real Estate: 32 Insider Tips for Buying and Selling a House
2. Overlooking Fixer-Uppers
Most buyers want a perfect home and get turned off by deferred maintenance or outdated fixtures. If you’re looking for a good deal, overestimating the cost of minor repairs and improvements can be a huge mistake.
Home sellers often discount listing prices by more than the cost to make potential upgrades, like changing paint, wallpaper and carpet, buying new appliances or fixing anything non-structural. That’s why real estate pros often snatch up fixer-uppers as soon as they go on the market.
Choosing a home in a great location that needs repairs might offer much more appreciation and a higher resale value than a perfect home in an undesirable area. Just be sure to factor repair costs into your budget.
3. Getting Way Too Emotionally Attached
One of the biggest lessons I learned after becoming a real estate agent is that homebuyers often get incredibly emotional. They might have a dream home or a lifestyle in mind that clouds their judgment and causes them to overpay.