Avoiding mistakes in home purchases

Selecting and purchasing a home can be an emotional experience, but what probably is the largest investment of your life should not be chosen on emotion alone.

Every year around this time, we get numerous calls from panicked purchasers concerned that they made a mistake when they signed a home purchase agreement.

Let’s take a look at the most common mistakes made by home purchasers, and we’ll give you some tips to help you select the right home.

No right to rescission

Unlike consumer home solicitation contracts, a purchase agreement to buy and sell a home does not have an automatic right to cancel within three days. Under Ohio law, once you and a seller sign a purchase agreement, you have a legally binding contract to buy a home.

What should you be aware of before you sign to protect you from making a mistake?

Major mistakes

Major mistakes to avoid when purchasing a home generally fall into one of the following categories:

Overpaying

Going beyond your budget

Buying a lemon

Buying a home that doesn’t fit your needs

Getting burned by unfavorable contract terms

A wise home purchaser can take steps to avoid these mistakes

Overpaying

Placing a value on a home is not an exact science, so determining what to pay can be tricky. The best measure of the value of a home is how the price compares with sales of similar homes in the area.

To figure a fair price:

Shop around. The more homes you see currently on the market, and the more prices you can compare, the better decision you’ll be able to make.

Investigate. Determine what the seller paid for the home and when. And get the sales price of other homes on the street or close by that have sold within the last year or two.

This information can be obtained from public records at the county administration building. If you are working with a real estate agent, the agent should be able to provide you with comparable prices.

Going beyond your budget

A wise home purchaser carefully calculates what a new home will cost and how that fits into the budget. This process should include sitting down with or calling a mortgage lender to determine rates and closing costs.

It also includes calculating all the costs of a new home. Don’t forget monthly real estate taxes, home owner’s insurance, utility bills, decorating and remodeling costs and costs of life style changes.

For example, sometimes a move farther away from stores, work, schools or public transportation necessitates buying a second car, or a more reliable first car.

Take all these factors into consideration before you determine how much home you can afford.

Buying a lemon

It is essential that you conduct a private inspection of a potential new home. A shiny surface can hide any number of problems lurking in a home. Inexperienced purchasers get burned every year by failing to spend $150-$250 to thoroughly check out a home.

Insist that your purchase agreement include a home inspection contingency that provides you enough time to complete the inspection. Make sure you and your inspector thoroughly review the seller’s residential disclosure form and any community point of sale inspection reports before the inspection.

Buying the wrong home for you

We had a call from a buyer who signed an agreement to buy a home that didn’t even have enough bedrooms for her family. That can show you how emotion can cloud the judgment.

Don’t allow yourself to be swept into an inappropriate purchase. Make a list of minimum requirements you need satisfied. Take some time and a few visits before signing any contract to make sure the home adequately meets the needs of your family.

Getting burned by contract terms

Very few if any purchasers fully understand the legal impact of the fine print of a purchase agreement. Before signing your name to a purchase agreement, carefully review all the language and make sure you know the meaning of each term.

Never sign a purchase contract without getting the advice of a real estate attorney, and have the lawyer review the agreement to ensure that you understand it and that it protects you adequately.

Most purchase mistakes can be avoided, just by doing some homework. Protective steps before you sign a purchase contract will help ensure your purchase will be successful.

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