18 Mistakes Real Estate Investors Make When Buying & Selling
Real estate is like ice cream. When it’s good, it is really good. However, if things heat up and the transaction gets complicated, you may find yourself struggling to continuously lick away the now water-like cream from encompassing your hand in an attempt to save your dessert, and save your real estate deal!
As real estate investors ourselves, we’ve all been there when it comes to making mistakes. At times, a real estate deal can go south for reasons that are completely out of your control. Have you ever heard of “title issues”? They are real. Consider them a 105-degree Fahrenheit day to your freshly scooped Ben & Jerry’s nondairy sorbet!
Many of us have experienced different real estate ups and downs. Today, we hear from 18 real estate experts who share their top mistakes when buying and selling real estate.
Keep reading to learn the top mistakes real estate investors make when buying and selling (provided by industry experts), so you can avoid them!
1. Loan Availability & Options as a Home Buyer
“The biggest mistake buyers make when looking to purchase their first home is not seeking qualified advice regarding loan availability. Buyers should seek advice when purchasing homes based on income, credit, and other standards, which change frequently. This will assist with landing on a purchase price that is doable for them, and realistic.”
- James of The Blue Wave Group, Inc.
2. Be Aware of Closing Costs
“As a realtor, it’s my job to make sure homeowners are aware of the closing costs they should anticipate. This is often one of the biggest mistakes homeowners make when selling their home, especially in the San Francisco Bay Area where owners typically pay the 6% fee for both real estate agents on the transaction. Other large closing costs for sellers to remember might include moving costs, concessions to the new buyers, and home inspections.”
- Crystle of CKW Real Estate
Related article: How to calculate mortgage closing costs
3. Inspections, Back Up Offers, and Broader Search
“There are a few recommendations that were not done by the buyer and turned out to be mistakes for them. 1) Complete the full set of inspections recommended. 2) Not to put in a backup offer. 3) Allow the agent to open them up to different areas on their search.”
- Roger Perry of Rodeo Realty
4. Choosing the Right Lender
“Choosing the right lender is paramount to a successful real estate transaction. I have let buyers continue on too long with their lender who was not performing instead of insisting they work with someone else. Buyers have almost lost homes because of the incompetence of their lender.”
- Jane of Home Jane Realty
5. Thorough Walk-Throughs of Properties
“My biggest mistake when I bought real estate investments for myself was not spending a little more time walking through an owner-updated house. The signs were there that they did a really poor job and covered up a lot of major issues with the house. However, I did not take the time to really look, and made some costly assumptions.”
- Mike of Good As Sold Home Buyers
Related article: Ways to improve an open house in Philadelphia
6. Stay in Your Lane
“Getting outside of our company’s lane and being too experimental. We built a spec home that turned out to be a disaster.”
- Brooks of KC Property Group
7. Recognize the Gifts
“Not recognizing the “gift” when it comes along, whether it’s the right house or the right price. When Buyers or Sellers continue to move the bar throughout the transaction, it makes it difficult to deliver a satisfactory result. Clarity and integrity are key components to a successful outcome; gratitude is the cherry on top!”
- Julie of Compass
8. Communication is Key
”Without a clear line of communication, mistakes are unavoidable and inevitable. You will never have control over all third parties involved in a transaction. Please do your best to give people what they want. You’ll typically get what you want in return.”
- Glenn of The Shelhamer Real Estate Group
9. Work With Experts
“Don’t sell your home by yourself! Sellers sell for thousands lower when they skip the Realtor.”
- Jeff of Upnest
10. Seize the Moment
“The biggest mistakes I have made over 42 years of investing in the Denver area are the houses or properties that I failed to buy when I had the opportunity and the properties that I sold instead of holding on to.”
- Doug of The Buy-Out Company
11. Screen Your Tenants
“When I first began buying rentals, I did not do every bit of due diligence. I got bad tenants because of it. Some simple background checks and checking of references personally could have saved me a lot of hassle…and money.”
- Brandon of Ekwity Investments
Related article: How to avoid missed mortgage payments
12. Double Check Your Renovation Costs
“My company AZ Home often renovates houses to make a profit. It’s super important to make sure your purchase price allows for enough margin in the case that either the house repairs go 15% above the original budget or that the house resells for 15% less than originally planned. Never do a house flip project that can’t allow for those extra precautionary hiccups.”
- Israel of AZ Home Offer
Related article: How to renovate a property on a budget
13. Offer With Confidence
“One of the biggest mistakes my first-time homebuyer clients make in the current market is not being willing to submit aggressive enough offers for a property. We’re constantly in multiple offer battles and some clients miss out on a great home because they can’t get their mind around having to go over the top with purchase offer amounts, earnest money deposits, appraisal concessions, etc.”
- Jeff of Buy Utah Homes
14. Do Extra Due Diligence When Buying Out of State
“We purchased a property out of state and did not visit it since the acquisition price was very low. Looking at satellite images of the lot, there appeared to be a run-down cabin on the property and we marketed the lot accordingly. Unfortunately, the GPS coordinates given to us by the county assessor were off and the cabin was actually situated on the neighboring lot. By the time we realized this, we already had a buyer and had to renegotiate the deal.”
- Erika of Gokce Capital LLC
15. Evaluate the Kitchen
“After all of the projects I’ve tackled in my real estate career, my biggest mistake was not looking into the kitchen enough before starting a renovation. We found out later on that the sewer line beneath the kitchen floor was collapsed. Not the easiest fix on a renovation, and not cheap either!”
- Chad of House Buyers KC
Related article: What NOT to fix when selling a property
16. Deeply Review the Title and Legal Description of the Properties
“My biggest mistake did come while I was helping a client purchase an investment property. They were buying a condo that clearly stated it was coming with a parking space. The parking space was actually part of the negotiations; the sellers used it as leverage over the other comps in the complex. My clients agreed with the valuation of the space, and closed on the purchase“.
“Months later, their tenant kept getting towed from the space that was supposed to come with the unit. As it turned out, the unit had been removed from the title years earlier. I missed that when reviewing title work, and the legal description. While we were ultimately able to recover some costs for my client, I got very lucky. That mistake was on me and could have caused a lot more trouble than it did. Will never make that mistake again!”
- Bret of BSW Real Estate
17. Location, Location, Location
“Location is huge, home values rise much higher in areas where growth is high and more desirable.”
- Marc 0f Sell Quick California, LLC
18. Factor in Additional Costs
“So many people buy to their maximum and forget to factor in the cost of moving and repairs/renovations AFTER the sale. Many new-built home owners forget they have to cover the windows after they pay to move.”
- Deb of Priority Properties, Inc.
Conclusion
That wraps up our deep dive into the mistakes real estate investors make – shared by 18 real estate experts. Real estate is an industry where you can prepare as much as you can. But learning by doing is sometimes the best way to experience the hurdles, get through them, and learn from them!
If you’re thinking about buying or selling a property in Philadelphia, or investing in a rental property, Brotherly Love Real Estate are your local property experts. Give us a call today at (215) 769-9875 or contact us online to learn more.