Top 10 Real Estate Buyer's Challenges

Buyer Beware. Owning a home is a privilege many enjoy. With ownership comes pride, investment return, etc. You may also find challenges when you purchase a home. Here are some to be aware of along with some ideas to overcome them.

1. You Don't Have X-Ray Vision
   Regardless of a home's age and quality there are possibilities of lurking problems. Plumbing, electrical, and structural issues are often unseen within walls, ceilings, and floors. When you buy a home you will likely hire an inspector for the common mechanical and functional systems of the house. They will be able to help you determine whether there are any glaring defects or not. If they recommend another type of inspector it is important that their advice is considered because the cost of another inspector may be much cheaper than the problems that may arise if you purchase a home with serious problems. Whether or not the seller pays for a home warranty it is important to get one. Let the insurance companies carry the brunt of a repair cost. Many policies cost between $300-600 and will have some type of a deductible. However, the policy cost and the deductible are not nearly as expensive as a major system repair may be. If there are known issues at the time of the offer deal with it before you close on the home. Make sure you come to some type of terms with the seller so you are protected. Try to investigate beyond the walls and cosmetics into the systems of the home. Understand that regardless of the inspections you require a home will have issues come up. You will have to deal with them at some point.

2. You May Not Understand the New Market You Are Buying In
   At times home buyers have to move to a new market half blind. A company, military, or family relocation may put you in a new environment without the proper research. It is important to find a reputable real estate agent to help you out. They know the city and can recommend an area that fits what you need. Request a relocation guide from the local market. Research sites dedicated to providing information about the town. Spend some time on the net scouring sites for relevant information. If possible, make a trip to the city to tour around. Burn some time and fuel to scout out the areas and amenities. Use your agent to drive you around if he/she will.

3. You Don't Know the Future
   Buying a home is a great investment in many markets. In fact, ownership in a home may be more secure and in many cases more profitable than mutual funds and other types of investments. However, no one has a crystal ball. Factors can change and economies can alter to affect how the housing market is appreciating. Real estate is often cyclical and many indicators exist to understand short term growth and appreciation. Ask your agent what the market has been doing over the past few years. Find out how job growth is and what the city government is doing to stimulate growth. A strong job situation may indicate a strong housing market. You can also determine whether or not the market is on an upswing or downswing. Markets often see 5, 7, 10 year cycles in growth, stability, and softening. You can get a pretty good picture with regards to how the market has been acting and what other factors may affect it in the future. The future may hold a fabulous return for you. The key is to purchase within your means and be sure to stash away some money each month for a rainy day.

4. Managing Your Down Payment and Other Savings
   When investing in a home you will likely be putting forth a down payment. You will likely need an earnest payment as well. In fact, there are many fees included in your purchase. Your agent should help you negotiate your closing costs and how they are paid. Your loan officer should be able to help you plan to spend your hard earned savings in the best manner. Get counsel on how to divide up your money into an earnest deposit, closing costs, equity into the home, and other payments. The amount you put down will affect your payments and often the interest rate depending on your credit score. However, a small down payment may better be kept as a reserve in times of difficulty. Address these things with your loan officer (financer). Then get a second opinion. The money is yours and you need to trust that it is being placed in the correct places.

5. Managing Stress and Anxiety
   Even real estate agents and veteran investors take on stress and anxiety when buying and selling a property. Two of the best plans for stress management are establishing a strong, written plan and placing much of the load on a trusted competent real estate agent. Understand that the period of time your home is in escrow, whether 15 days or 75, can be hell. Expect to run into one major obstacle and 3 small ones. Be creative and negotiate your way to a solution. Take each step as it comes and consider that the end goal is to own your home. Talk things through until you understand them. Get sleep, eat well, exercise, and do those things you normally do to lower your stress. Be optimistic so you can get through the challenge.

6. Selecting a Agent
   As you may see, there are many things that fall on an agent's shoulders. How do you choose a good agent? reputation is key in selecting an agent. Ask around in the market you are looking to inhabit. Find an agent that comes recommended by someone you trust. Interview the agent. See if they have time for you. Be sure they are interested in your goals. Call them and ask a question. See if they answer their phone. If they don't watch how long it takes for them to call you back. Call them again with another question. See if they answer it professionally and take time to resolve your concerns. Ask them what their commitments and services are to you. You will be dealing with these people under stressful circumstances. Will they help you? Will they take on some of the stress? Will they get the job done? If they won't don't use them. Even if they are family or a friend don't use them as an agent if they don't know what they are doing or if they are flaky. They won't have to pay your legal fees later later if something goes wrong. They won't have to pay your mortgage either. It is your house, your transaction, your agent. 

7. Negotiations with the Seller
   The end goal is to make a home purchase. Keep that in mind. Before you house shop determine what you need and must have. You are not in a competition against the seller. They have listed their home and it is time to negotiate the terms and price. Your agent will be a huge help in this area. Don't let a deal fall apart over $1,000. Be creative and find a way to make the deal win/win.

8. Managing Documentation
   From the day you begin talking of a home purchase get yourself a file folder and keep impeccable records of events, conversations, and documents you sign and read. Keep them in either chronological order or order of importance or both. Maintain the documentation for legal reasons, tax reasons, and to facilitate negotiations. Keep the records for 5-7 years and keep them sealed until you need them.

9. Dealing with Financing and Your Lender
   Use a reputable lender. We can't stress that enough. Use a reputable lender. Make sure they have a record of getting the job done, responding to phone calls, and coming up with solutions to tough situations. Let them know your goals, your situation, and then take charge. You are the boss. If they can't get the job done have a backup plan.

10. Finding the Right Area
    Use your agent to guide you in your decision. They can't sell an area but they can provide you with documentation on amenities, crime rates, and appreciation rates. Tour the area if possible and even talk to some of the people in the area. Interview them and see what they think of the features, schools, etc. Get educated well before making the decision.

You probably have found that buying a home requires a lot of research and reliability on your team. Do your due diligence ahead of the purchase so that owning isn't a nightmare. Do the work up front and then you will likely have less to worry about for the years to come.

NOTE: Information on this site is not guaranteed to be accurate. Some content is compiled from 3rd party sources. If you are aware of incorrect or outdated information, feel free to contact us.