10. Buying high and selling low
Making a profit (or getting good finanial results) comes from buying low and selling high. In recent years, we have seen record short selling, which is buying high and then selling low. Buying at a high prices sets the likelihood for a loss, while selling low locks in that loss. Short selling is one of the worst things that a buyer can do, unless the buyer has a friend or relative who can help purchase a better home for less in order to offset the previous loss.
9. Buying or Selling on Impulse
Many human circumstances or feelings can arise to cause a rash decision. A new love, death of a loved one, injury or sickness and other unexpected event can make one seek a change that might not be in his or her financial interest. Real estate is the largest investment that most Americans make. It should be treated like a home and investment. If a change is needed immediately, renting is often the first thing that should be done. Buying and selling require thoughtful planning to avoid an expensive mistake. If the real estate market has been extrememely heated for the past several years, consider selling and renting to take advantage of the bubble that might burst. If real estate has been extremely depressed for the past few years, consider buying to take advantage of the depressed prices and profit potential.
8. Selling a home that is cluttered
Too much furniture, appliances, nick-nacks and miscellaneous stuff can make the home look smaller and impractical to most buyers. Many buyers have a very difficult time seeing past the junk. Removing excess stuff is the easiest and cheapest way to improve the rental and resale value of a home. The next best investments for improving perceived home value are patching, painting, repairing and landscaping.
7. Assuming the first offer will be accepted
Most offers are not accepted because the most desirable homes normally receive multiple offers. Buyers cannot expect to receive a counter offer all of the time. In some markets, only about 50% of low offers receive a counter offer. That is why, for motivated buyers, it is always safest to place the highest and best offer early.
6. Placing an offer too low at the beginning of a housing boom
After hearing about diminishing home values for several years, many become far too negative on real estate. After prices have been beaten down for a few years and start to show signs of recovery, it is then time to get "greedy" and aggressive to take advantage of the low prices before they soar again. When prices begin to rise, buyers must place attractive offers quickly to beat out the other buyers. This is especially true in highly desirable areas.
5. Placing an offer too high at the peak of a housing boom
After hearing for several years about friends and aquaintances who have received big gains in equity, many start to become jealous and greedy. This is the worst reason to purchase a home and the worst timing. The best reason and timing to buy a home is to avoid wasting money on rent when one can buy a home in a desireable neighborhood at a relatively low cost.
4. Buying the best property in the worst neighborhood
Because location is one of the most important factors, along with building type and size, the best investment is usually to buy the home in the worst condition buy is in the best neighborhood. With a little fixing, the home soars in value. When a buyer sees a beautiful home that dominates a less desirable neighborhood, the value often plumets because buyers and renters avoid it.
3. Not obtaining a pre-approval before searching for a property
Getting a pre-approval can sometimes be done in one day, but sometimes it can take several days or, for complicated finances, can sometimes take weeks. Before considering an offer, sellers want to see proof the that buyer can obtain sufficient financing. In a fast moving market like we have today, a buyer can lose a highly desirable property if (s)he wishes to place an offer but does not have the required pre-approval.
2. Not getting representation from a real estate agent
Most buyers and sellers should use a real estate agent to buy or sell a home. For Sale by Owner (or FSBO) nearly always takes longer and generates less profit than an agent-promoted property. Buyers often buy directly from a developer or seller's agent when they could get their own agent who will be focused on representing the buyer's interest at no cost to the buyer. The buyer's agent should be a specialist in the desired neighborhood so that they know what to watch out for and can advise on the lowest attractive offer in order to save the buyer the most money while maximizine the chances of an accepted offer.
1. Hiring a friend instead of a local real estate specialist
Many of us have friends of relatives that are real estate agents. We often hire them to help them make a commission. Only hire a friend or relative if they happen to be a specialist in the deisred neighborhood. Local specliasts know what to look out for in that neighborhood, they avoid common mistakes, are faster at finding or selling the property, and know exactly how much the property is worth becuase they see the property values in that neighborhood on a daily basis.
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