Many of us not only care about our residential property investments, but actively consume and absorb real estate data and trends, whether it be from the media or word-of-mouth from our personal networks.
We want to navigate the real estate market smartly when presented with various choices. But it can be difficult to discern what information is true or false, timely or obsolete, relevant to our property or only to someone else’s. The path ahead when starting the buying or selling process is littered with mines and obstacles, and it can be so easy to make mistakes, some of which might be very costly.
Here are some common pitfalls for buyers and sellers make and how to avoid them. But the biggest mistake buyers and sellers make is getting bad advice from the wrong people.
[Is it a Buyer’s or a Seller’s Market?]
Mistake: Getting Bad Advice
Knowing what advice is useful versus what doesn’t apply to your property or your search can be tough. Since having a home is a universal human experience and homeownership is a common goal, it often seems everyone has an opinion.
Most homeowners are happy to dole out advice based on their experience or the latest article they’ve read. This can be problematic because the real estate market is an ever-evolving moving target, and relevant conditions last year may no longer be a factor today. Furthermore, most cities today consist of many submarkets or micro-markets, so good advice to navigate the downtown condo market shouldn’t come from someone who bought a house uptown a few years ago.
“Everyone has an opinion,” says broker Jill Hertzberg of Coldwell Banker’s The Jills Zeder Group in Miami. But she warns that “even if someone has been lucky or smart with their own real estate investments, the decisions they made may not be right for you or for your market.”
“The real estate market behaves differently from one neighborhood to the next, one price point to the next — it’s all about micro-markets,” says John Iglar, a real estate agent with Verdant Properties in Los Angeles. “For younger clients buying their first home, some of the worst advice they get is from their parents, who might have last bought a house under totally different market conditions, and often in another part of the country.
“Their parents’ advice might be right for the parents’ market, but market dynamics are highly localized. If the parents don’t live in the market the kids are buying in, this well-intentioned advice might actually be detrimental.”
[READ: Are You Too Young to Buy a House?]
If you’ve hired an expert you trust to guide you through an expensive and potentially stressful transaction, perhaps one that represents your largest asset, it makes sense to listen to their advice and counsel.
“You would never consider, if you were having surgery, to do it yourself,” says Hertzberg. “You would never do anything of value in your life without an expert to guide you. Real estate is one of the most valued assets that people have. It doesn’t make sense not to get an expert.”
While some mistakes that buyers and sellers make are based on bad advice they get from friends and family, others are couched in misinterpreted data that doesn’t apply to their property. When it comes time to buy or sell, some people enter the market with the mindset that residential property is just another asset, like a marketable security, and that data should dictate the entire process.
Although data is a great tool at your disposal and should be used as a guideline, “it doesn’t make someone an expert,” says Hertzberg. “It’s not uncommon for buyers to lose out on a great property if they get too bogged down in the data.”
Common Buyer Mistakes
Mistake #1: Waiting too long to engage with a buyer’s agent
Most seasoned homeowners understand that it benefits them to work with a buyer’s agent
during their search, but many prospective purchasers don’t engage with one soon enough in the process. The purchase process starts before getting out and looking at property.
“Too many buyers wait until they find the home they love and then try to take a crash course on the mechanics and strategies of making a competitive offer,” says Ryan Bruen, a real estate agent with Coldwell Banker Realty in Morristown, New Jersey. As many buyers learn, and often not quickly enough if working without an agent, “their offer needs to be strategic to be competitive.”
“A seasoned agent will also help a buyer understand current local market dynamics so we can be strategic together from the get-go,” Iglar says. A buyer can’t know which properties are within reach if they don’t understand which mortgage products are available to them. “A good agent can make the right introductions that a buyer needs, including to the right mortgage banker if financing is required,” Iglar adds.
Engaging with an experienced agent early in the purchase process will also keep you on a timeline so you’re not scrambling to find mortgage professionals, attorneys, inspectors or designers at the last minute when delays may cost you the deal.
“People often think the transaction is just the price,” says Hertzberg. “There are multiple layers and players — inspections, financing, communication between attorneys and more. You need someone to help you through this, or else it can be an unpleasant, unsuccessful, costly experience.”
Mistake #2: Seeing a property online vs. in person
Almost all home searches begin on the web. Since each listing presents itself with an extensive array of beautiful photos, many buyers feel they’ve already seen a house before seeing the property in person. This notion is a huge mistake, since photos will almost always showcase a property’s best attributes while minimizing its shortcomings — any smart seller’s agent will ensure this.
“Homes are experiential products, and photographs are deceptive,” says Iglar. “In Los Angeles, for example, the block you’re on, the way the house is sited, the way the light travels through the property, noise issues and topography cannot be gleaned from photos alone. The way a house is sited can affect not only the light and the air, but even the way sound from local roads may refract off hillsides.”
