Five Pitfalls To Avoid When Buying Or Selling A House

Like a lot of Americans across the country right now, my neighbors have put their house up for sale. They want to downsize and lower their monthly mortgage payment. The house has been on the market for a few months now. It’s a good size house, is well maintained and is in a desirable neighborhood but they’ve gotten nary a sniff of interest. It’s an all too common occurrence nowadays as the economy continues to work out the excesses of the housing bubble.

The margin for error for home sellers is extremely thin in the current market but home buyers need to be alert as well. Without the proper preparation and knowledge, people on either side of the home buying transaction can needlessly cost themselves thousands of dollars. Whether you’re in the market to buy or sell, here are five things that you’ll want to avoid doing so that you can save yourself money.

Asking too much

Housing prices have dropped precipitously all across the country and there’s no quicker way to make sure your house stays on the market than to overprice it. This is one of the mistakes my neighbors are making. They priced their house to ensure that they don’t lose money on the sale. Instead, what they’ve done is priced their house 10-20% above comparables in the area. Understand what your house is really worth in today’s environment and price it accordingly.

Paying too much

This is without a doubt a buyer’s market. Unlike several years ago where some people were paying OVER asking price for houses, times now have changed. Some real estate folks have suggested that you can start a negotiation at 10-15% below the asking price to start off. Offering the asking price right now will only cost you unnecessarily. And there’s a good chance that you’re only bidding against yourself. Supply is far exceeding demand for houses right now. If you’re a buyer, you’re holding all the cards.

Avoiding the home inspection

What’s the point in getting a good deal on a house if you’re going to have to spend a truckload of money to fix it up? Home inspections are there for your protection. An inspection by a qualified pro will let you know whether the house you’re about to make an offer on is the real deal or a well disguised lemon.

Ignoring the area around the house

Right next to the neighborhood I live in is a railway line that sees about five trains a day go by (and blow their horns). Rarely does a week go by where I don’t hear one of the neighbors complain about the noise from the trains or the unsightly appearance of some of the rail cars parked nearby. That railway line existed long before everybody moved into their houses. Remember, the house may be beautiful and it might be priced right but if you have a railroad or a freeway or a Walmart right next to it, you may end up wishing that you walked the other way.

Not considering property taxes

While principal and interest will undoubtedly make up the biggest chunk of your monthly mortgage payment, property taxes will be something you’ll need to escrow for as well and that’s something that could add several hundred dollars to your payment. Make sure you know what your TOTAL payment will be.

With the supply and demand imbalance in the housing market right now, it’s as important as ever to do what you can to put your house at the top of the “must see” list. Houses are still selling but you’ll need to work harder to get the asking price you want quickly. Getting reliable information on comparable houses for sale in your area and pricing your house accordingly is one of the best ways to accomplish this.

Likewise, buyers are in a terrific position to nab a great home at a significantly reduced price but the deal can be made even better with the right negotiation. Extras such as closing costs and appliances are all in play as sellers get eager to close the deal. Make sure you’re ready to take advantage.

?Photo credit: najjie

Original Post on The Sun’s Financial Diary