Top 10 Mistakes

10 Biggest home-buying mistakes

Beware: Many homebuyers get too much house, the wrong mortgage and fail to consider resale value.

CNN/Money staff writer Leslie Haggin Geary

NEW YORK (CNN/Money) – So, you’re ready to take the plunge and buy a new home. Maybe it’s your first brush with the American dream. Or perhaps you’re moving up in the world.

No matter. The same pitfalls await whether you’re shopping for a starter home or a lavish mansion. And in the current market, with houses selling within days — even hours — of being listed, buyers are prone to make mistakes.

“The problem is people get caught up in a wave and they get steered into a transaction,” said Richard Roll, president of the American Homeowners Association. “They think, ‘If I don’t [buy] now I’ll never be able to do it.’…You’ve got to do your homework.”

1. You didn’t set a budget

Buy a home that’s way out of your price range and you could well derail your ability to fund other important items such as retirement savings, your kids’ education — not to mention an entertainment budget.

Mortgage brokers will tell you how much you can borrow. But that amount may not be what you can afford to pay, said Eric Tyson, co-author of “Home Buying for Dummies.”

“What if you have a lot of kids or you like to travel a lot?” he said. “You’ve got to ask ‘How is this housing purchase going to affect our monthly spending?’ You have to look at all of your monthly expenditures.”

Experts say your total monthly debts, including your mortgage, should not exceed 36 percent of your income before taxes. (To help find the right-priced house for you, read our primer on how much home you can afford. And for help estimating how much mortgage you may get, try our mortgage qualifier.)

2. You picked the wrong mortgage

These days, many homebuyers are rushing to secure a mortgage as fast as possible without fully exploring their options. That’s because sellers often only consider bids from individuals who have been pre-approved for a loan. A word of advice? Pick your financing package with care.

Among your choices: adjustable rate mortgages, or ARMs, and the more traditional fixed-rate mortgages. These days,15-year fixed mortgages have interest rates of 6.39 percent compared with 6.8 percent for the 30-year loan. Keep in mind that shorter-term mortgages will cost more per month since you’re paying off your loan faster. Monthly mortgage payments on a 15-year fixed loan typically run 25 percent higher than the 30-year option, said Keith Gumbinger, vice president at HSH Associates.

First-time home buyers may qualify for a program through Fannie Mae (800 732-6643) that requires lower down payments and easier qualification limits than standard loans.

3. You picked the wrong community

Some places are just flat-out expensive, and you’ll probably have to search for a location that’s affordable. That doesn’t mean you should choose the cheapest locale.

If you don’t like the location you’ll be unhappy. What’s more, you’ll probably have a hard time selling your property if the community isn’t good. Ask around and read the local papers to know how the community is faring economically, what the major issues are, how many resources it offers.

Don’t neglect the schools. Gather such data as test scores, statistics on the percentage of kids who graduate and go to college, the student/teacher ratio and so on. Talk to parents and students to get the inside scoop.

4. You didn’t know what homes really cost

The best way to determine if you’re getting a fair deal is by comparing the cost of the home you’re interested in with similar homes in an area. You can do this easily by having your Realtor provide you with a CMA (that’s short for Comparable Market Analysis). A CMA lists such things as addresses of recently sold homes, prices, date sold, the number of bedrooms and bathrooms and — ideally — such things as the home’s condition, its size and extra features.

5. You used a bad real estate agent

Don’t make buying a home more difficult by choosing the wrong agent. You want a buyer’s agent who works for you and understands your needs and financial limitations.

References from friends can help you find a good pro. Interview three, and ask to see their activity lists, which reveal every property the agent sold (or whose clients bought) in the past year. Look at sales prices. Make sure the agent has significant experience in the area where you want to live and the price range that you’re looking for.

6. You never went back to check on the neighborhood

If you’re like most homebuyers, you probably spend many weekends looking for a new dwelling. But what happens to the neighborhood on weekdays or after dark? Is the house that’s “convenient to town” sitting on a main thoroughfare that fills up with cars come commute time?

The only way to answer these questions is to go back and see what the neighborhood’s like at various times of the day and week. Do your neighbors spend weekends with the stereo blaring? You want to know as much about the neighborhood as possible before you buy.

7. You forgot to consider resale

It’s easy when you’re house hunting to forget what it’s going to be like to sell your home down the road. But as you tour homes, put yourself in the perspective of the sellers. You may be drawn to a home that has quirky features or no closets or just one, tiny bathroom (You can use armoires. Share showers.) But others may not be as enthusiastic. When you buy, think about the day it comes time to sell.