Mistake #3: Getting too fixated on “the perfect home”
Hint: The perfect home doesn’t exist. Some buyers know in their bones what they do and don’t want in a new home, and wait until they get almost exactly that. But you may miss opportunities if you enter the process with blinders on and aren’t open-minded about another block, neighborhood or property type. Countless potential buyers never buy because of this, and thus miss great investments or never move on to the next chapter of their lives.
Any agent can relay story after story about buyers who said they wanted one thing, and then bought something else they are now very happy with. They might have wanted a house but now love their condo (and the building staff that comes with it!), or wanted to live on the East Side but found the perfect home on the West Side.
“It can be a mistake for buyers to stay too focused on a particular area or neighborhood or building, sometimes because of someone else’s advice who doesn’t know the area or the real needs of the buyer,” says Hertzberg. “A smart buyer will allow a qualified agent to make suggestions based on market dynamics and their situation. There can be great alternatives to take advantage of, and a savvy buyer will be open to alternatives and not held back by preconceived ideas.”
Common Seller Mistakes
Mistake #1: Hiring the wrong agent
Of course, sellers want top dollar for their property. And agents know this when they come to pitch. It can be very easy for a buyer to hire the agent who promises the highest price, but this can come with wasted days on the market and subsequent disappointment when the agent who promised it all cannot deliver.
When interviewing prospective agents, speak to a few highly recommended by trusted sources. Take a day or two, look at your comps (comparable properties), and then be realistic about your home’s attributes and shortcomings. How does your home compare and contrast? The agents pitching your business might be too forgiving of glaring problems in your home or minimizing the attributes that your property has that others don’t.
“It can be a big mistake to go with the agent who tells a seller what they want to hear,” says Hertzberg. “It’s easy to get caught up in flattery and unrealistic numbers rather than steadfast and true honesty: ‘Here is the number we can attain, but here are the parameters.’ When you speak to your doctor or lawyer, you want the truth so you can act accordingly. With your home, it’s the same thing.”
Mistake #2: Overlooking the importance of staging and repairs
With the proliferation of “before and after” design shows and the popularity of model homes in new developments, buyers have become accustomed to seeing decorated and staged turnkey properties.
If a home in the resale market looks very lived-in or maintains too much of the seller’s personality, buyers today often struggle to imagine what it might look like as their own. Thus, home staging has become commonplace. Buyers are looking for a fresh start, and a new home represents a new chapter in their lives. Sellers need to entice these buyers with what could be, especially if the home currently looks tired or in noticeable disrepair.
“People get used to where they are, and they don’t notice that it’s dated and doesn’t look fresh,” says Hertzberg. “They don’t notice that their garden is dead. They get used to it.”
The importance of decluttering can’t be stressed enough. But it can be an overwhelming conversation, especially for collectors or maximalists. You’re moving, and you need to pack it all up at some point anyway. Decluttering is a great first step in the inevitability of packing.
“Decluttering is a process, and it’s taxing,” says Hertzberg. “But buyers are seeing your home for the first time, and that ‘hello’ should be ‘hello, welcome, and stay for a while.’ Not ‘hello and goodbye.’ ”
Repair work that might consist of easy fixes should also be undertaken before listing. Some of these issues may come up during the inspection period, and it will be less costly for a seller to handle these upfront themselves versus at the buyer’s behest.
“Not heeding an agent’s advice with repair work and staging can leave money on the table,” says Iglar. “Minor repair work and staging can return as much as five times what’s invested. Sellers often aren’t willing to spend the money, and they miss out.”
Sellers are also often surprised to learn that some expensive renovation choices may not be desirable to buyers. “Many sellers make the mistake of assuming that expensive custom features that they’ve added to their home will increase their home value similar to the cost,” says Bruen. But “buyers may not like these features and may see them as costly to remove or maintain, reducing the perceived value of the home.”
Mistake #3: Not checking for open or missing permits on your current property
Another important and often less obvious task is to ensure that all work permits are closed, as these can delay or hamper a deal in the later stages. Closing out a permit can often take several weeks or even longer, derailing a deal.
“Sellers often don’t check for missing or open permits before they list their home,” says Bruen. “Then, a week before closing, the municipality denies their application for a certificate of occupancy because of an open permit from years prior. Addressing this can take time that will cause the closing to be delayed. They can prevent this by filing an OPRA (Open Public Records Act) request with their municipal building department to get a list of all past permit applications for their home.”
Find the Right Agent
Hiring an agent who understands local market dynamics and the nuances of your own situation can give you reliable advice and guide you on the path to a successful transaction. There are so many errors that can be made or milestones that can be overlooked when buying or selling a home, but the right real estate agent can make all the difference.
More from U.S. News
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The Everlasting Battle between Total and Usable Square Footage
How to Win a Bidding War on a House
Common Seller and Buyer Mistakes and How to Avoid Them originally appeared on usnews.com
