There is a ton of excitement and energy in the home-buying process, especially if you’re making a first purchase, or maybe you’re moving up to your “forever home”. But, all that excitement can make it easy to make mistakes; mistakes that could ultimately cost you your dream home, or at least make the process a lot more complicated.
Here are the top eight deal-killing mistakes that home buyers in Northern Michigan make, and tips on how you can avoid them.
1. Not Using A Local Lender
We know, it’s easy to get swept up in the hype and flash of big commercials from international banks or mortgage companies like Quicken or Rocket Mortgage. While these institutions probably have some very fine people working at them, these people don’t know our market. They don’t know our inventory. They don’t know the timelines our customers are used to working with, they don’t have an office down on Front Street that you can pop into for a meeting if you’ve got questions.
Using a local lender gives you a connection to someone who knows the market, who knows the inventory, who has worked extensively with local agents, inspectors, appraisers, and closing companies; someone who’s going to walk you through the process and be available for questions whenever you’ve got them.
Avoid This Problem: Go local with your lender! We’ve got some favorites – people we’ve worked with personally and know they’ll do a good job. One of these lenders is Jeremy Kilbourne with Arch Mortgage North. Knowledgeable, professional, does a ton of work in Northern Michigan – Jeremy takes great care of his clients. His phone number is 231-346-4110, his email is jeremy@archmortgagenorth.com, get started with a lender today!
2. Not Using a Local Realtor
Not using a local Realtor is often an express route to deals that don’t close or prices that aren’t market value. The most common reason buyers don’t go with a local Realtor is that they’ve got some loyalty or a pre-existing relationship with a non-local professional. While we respect this loyalty, remember, someone who isn’t working day in and day out in this market isn’t as connected to the property trends, to the typical list-to-sale ratios, to the hottest neighborhoods, or to the other Realtors who might have insight into a situation to help make a deal stronger.
When you don’t go with a local agent, you run the risk of overpaying, or maybe not even knowing that the perfect home is out there in the first place.
Avoid This Problem: Choose the Brick & Corbett Team to represent you in your next purchase. We are the number one team in all of Grand Traverse County, we’ve represented hundreds of buyers in their purchase of hundreds of millions of dollars in real estate, and we know this market front to back, top to bottom. If you want to buy a home in Northern Michigan, you can’t get better representation than the Brick & Corbett Team. Call us today at 231-715-1464, or drop us an email at hello@brickcorbett.com.
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3. Not Coordinating Your Purchase with the Sale of Your Existing Home
Unless you’re a first time home buyer, chances are you’re going to have a home to sell in conjunction with the home you’re buying. Not coordinating these transactions to work together can spell disaster for your purchase.
For example, if you’re planning on using the equity from the sale of your existing home as a down payment on your next home, you must close on your existing home either before or on the same day as your purchase. If there isn’t some serious choreography, you may find yourself missing deadlines, or maybe even closing on one sale weeks before you can close on another, which might leave you without a place to stay, all putting your purchase in jeopardy.
Avoid This Problem: Work with a qualified Realtor who’s got experience with multiple transactions for the same client. B&C team leaders BJ Brick and Tommy Corbett are experts here, they can get you across the finish line on both transactions, coordinating your calendar the whole way, and making sure all your needs are taken care of from the outset.
4. Not Accounting For Differences in Taxes
In Northern Michigan, where you live can play a big role in determining how much you pay in taxes. The tax rate changes from township to township could amount to hundreds of dollars difference in your monthly expenses, which could make-or-break a purchase of a home.
Here’s an example: Let’s say you want to live on Birchwood Drive at the base of the Old Mission Peninsula in Traverse City. The Traverse City city limits start on Birchwood where the addresses get below 800. A $300,000 home with an address of 800 or higher on Birchwood lands you in Peninsula Township, which means you’d be paying right around $4,070 a year in property taxes, whereas a $300,000 home on Birchwood with an address lower than 800 lands in the city, meaning you’d pay approximately $5,486 a year in taxes.
Avoid This Problem: Work with a skilled and experienced local professional who knows these things and can advise you as such. Also, check out the Michigan Property Tax Estimator tool; all you need is the SEV (approximate State Equalized Value – usually ½ of your purchase price), your county, township, and school district, and you can get an idea of what you’ll pay in taxes for any home you’re considering.