8. You bought the most expensive home on the block

It’s wonderful when you find your dream house, but if it’s the most expensive home on the block you could have a problem. Quite simply, your neighbors’ lower home values will dampen yours. Remember, people who buy a $500,000 home usually want to be surrounded by other $500,000 homes, not tiny $100,000 bungalows.

Tyson recommends buyers steer clear of homes that cost 50 percent more than neighboring dwellings.

9. You didn’t do an inspection

Bottom line: you should never buy a home without having it inspected. After all, you don’t want to learn that you’ve bought a house that’s filled with termites or has a frazzled electrical system. If you’re building a new home, an inspection can ensure that all the work has been finished properly.

Home inspections typically run $300 to $600 and usually include a check of a home’s heating and air condition systems, plumbing and electrical works, roof, walls, foundation/structure, drainage, the garage and basement.

What’s frequently not covered? Termite, radon, asbestos, mold and lead inspections. Don’t rely on inspectors to hire other pros to check for these items, said Mike Casey, president of the American Society of Home Inspectors.

“Most home inspectors will describe what they do and what they don’t do,” Casey added. “It might be a good idea to ask what standards do they work to.”

Underground heating oil storage tanks also should be inspected before you buy since leaking tanks cause huge environmental, legal and financial problems. (A seller’s disclosure statement should reveal if there’s an underground tank on the property.) TheEnvironmental Protection Agency has tank guidelines for homeowners — plus contacts at state Department of Environmental Protection offices — so you can find pros to help.

Finally, it’s unwise to hire a home inspector who is recommended by a Realtor, since they’re likely to refer you to a pro who won’t kill a sale. Instead, use recommendations from friends or go to the American Society of Home Inspectors for a list of inspectors in your area.

10. You forgot about closing costs

Think it’s bad to pay tax when you eat out? Wait until you’re paying closing costs, which can run 2 to 5 percent of the home’s purchase price, according to Tyson.

A mortgage lender should provide you with a specific estimate of what costs will be. But keep in mind they include such things as origination (points) on a loan, escrow fees, title and homeowners insurance, legal costs, property taxes, fees to record your need deed and notary fees.


Selling homes is my specialty, and while I love this article because of the great info it has it misses the biggest selling mistake of them all….That mistake is, not choosing the right agent. You need to look for someone that understands listing and selling properties, advertising, and using the internet to get the home sold for the best price and in the shortest time. Also someone that understands sellers concerns and the unique issues that face sellers. These things are what I focus on, and dominate my market in. I would love to be your Realtor and show how I am creating a new standard in real estate.

Top 10 Biggest mistakes of home sellers

By Alana Klein •

You’ve advertised your home in the local paper. You’ve planted a big “Open House” sign on your front lawn. You’ve even baked fresh cookies to pass out to potential buyers. So why aren’t people lining up at your door?

Selling a home is a complex, multi-faceted process. From choosing a trustworthy real estate agent to pricing your home accurately and presenting it properly, the selling process can be downright daunting, especially for first-time sellers. 
As eager as you may be to close the sale — perhaps you have a new mortgage or luxury sports car waiting to be financed — you must not rush the process. Take the time to research the real estate marketplace as well as the credentials of your potential buyers and never hesitate to bombard your agent with any questions you may have.

You don’t want to fall victim to Bankrate’s top-10 list of sellers’ biggest mistakes:

1. Overpricing your home. It’s important to be realistic about the value of your home. “Sellers must make their agents present them with objective criteria for pricing,” says Terry Hankner, a Realtor with Comey & Shepherd Realtors in Cincinnati, Ohio. “Comparative information is most critical in getting a house priced properly.” While all sellers are tempted to see how much they can get for their homes, Hankner says once you ask for too much, it’s hard to ask for less later on in the process. “You run the risk of buyers thinking ‘Oh boy, I wonder why they had to reduce this one. There must be something wrong with it.'” To get a realistic assessment of your home’s worth, research the cost of similar homes in your neighborhood and price it accordingly.

2. Not displaying curb appeal. You don’t have to invest thousands of dollars into redecorating your home. But there are some basic steps you must take to present your house in the most positive light. “When people drive by a home they’re either turned on or turned off. There’s nothing more important than the exterior of your home,” says Richard F. Gaylord, a broker with RE/Max Real Estate Specialists in Long Beach, Calif. “I once showed a home that was magnificent. But it had an old, ugly front door that hadn’t been painted in years,” he says. “People were only able to focus on that front door.”

