The biggest mistakes homebuyers make

1. Rush to buy a home without researching the local home sale market.
Home sellers and real estate agents love homebuyers from out of town. Why? The reason is that they know these people are in a hurry to buy, because they usually have employment deadlines for getting settled. The too-frequent result is out-of-town buyers often (a) overpay, (b) buy a house the "locals" won't buy, and/or (c) select a home in poor location.

2. Don't bother to get pre-approved for a mortgage.
Before looking at houses or condominiums (including townhouses) for purchase, smart homebuyers get pre-approved for a mortgage. Please notice I said "pre-approved," not just pre-qualified. What's the difference? It's a big difference!

3. Don't bother to check school quality and the crime rate to help decide on location.
Even if you don't have children, or don't plan to have any, the first thing to check when moving to a new home is the quality of the local schools. If the community has separate elementary and high school districts, rather than a unified school district, be sure to check both. After you've found the area with the best schools, also check the crime rate for that area. You will usually find it low where the schools are of top quality. The best Realtors have these school quality and crime rate statistics easily available in their offices, so your research time will be minimal.. Ask for a copy so you can study the details at your leisure. Be wary of any Realtor who praises the schools and the low crime rate but doesn't have statistics available to back up those claims.

4. Don't look at your personal residence as also being your major lifetime investment.
The smartest homebuyers consider their home as their major lifetime investment. Its location is obviously extremely important to making a profitable purchase decision -- buy in the best community and best location you can afford. Don't be afraid to stretch your budget -- almost every homebuyer does! Of course, people buy homes primarily for the emotional security and stability benefits. But most homebuyers often fail to take an objective look at their purchase as significant lifetime investment because they figure they'll be moving in a few years.

5. Don't bother hiring your own buyer's agent.
Most homebuyers are unclear about who represents whom in the home sales transaction. Until about 10 years ago, the listing agent represented the home seller. The selling agent, who obtained the buyer, acted as a sub-agent of the listing agent. In other words, nobody legally represented the homebuyer.

6. Let the realty agent and home seller know you have fallen in love with a home and absolutely must buy it.
Eventually you will find "the home" you love and feel you must buy it. When that happens, try to avoid telegraphing your interest to your buyer's agent and the seller and/or listing agent. Once these people learn how much you like a home, they will know your first purchase offer probably is not your final offer price. Husbands and wives should sign a pact in blood before starting the home quest that under no circumstances will they express their emotions about a home they like in the presence of anyone connected with the sale!

7. To avoid overpaying for a home, don't bother asking your buyer's agent to prepare a written comparative purchase offer.
Most homebuyers worry about paying too much for a home. To minimize this possibility, when you find a home you want to offer to purchase, first ask your buyer's agent to prepare a written CMA. This is the same form which was given by the listing agent to the seller at the time the home was listed for sale. The CMA shows recent sales prices of comparable neighborhood homes as well as the asking prices of other nearby residences, which are currently listed for sale. By discussing the pros and cons of each home, which your buyer's agent should have inspected, you can arrive at an intelligent purchase offer price. This CMA, which is more up-to-date than the CMA given to the home seller at the time of listing, can also become a negotiating tool for your buyer's agent to get the seller to accept your offer because it justifies your offer with objective facts.

8. Neglect to include a mortgage finance contingency and professional inspection contingency in your purchase offer.
Your buyer's agent should suggest including at least two important contingency clauses in your purchase offer. The first is a mortgage finance contingency. It specifies the financing details, making your offer contingent upon obtaining the mortgage you need. Remember, in appropriate circumstances (such as a free and clear home), to make your first offer with the seller financing terms you want. If the seller says "no," then you can come back with a second offer contingent upon getting the mortgage for which you have already been pre-approved. (You did get pre-approved for a mortgage before starting to shop for a home, didn't you?) The reason the mortgage finance contingency clause is needed, is that the mortgage pre-approval is subject to an appraisal. If the home doesn't appraise for the price you offer, then the finance contingency lets you cancel the sale and get your deposit refunded.

9. Buy the best home in the neighborhood.
Buying the best home in the neighborhood can be a major mistake. It is probably an over-improvement for the area. The market value of the best home in an area is dragged down by the quality of other neighborhood residences.. Instead, if you want to make a smart investment, buy the worst home in the areas at a below-market price (usually it's a fixer-upper residence) and make profitable improvements to bring its market value up to neighborhood standards.

10. Invest as much cash into your home purchase as possible.
Most homebuyers today don't have more than 5 percent, 10 percent or 20 percent cash down payments. I recommend buying a home with as small a cash down payment as possible -- conserve your cash and obtain the maximum mortgage available. That's why you got pre-approved for a mortgage! By not tying up all your cash in a residence, you will have it available for emergencies, other investments and perhaps improvements to the home you purchase. Real estate leverage is to your advantage -- control the home with a small amount of cash. As long as you can afford the monthly mortgage payments, invest as little cash in your new home as possible