We all make careless mistakes. We accidentally undertip the waiter. We lock our keys in the car. We wear white after Labor Day. We press “send all.” It happens to the best of us.
But some little mistakes can create big problems, like when you’re buying a home.
A house, after all, is a huge purchase; the stakes are extremely high. With that kind of money on the line, you’d better be darn sure you can navigate the home-buying process without a hitch. And avoid self-sabotage!
To help you out, we’ve pinpointed six common ways home buyers botch their property-purchasing prospects so you can sidestep these snafus at all costs.
1. Flying solo
If this isn’t your first time on the home-buying merry-go-round, you might think: Why hire a real estate agent to hold your hand? Well, first, let us remind you: It’s generally free to use a buyer’s agent, because the seller typically pays the commission for both the seller’s agent and the buyer’s agent. And whether it’s your first home or your fifth, you probably want a professional to help guide you through the often-tricky process of writing an offer, negotiating with the seller, and making sure the deal is up to snuff.
Without an agent, you’ll soon be drowning in paperwork and at risk of making a whole bunch of costly mistakes, warns Jennifer Baxter, associate broker at Coldwell Banker RMR in Suwanee, GA.
To find a real estate agent in your area, use online tools such as realtor.com®’s Find a Realtor search, which will give you useful info such as the Realtor®’s number of years of job experience, number of homes sold, and the price of homes typically dealt with.
2. Saying too much—and undercutting your negotiating power
Be careful what you say when you’re viewing a property at an open house or home showing, Baxter warns. For instance, if the listing agent hears you say to your spouse, “I love this house, and it’s way under our budget,” the seller might try to play hardball when you try to negotiate on price. Keep private conversations private.
3. Waiting too long to make your earnest money deposit
The sales contract will specifically state when you need to cough up the earnest money deposit, which is cash you provide upfront to show the seller that you’re serious about buying the property (the typical amount is 3% to 5% of the sales price of the house).
How much time you have to provide the deposit can vary by state. For example, in Virginia the deposit must occur within five business banking days after ratification unless otherwise agreed to in writing by both parties.
“If you don’t turn in the EMD in accordance with the contract, the contract is void,” says Baxter.
Read: You can kiss the home goodbye if you dillydally for too long.
4. Not bothering to read property disclosures
Even if you plan on having a home inspection, you should still read the home seller’s property disclosures in full, advises Seth Lejeune, a real estate agent with Berkshire Hathaway in Collegeville, PA.
“Property disclosures can be long, but that’s where you’re going to find whether the seller knows if there are any pre-existing issues with the house,” Lejeune says.
Most home buyers will receive a property disclosure statement after their offer has been accepted, says Atlanta real estate agent Bill Golden.
Look for major issues like a faulty foundation, leaky roof, HVAC issues, or pest or mold infestations. If you spot something on a disclosure statement that you don’t understand or that raises concerns, have your real estate agent bring it up with the listing agent. The seller might have an explanation that puts you at ease (e.g., “We had bedbugs back in 2012 but hired an exterminator and have been free and clear ever since”). But if the issue makes you seriously question whether you want to move forward, this could be an opportunity to renegotiate the sales price to compensate for the added risk you’re taking on buying this home.
5. Damaging your credit score while you’re under contract
Unless you’re buying a house with all cash, you mortgage still has to go through underwriting to get approved. Since this process typically happens shortly before closing, you don’t want to do anything while you’re in contract that’s going to hurt your credit score. That includes buying a car, boat, or any other large purchase that has to be financed.
One less obvious mistake, however, is applying for a new credit card. Doing so—even for a store credit card like Target’s or Macy’s—triggers a hard inquiry on your credit report, which can ding your score by up to 5 points, says Beverly Harzog, a consumer credit expert and author of “The Debt Escape Plan.” That might sound like a small hit, but it could make a big difference if you’re on the cusp of qualifying for a mortgage.
6. Trusting a verbal agreement
“Some home buyers don’t realize the importance of putting everything in writing,” says Baxter. Unfortunately, that can come back to bite you, hard. For instance, let’s say a seller promises he’ll replace the water heater before closing. Well, if it’s not agreed upon in writing, the seller isn’t required to do it.
“I see this issue come up a lot when people buy new construction” and don’t use a buyer’s agent, says Baxter. “The builder’s agent is always looking out for the builder’s interests.”
This is another reason why you should work with a buyer’s agent rather than trying to muddle through this alone.