3. Overdoing home improvements. Don’t go overboard with staging your home. “You don’t want your house to be so pristine that it feels cold or so overdone that it looks like it’s out of a magazine,” says Allyson Bernard, 2005 regional vice president for the National Association of Realtors. “You want it to feel warm and welcoming.” Do, however, spruce up the yard, plant some flowers, de-clutter the home’s interior, rid the home of unpleasant smells, and apply fresh coats of paint to all walls and doors.

4.Misunderstanding the buyer’s offer. Carefully reviewing and understanding the offer or purchase contract is imperative. Here are a few things to look for: How much deposit the buyer has agreed to put down — is it a significant deposit? Has the buyer asked for some credits to cover loan costs? Is the offer contingent upon the owner selling his or her current home? If so, how is the selling process going? “In most cases that contingency stays into effect until their deal closes so you better find out if their home is priced properly,” Gaylord says. “These kinds of things are worth investigating.”

5. Not getting your home inspected before listing it.

Have general inspections done ahead of time. Even though buyers will often have the house inspected again, it’s best to prepare for any potential problems. “It can be very costly to the seller if he or she does not go ahead with the inspection before the offer is placed,” says Gaylord. “You don’t want to get stuck with a $7,000 fee because the termite, dry rot, and fungus report determined that the wood in the foundation of your house had deteriorated so badly that the whole house needs to be leveled.”

6. Withholding information from potential buyers.

While it is tempting to hide or fail to mention the downfalls of a home — perhaps it’s a haven for cockroaches or located in an area that’s prone to floods or earthquakes — it is best to give buyers full disclosure. This kind of information can greatly affect the value or desirability of the property.

7. Not being objective about your home.

While you may think your purple walls or poly-classic columns are great, it is best to keep that opinion to yourself. “Sellers may feel they know their home best but that doesn’t mean they are the best people to sell it,” Bernard says. She recommends that sellers leave their home while the agent shows it. “A lot of people feel uncomfortable looking at a home if the buyer is right there. It’s important to give the buyers space.”

8. Poorly communicating with your agent.

Sellers should take a proactive approach to the selling process and not rely solely on the agent. Sellers should insist upon regular updates about the house and never assume the agent has taken care of everything. Ultimately, it is the seller’s responsibility to ensure everything is running smoothly.

9. Not investigating your buyer.

Once you have an offer on the table, it’s important to secure letters of pre-qualification or loan approval from the buyers. These letters should not only state that the buyers’ credit has been checked but also that it was acceptable to the lender. Also, it’s important to ask buyers to complete a loan application and submit it to their lender within a few days after acceptance of the offer.

10. Not proofreading the closing statement.

Carefully review the statement, including the loan balance, repairs, and other expenses that are detailed in order to avoid last-minute surprises or errors. Make sure you get an estimated statement a few weeks prior to closing and compare the final statement to the estimated one.


If there is one thing that bothers me more than anything else in real estate it is agents that take short sales that have no idea what they are doing. People entrust these agents to protect and preserve their financial future and they may as well list their property with their dog. In fact their dog might be a better choice as at least the dog wont screw things up and give the home owners expectations that they cannot possibly achieve. Short sales are a very specific thing, and if the agent you are trusting with your home doesn’t say these words “I love short sales” and “ I close 100% (or nearly 100%) of my short sales” they do not do enough short sales to warrant your trust. You don’t want to be some ones first, second, or third short sale.  Short sales are what I do and they represent about half of my business. I have closed anything from $20,000 condos to multimillion dollar homes and commercial properties as well. I love short sales, and I close ALL my short sales. I love helping people and saving their financial future.

Top 10 Biggest reasons realtors screw up Short Sales.

1. Lack of Ability and Knowledge Short Sales for most agents represented the new chic way of making money in a volatile, foreclosure laden real estate market. So, they took a 2 hour class at the board, became duly knighted “short sale experts” and off they were to conquer the masses. Unfortunately most found that trying to perform short sales without the knowledge to do so was like picking up a baseball bat and trying to hit a Roger Clemens fastball.

You can take all the baseball classes you want and unless you have the knowledge and ability to perform, you are never going to hit that fastball. People train for years to become great at their “profession”. A (2) hour class does not qualify you as a short sale expert.

