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Top 5 Mistakes of First-Time San Francisco Real Estate Buyers
Buying a South Beach home may be the biggest investment you ever make. Understanding the realities of the purchasing process can save you time and money, and help ensure you choose the right property. The list below outlines the top five mistakes people make when buying a home.
Going without a buyer’s agent.
A San Francisco buyer’s agent will narrow your field of choices—very time consuming in an over saturated market—so you spend time viewing only relevant properties. If a property needs a new roof or has water damage in the basement, a good agent will point that out. And how do you know you know a night club isn’t planned next door? A good agent will understand the zoning laws and point out potential problems.
Maybe the most important reason to work with a buyer’s agent is price negotiation. In many cases, the agent you met at the open house is the listing agent and works for the seller. He or she is on the seller’s team when it comes time to negotiate the sale. A buyer’s agent works for you. He or she will not only provide qualified price negotiation, but thoroughly understands the actual value of the properties that interest you. This will help you maintain your parameters, achieve your goals, and enjoy the best possible purchasing experience.
Making an offer based upon price rather than value.
The price of a San Francisco property and its value are not necessarily the same thing, and the difference is often surprising. Any offer you make should be based on comparable sales of similar properties in the area where you are searching. It would be a mistake to offer full asking price for a one-bedroom, one-bath condo that lists at $850,000, when a similar unit in the same development recently sold for $750,000.
But the reverse is also true: if the same South Beach condo, with similar comps, is listed at $700,000, there will likely be other offers above the list price. You want to make a competitive offer, but you should not overpay. A good buyer’s agent will help you factor in the property, location, and current market conditions to make a reasonable offer.
Over-extending financially.
Loan pre-qualification is a smart way to begin. It gives credibility to any offers you make, but is also gives you a concrete idea of what you can spend. A direct lender or mortgage broker will factor in your available down payment, and weigh your monthly income against the debt you already carry (referred to as your debt-to-income ratio), to determine the size of mortgage you can reasonably afford to take on. This will establish the maximum loan amount for which you will be eligible.
But there’s more to your monthly payment than the mortgage itself. You will also have to pay taxes, homeowners insurance, utilities and maintenance fees, as well as HOA fees if you buy a condo. It’s usually best not to make a purchase at the top end of your budget. Your lender will qualify you for the maximum amount they feel you can carry, but it’s up to you to decide what you are comfortable with.
Also keep in mind that your down payment is not the only cash amount you’ll need to make your purchase. Add to that inspection fees, transfer tax, and any repairs to the property not negotiated into the contract. Your South Beach real estate agent can thoroughly explain these costs and a help you come to a realistic estimate of what you will have to pay up front.
Rushing into the Purchase.
It’s easy and understandable for a buyer to get excited and rush into making an offer without knowing about the neighborhood or viewing enough alternatives. But these are crucial steps and should not be skipped. It pays to learn all you can, especially about the purchasing process itself.
Your San Francisco agent can give you the information you need about the market, the neighborhood, and property values. Before you dive into an offer, ask as many questions as it takes for you to feel excited and comfortable with the purchase you are making. To speak with a real estate agent about purchasing a home, please contact us!
Skipping the property inspection.
Sellers are required by law to disclose a great deal of information about the property. But these disclosures may not include everything you want to know. Questions about the age of the roof, the stability of the foundation, or the shape of the electrical and heating systems are best answered by trained professionals. Make sure you include a contingency in your purchase offer that requires the property to pass a home inspection without major issues.
With such contingency, the seller will choose—and pay—the inspector to meet the requirement, and you will have to trust that the inspection was honest and complete. If you plan to make large changes to the property, consider hiring your contractor to accompany the inspector. This will give you an idea of what any potential repairs will cost, and what it will take to make your intended changes.
Skipping the home inspection could leave you with faulty plumbing, dangerous electrical wiring, and a roof that needs replacing within the first year. Your home is a large and serious investment, and you deserve to have all the information before you hand over that down payment.
Remember, there is no such thing as being too educated about the process of purchasing property. The help of a trained professional, and clear knowledge of what the property is worth, are invaluable tools no prospective homeowner should be without! Contact a South Beach Real Estate agent to get your property search started on the right foot!
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