The new year brings a mixed bag when it comes to real estate in Florida. Prices continue to rise, and inventory is low, and no one quite knows what to make of it all.
Whether you're a first-time buyer or a seasoned veteran, you might be among the scores of Floridians who plan to buy a home in 2015. If this is your year to start looking around, how about a refresher course in the biggest mistakes home buyers make?
No matter the economic climate, the following five pitfalls are the most common reasons an investment in real estate might not end positively. Take heed, and avoid them as you embark on your real estate adventure.
1. Failing to do your homework. This applies to a number of areas, including understanding how much home you can afford, knowing your credit score, and getting pre-approved for a loan. But homework also applies to thoroughly researching the neighborhood in which you are considering buying. Drive by at various times of the day and evening, as well as on the weekends; investigate the school district if you have school-age children; go online and get crime statistics for the area. All these issues will affect your quality of life once you have moved in. Failing to fully research and prepare before you sign a contract is one of the biggest mistakes you can make as a home buyer.
2. Being impatient. Buying a home is a big decision, and is likely the biggest investment you will make in your lifetime. Take your time to look at as many houses as possible in the neighborhood where you wish to buy. Consult with a real estate professional who is well-versed in the area. For many of us, a home is an emotional purchase - we walk in and know it's "the one." But don't rush in and buy the first house you fall in love with. Be sure to consider the floor plan (will it work for your family?), the size (is it big enough?), and the location (is it close to shops, transportation and schools, if this is important to you?). Love can be blind, but don't make this crucial mistake when shopping for a home.
3. Picking the wrong mortgage. The competitive lending environment has many homebuyers rushing out to secure the first mortgage they are offered without researching all options. Understand the pros and cons of long-term fixed loans, ARMs, no-interest loans, etc. Consult with your lender about which one will suit your family's finances and long-range plans. One of the worst mistakes you can make is to secure a mortgage that you will have to refinance in short order - including having to pay the related closing costs all over again.
4. Skipping a professional inspection. A thorough professional home inspection typically runs between $300 and $600, and generally includes a check of a home's heating and air condition systems, plumbing and electrical works, roof, walls, foundation/structure, drainage, garage and basement. If the inspector discovers hidden flaws, structural damage or faulty systems, you may want to back out of the deal, or at least revisit your offer. Always show the inspector's report to your real estate attorney, who can help interpret it and negotiate to have the seller correct any defects before closing.
5. Not consulting legal counsel. Your real estate attorney is an integral part of your home-buying team, and it's essential that you find one early in the process. Interview several and pick one with whom you have confidence and who has dealt in the county where you are looking to buy. You pay the same fee whether you hire the attorney right before the closing or early on, so it is to your advantage to bring one on as soon as possible. When the attorney acts as the closing agent and provides the title insurance in standard real estate transactions, costs are comparable to non-lawyer title agencies, but homebuyers receive the added value of legal representation and protection of their interests for free.