Common Homebuying Mistakes to Avoid in 2020

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Are you planning to purchase a home next year? The process of buying a home has many steps along the way. If you are new to purchasing real estate, it is easy to make mistakes throughout your home search because it can be a tricky process. If you are planning on buying a home in 2020, here are a few examples of common home-buying mistakes you will want to avoid.

Choosing the wrong agent

In many cases, it is in your best interest to hire a real estate agent to represent you throughout your home buying search. However, it is important that you hire the right agent and not just the first one you come into contact with. This is where many buyers go wrong. Understand that some agents are more qualified than others. Be sure that you thoroughly interview each agent to be sure that they are knowledgable, reputable, and are committed to helping you with your home search.

Not having any cash reserves

There are several factors that you need to take into consideration when determining your home budget. Many buyers do not factor in future maintenance and repairs after they close on a home. This is why it is important to give yourself a cushion by having enough cash in reserves.

Skipping home inspections

A home inspection provides the buyer peace of mind that they are making a wise investment. While many cosmetic issues can easily be spotted, many problems are tucked behind walls. This is why home inspections can save you from making a poor decision. They will tell you if there are problems with systems or appliances. With this knowledge, you may realize that a home is a bad buy or factor your home inspection information when calculating your offering price.

HUD Foreclosures

HUD foreclosures and VA Foreclosures are some of the best homes to buy when price is part of the equation. As with most Americans, price is always a concern. If not buying the same house for less, why not buy more house for the same dollar invested? When looking for a good deal it is hard to do better than the VA or HUD foreclosures market. The simple truth is that there are just more VA and HUD homes on the market, as they represent such a large number of mortgages that are generated each year. This translates into more foreclosures just by the magnitude of difference between all others comparing to the two largest.

The two largest also being government owned and operated means that they have less time to wait to make money back on the home. The FHA is especially known for selling HUD homes for less than the average sales price in a given area. FHA foreclosures represent a fraction of HUD but they are still a significant number of homes and both should be considered.

VA (Veterans Administration) and HUD (Housing and Urban Development) have different and unique opportunities for the buyer. Both are often forgiven for the local taxes normally associated with the purchase of a home (this is on a county by county basis). Be sure to ask the local title company or escrow company to look into it for you before closing as this is often missed due to their are not used to dealing with the 2 to 3 percent of the market that VA and HUD foreclosures represent.

Foreclosure Listings Increasing

As the market settled after the mortgage meltdown foreclosure listings also settled and fewer homes were on the market with a placard reading “Bank Foreclosure” in big red lettering. This was a good thing for the entire real estate market. Having an abundance of foreclosures brings the entire market down and it makes it harder for home owners, who would like to move, to get the appropriate price for their home as a similar home down the same street was sold for substantially less and the appraiser is using the foreclosure as a comparable sale.

This is just one of the problems when there are too many foreclosure listings in any area. Another issue is the television set that sits in everyone’s living room harping about the price of homes based on the number of foreclosures and this constant barrage of negative information makes most people sit on the sidelines waiting for the market to either implode completely or to correct itself. Meanwhile while they wait, others are buying foreclosure listings and making great investments.

Whatever the reason, a market can only handle so many foreclosure listings at any given time. The more foreclosures, the lower the market gets and this is a lesson the banks that were foreclosing and selling off realized too late. The market and their investments would have been better off if there had not been a rush to divest themselves of the toxic assets made more toxic by their own actions.