2. Lack of Experience Experience is the best teacher. I believe I have read that somewhere. there is no substitute for experience. I believe I have read that somewhere before as well. How can one call themselves and expert without having any experience in the chosen field of expertise. I have changed the oil in my car before, it hardly makes me a mechanic.

However, at least I have changed the oil! How many real estate agents decided to get involved in short sales without ever having completed one in their real estate career? Here’s a hint…over 90% of the licensed real estate agents had NEVER successfully completed a short sale prior to 2007 (source: MBA). Where did all the experts come from?

3. Laziness In order to be an expert at anything you have to continually train and practice. Have you ever played a competitive sport? Training and practicing are not paid activities. But they are absolutely necessary for you to complete in order to raise the level of your game. No slow, fat, weak kid ever succeeded in football. No slow, weak, fat realtor is going to succeed in short sales.

What amount of training and practice have you engaged in prior to attempting a short sale? What was you daily regimen of fine tuning your game? Yet, you bought some business cards and slapped the words “short sale expert” on them and bamboozled your way through the last 7 months trying to feign being a “short sale expert”. How did that work out for you?

4. Trying to Find The Shortcut There is no short cut for success. As the great Vince Lombardi once said, “the only place success comes before work is in the dictionary”. Short sales are a lot of work. It is not a field for the faint of heart. You need the knowledge, the strength, the ability and the perseverance to succeed. There are no shortcuts except to failure. Sending all offers to the bank for “3rd party approval” is a fools game and an immediate sign that you do not know what you are doing.

Where’s your comprehensive short sale package? Where’s your loss severity analysis? Where’s your regression analysis? Why did you list the property incorrectly? What’s this stupid addendum your broker is telling you to have singed?

If you have not prepared all of the requisite documents and reports and submitted them correctly you are destined to absolute failure.

5. Lack of Personal Incentive Everybody already knows that the commission is one of the first items that the bank is going to try and knock down. Well, if you know that going into the deal and that’s the sole source of your revenue then you need to be prepared that you may make a little bit of money or none at all if your commission needs to be struck in order to save the Client from foreclosure.

That’s a cold hard reality pill to swallow but if you decide to be a “short sale expert” then you should not be surprised by this at all. don’t take a short sale listing if you are not prepared to possibly reduce or eliminate your commission.

What we see and hear quite often is Realtors saying that”it’s too much work” for what you get paid doing a short sale. Too bad! You’re the expert, if you don’t know how to make money in short sales, stay out of the game! If you are truly an expert and have the knowledge and experience, you’ll make money.

It’s those who do not that have commission issues. But..who cares…not our problem. Accept it or get out of the short sale game and do your best to sell something else…LOL

6. Picking The wrong Properties To Represent Despite what you think..every property is NOT a short sale candidate. There are very specific properties that make for ideal short sale candidates. Do you know how to find them, what to look for? I thought you were an “expert”. Short sales have to be identified via prospecting based upon a very strict criteria. Most of the agents whiffing on their short sale deals are doing so because they are finding the right deals to work on. They are spinning their wheels hoping to put a square peg in a round hole.

Let me ask you a question, do you know anything about demographics, psychographics ans statistical analysis? If you do are you applying that knowledge to your selection criteria of short sale deals that you want to get involved in. Simply put, with millions of people in foreclosure, cherry-picking is not a bad thing.

Our closing ratio is so very high because we are EXTREMELY selective in the short sale transactions we decide to get involved in. We don’t go rushing out the door to take every listing just because someone calls. Our time is much more valuable than that. Besides, we already know the most likely of short sale opportunities will be accepted.

7. Subscribing to The Rumor Mill Would you ask your friend, neighbor, or broker to tell you how to open a parachute if they never have skydived before? Heck no! So why are you asking associates, friends and other brokers how to do short sales..they don’t know either! I read so many postings on Active Rain and other real estate blogs about short sales and it amazes me how many people ask for advice and how many people proffer advice on a subject they know nothing about. Unplug and learn how to do short sales correctly from people who can PROVE to you that they know what they are talking about.

8. Lack of Adequate Due Diligence Have you read the annual report of the bank that you will be asking acceptance of your short sale from? Do you know the level of their non-performing asset base? Has Moody’s lowered their credit rating? What are their stockholders saying? (there’s an easy way to know) How many REO’s are they sitting on..nationally and in your area? How many foreclosures do they have pending? Have they properly filed their Court documents? Was the mortgage sold?

I could go on and on and on with the amount of data that a true short sale expert obtains to validate and support their request for a short payoff. If you are not doing at least the minimum of what has been asked in this section then you are truly not being an expert and you are showing that you have not even performed a cursory level of due diligence.