5. Focusing Too Much on Zillow
Zillow is a great tool for getting inspired, browsing listings, and making lists of homes you’re interested in, but ultimately, it’s a third-party tool that deals with second-hand information. It’s easy to get sucked into “Zillow-scrolling” when searching for homes; a practice that doesn’t focus your search and tends to distract from the decision-making process.
Avoid This Problem: Don’t ignore Zillow, but use it as a secondary resource – not your primary source of information. The Brick & Corbett website allows you to search for homes for sale just like on Zillow. We have all the homes they have, and when you search with B&C, we can coordinate your searches with our insider knowledge of the market so that if something is coming up that you might be interested in, we can let you know about it before you have to compete with everyone else.
6. Not Accurately Planning for Closing Costs
When most people think about financing the purchase of a home, they think about their mortgage – what am I going to pay a month for the next 30 years? Unfortunately, most first-time home buyers don’t know that, in addition to the mortgage payment you’ll be making until your home is paid off, you also need to account for your upfront closing costs of the property too.
In order to close a home, you’re going to need a down payment, money for inspections, appraisals, any up front fees your bank may charge, plus money for the title company’s closing services, title insurance, and any other miscellaneous fees. It’s not uncommon to have two or three thousand dollars in up-front fees as a part of your home purchase cost.
Avoid This Problem: Make sure you speak to your lender ahead of time to understand exactly what your out of pocket expenses are when it comes to a mortgage. Many banks offer options that allow you to roll these expenses into your mortgage, which can help cut down on the amount of cash needed to close. Also, talk to your Realtor about the closing costs associated with the title company before signing a contract. An experienced, full-time Realtor is closing multiple deals a month – they are very familiar with the rates local closing companies are charging – get educated and make a plan. We’ve got a great buyer’s guide that explains the entire process, check it out.
7. Shopping Before You Get a Pre-Approval
If I asked you to go to the store and get groceries, you wouldn’t fill up your cart before looking to see how much money you had to spend, would you?
Shopping for a home before you’ve got a pre-approval from the mortgage company is just like heading to Meijer and not knowing what your budget is until it’s time to get in line and checkout, and honestly, just as painful. If you got up to the check out only to find that you only have budget for half the things in the cart, you’ve then got to go through the cart and pull out a bunch of the snacks you were pretty excited to eat later that evening.
The same is true when shopping for a home. If you start shopping prior to getting that pre-approval, then find out after the fact that your budget is going to disqualify many of the homes on your favorites list, you’re going to need to put those homes back, and just about everything left is going to feel inferior in comparison.
Avoid This Problem: This is pretty simple; get your pre-approval. Getting pre-approved for a mortgage is free, it is fast (most great lenders like Jeremy Kilbourne can turn a pre-approval around to you in a day or so), and it gives you a budget to work with.
8. Underestimating the Cost of Repair and Renovation
Just about everyone shopping for a home is looking for a great deal. Some of the best deals to be had are on the homes that require a little TLC; the classic fixer-uppers. The problem is, unless you’ve got a lot of hands-on experience doing home repair and renovation, estimating how much it is going to cost to get the home in tip-top shape is tough.
Typically, the inspection period is when a buyer would bring in contractors to give them estimates on the scope, price, and difficulty of work. However, this inspection period may be short thanks to how competitive the Northern Michigan market is. If you don’t have the opportunity to get these inspections done, it’s difficult to continue with a purchase.
Avoid This Problem: Before submitting an offer on a property, get the details of the home and the work you’re considering over to your contractor for a paper-estimate. Yes, it isn’t going to be as accurate as the estimate they will give you standing in the home, but it will be a starting point that will allow you to make better offers on the outset.
Bringing It All Together
The Brick & Corbett Team is committed to making sure you don’t make any of these mistakes when buying your next home. Our team of seasoned real estate professionals has helped buyers with just about every property type you’ll find in Northern Michigan; we know the process, we know the market, and we know the people in our community that will help you get the job done.
If you’re ready to buy a home in Northern Michigan, The Brick & Corbett Team is ready to help. Reach out today to get the buyer conversation started.
