6 Common Real Estate Mistakes to Avoid When Buying a Home
Agents for Home Buyers has 25 years of experience helping home buyers find great homes in the Boulder area and nearby. As buyer agents, we sometimes work with people who have had bad experiences in real estate and who are looking to have a full-time professional on their side for the whole home buying process. Here are the 6 common real estate mistakes we hear about from people who have gotten burned on a bad deal.
Not using an agent
Do I have to use an agent? In this DIY world, many people believe that they don’t actually need a real estate agent at all. Isn’t Zillow good enough? If you feel comfortable with real estate contracts and real estate law, you might be OK.
But consider this parallel scenario. You are being sued by your neighbor for a trip-and-fall accident at your home. He has an attorney. You don’t. Who do you think is likely to win?
Let’s say you decide you do need a lawyer after all. Would you call your neighbor’s attorney to represent you? If the attorney in question was unethical enough to agree, do you think she could do a good job of representing you both?
Not using an agent opens you to dozens of risks regarding one of the most expensive purchases you will make in your lifetime. We recommend working with an agent, specifically with a buyer agent using a buyer’s agency contract.
Not signing a contract
Do I have to sign a contract? In Colorado, a real estate agent can work with home buyers as either a “buyer’s agent” or a “transaction broker.”
The difference is both simple and dramatic. A buyer’s agent commits to representing only you and your interests. A transaction broker “assists the buyer or seller, or both, throughout the real estate transaction, without being an agent or advocate for any of the parties.”
A transaction broker is prohibited by law from doing anything that would advance your interests over those of the seller. When you’re putting an offer together, or negotiating inspection issues, a transaction broker can’t provide any advice without violating their legally mandated neutrality.
In Colorado, transaction brokerage is the default position. Agents must work as transaction brokers for home buyers unless and until they have a signed buyer agency agreement with you. See more about the 3 types of real estate agents allowed by law in Colorado.
Revealing info to online real estate agents
Do not, under any circumstances, reveal information about yourself or your situation to agents on Zillow, Redfin, Trulia, or other online real estate databases! For example, never tell a listing agent how much you can afford to spend or what your time constraints might be. That information can and will be used against you in future negotiations.
Going to open houses
Open houses may be fun, but open houses are a bad way to look for new homes. Open houses are, in fact, responsible for selling only a tiny percentage of homes for sale.
If that’s the case, why do open houses remain such a ubiquitous fixture in the real estate market? The answer is simple. Open houses are a great way for real estate agents to snare unrepresented buyers. Agents hold open houses not to sell that specific house, but to find buyers, get their info, and then try to show other homes they are listing.
Touring houses with the seller’s agent
Buyers should never go look at a property when the seller’s agent is present, like at an open house or by scheduling a tour using an online real estate listing or info from a yard sign.
Revealing any info to the seller’s agent, by meeting them in person or by chatting online, is giving them information they can use against you in negotiations. If you pull up to an open house in a Mercedes or a Tesla, what message are you sending to the seller’s agent?
Instead, hire a buyer’s agent who can get the key code for a private showing. They can help you tour the house without the seller’s agent being there.
Not talking to a mortgage broker before starting the search
If you don’t know what you can afford, searching for homes may not be the best use of time. You may spend a lot of time rabbit holing on Zillow and stressing over what’s available at various price points without really knowing what you can afford. Touring open houses in homes that are above or below your budget, and potentially revealing info to seller’s agents in the process, doesn’t make a lot of sense either.
Before you get too deep into a DIY home search, keep in mind that searching for homes that you might actually want to purchase doesn’t make sense in a fast-paced real estate market like in the Boulder-Denver area. In our market, homes list, take offers, and close much faster than some buyers are accustomed to. In other words, if you don’t have a payment mechanism ready and you find the perfect home, there’s little chance you are going to be in the running when the seller is taking offers.
Doing some internet research and crashing a drive-by open house may be interesting, but there are better ways to start your home search. For example, Agents for Home Buyers follows a time-tested, systematic approach to helping home buyers analyze their needs and criteria and then mapping those desires to specific neighborhoods and housing stock that is within a buyer’s price range.
See more Real Estate FAQs.