9. Lack of Focus Short sales require a lot of communication and extensive follow-up. Many agents are not even affording their short sale clients a modicum of attention. They are either working on other deals, prospecting for new leads, working a second job…whatever! Short sales are time sensitive and require special attention. How many calls do you miss? How many offers do you not respond to? I can’t tell you how many times we have had to re-fax offers or incessantly track down agents who fail to respond. This is absurd. A homeowner is about to lose their property and they entrusted an agent who may or may not ever be available.

10. Playing God With Lives This short sale dunce is the worst. This is the agent who actually calls back to tell you that he received your offer but he:
a. The offer is too low and the bank will not accept it
b. We need to place the offer on a form he understands
c. He has an addendum that he requires and it tells me we have no contract even after it’s signed (yes..received one and laughed)

These agents in my mind should be bound, gagged, flogged and left in the public square in stocks naked! They should be exposed. They represent distressed homeowners and try to inject themselves into the transaction as if they had some importance and time after time we see good people represented by crappy Realtors going to the gallows of foreclosure without so much as a concern by the Realtor. Shame.

They have nothing at stake, it’s not their loan, not their property, and if they do not make the commission they want then they could careless. I personally have seen this and have had read about it on numerous real estate related social networks. If you’d like I can send you the links to the posts attributed to these vermin posing as real estate agents.

Bonus!!!!!!! 11. Lack of Negotiation Skills If you do not realize that you are in a negotiation you have already lost. Do you understand what the field of loss mitigation is? Do you know how many levels of collection there are and what goes on at each level? Do you know what each level is trained for? Do you know the experience level of your opponent?

Maybe you should go to and search “loss mitigation executive” and see what kind of experience and knowledge you have to have in order to be a Senior Loss Mitigation rep at a mortgage lender. Then compare that criteria to your resume and let me know how you measure up.If you do not know the various techniques and strategies for negotiation and have not been trained as such then you are vastly unprepared to engage in such negotiation and you are hardly an expert.

Bonus: Fear of Reputation I often hear from those involved with short sales that they are concerned with how foreclosures and short sales are affecting the overall real estate market and economy. They also fear that negotiating strongly with the bank for the best possible deal is some form of bad karma. this is business people.The short sale expert already knows how low a bank is willing to go.

The Short sale expert already has the knowledge that the loan amount is inconsequential to the amount of the discount or final judgment.As for the impact on the overall market? Hey..don’t we keep hearing that real estate is local? If all that is selling in a market is the REO’s and short sales then those sales represent the true market value.

Trying to stave off a short sale by not competently executing and negotiating the short sale ensures the continual drop in the market you seek to avoid.FYI…what do you think the bank is going to do with that property when your short sale fails? Do you think for an instant that the bank cares about your local real estate market and the impact their low priced REO is going to effect?

A true short sale expert understands that this type of property needs to be looked at as a commodity and it is apparent that MLS boards and the like are trying their best to bandage the wounds caused by the tsunami of foreclosures and it’s not working.

Bottom line, if you are not comfortable doing a short sale the right way, from listing the property correctly, to performing all the steps necessary to get the best price for your BUYER then you need to step out of the game. It’s the BUYER that you need to be kow-towing to in a short sale. A true short sale expert understands this wholly.

Super Bonus: Can’t Attract Buyers Yes…it’s all about the Buyers. Without a Buyer in a short sale you don’t have a short sale. It’s that simple. If you are not marketing to Buyers’re done!

The Seller is DOA at your listing sit. They can’t make any money. Their only other alternative is bankruptcy. They have absolutely no control in the transaction. Their credit is going to be ruined if the property is foreclosed. The 1099 issue and deficiency judgment issues are what they are and a true short sale expert knows how to properly explain each. So what’s the problem?

Why are agents listing properties at full value or around full value? You are not going to draw out most buyers at that price. There is so much inventory the price has to be low enough to bring out a real Buyer. Notice I said “real Buyer”. A real Buyer does not and would not walk away from a great deal. He does not have to. Why? Because if the short sale is executed properly and is accepted he would be a fool to do so.

Short Sales are viable, they work and you can generate a great deal of revenue from them. The problem is that most agents will not take the time to obtain the skills to be successful in this arena. Unfortunately, they are slow to exit the game as well. If you are going to be involved in short sales, please, by all means, do them correctly or have the decency to get out of it completely.