So you want to buy an apartment in New York City? While this is a hypercompetitive market, it’s important to stay motivated and steer clear of mistakes that home buyers often make. Here are five big ones that you should avoid:
1. Falling in Love With the First One
Not to be a buzzkill, but simply don’t fall in love with the first property you see and decide to stop looking. Whether you’re looking for an apartment or a townhouse, it’s important to size up the inventory that’s on the market. Even if you have your heart set on a specific property, make sure you or your broker have lined up other properties to check out.
Continuing to preview additional properties isn’t simply a matter of trying to find something better. You want to make sure your emotions don’t hinder you from properly negotiating the price and terms. Additionally, you may find this property has many other wooers out there, which may lead you to take part in a heated bidding war for something that may not be worth it. Lastly, you don’t want to find yourself completely heartbroken if you don’t end up with it. Stay open minded and always keep looking — you might even find something better.
2. Trying to Find Perfection
For every property that’s on the market, there are three main elements you’ll need to consider as a buyer: location, size and price. Lining up all three of these perfectly according to your wish list may prove to be incredibly challenging. For instance, you might find an apartment in the exact location you desire, and that meets the size criteria. However, it’s several hundred thousand dollars over your budget. You have a couple of options at this crossroads. You can choose a different location, or you can search for a smaller property.
As your search expands, it’s important to start parsing out the nice-to-haves from the definite must-haves on your wish list. This will make your property search much more fruitful. Simply put, just like a healthy relationship, the property search requires you to make some sacrifices. If you’re always looking for perfect, you may end up finding nothing at all.
3. Going It Alone
We live in a world where access to information has become a right. Home shoppers can go online and find almost every sales listing on the market. And with so much access to information, some potential home buyers wonder why they even need a broker to represent them throughout their search and purchase process.
That’s why many home shoppers don’t recognize that when they connect with a listing agent at an open house, they are connecting with an agent whose fiduciary obligation is to their client, the homeowner. So if you are opening up to the listing agent, this can actually put you in an unfavorable position if you decide to submit an offer and attempt to negotiate. It’s called dual agency — where the same agent represents the seller and the buyer — and you should be very cautious.
Instead of using the listing agent and revealing information that is advantageous to the seller, find a broker who represents you. A buyer’s broker will act as a matchmaker and help you in your search, while also negotiating your deal. A buyer’s broker will also be able to help you identify value and avoid any potential pitfalls.
4. Not Inspecting the Goods
Have you ever heard of someone buying a brownstone without first inspecting it? This would be the equivalent of playing with fire. Think of all the things that could become major problems. Maybe there are foundation issues, roof leaks, faulty electrical wiring or bad plumbing. The list could go on, and the risk of not conducting a professional inspection prior to signing the contract could be financially catastrophic.
While the majority of sales are on an as-is basis, it’s still incredibly important to know what, if any, issues you may be buying into. For condos and co-ops, conducting a home inspection becomes a lot more discretionary and will be highly dependent on the age and size of the building.
5. Not Shopping for the Loan
When it comes to financing your home purchase, never apply for a mortgage with just one lender. You should always shop for rates using multiple lenders. The reason is twofold:
- You never want to be in a position where a single lender can’t provide the home loan you need, therefore risking that the deal will fall apart because you failed to make a backup plan.
- Second, you want to ensure that you’re getting the most competitive products and rates on the market. The only way to get the best rates is to create a competitive environment, wherein lenders are fighting for your business. They might even provide you with credit towards closing costs.
Given the fact that using this technique has the possibility of saving a home buyer thousands of dollars in the long run, it’s a surprise that the majority of buyers don’t do it.
Happy house hunting!