Many people view real estate as a good investment and, in many cases, it is. But the process of buying and selling a home can be lengthy and complicated. If you’re not thoroughly prepared, or if you don’t have someone at your side who is, it’s easy to make mistakes. Some of these mistakes are minor and easily rectifiable. Others can end up costing you hundreds or even thousands of dollars and putting more cash in the pockets of other people.
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If you’re in the process of buying or selling real estate, here are the top mistakes people make that might actually be making others rich.
Not Brushing Up on Tax Policy Changes
Like many things, real estate comes with certain tax policies. If you’re not up to date on the current tax policies, especially when it comes to real estate planning, you could be losing money.
“Tax policy changes can complicate the estate planning process,” said Julie Jones, VP of Ultra Luxury Sales with Douglas Elliman. “It is really never too soon to sit down and look at the tax implications and potential complications of the real estate sale. This will avoid surprises at the closing table, whether due to divorce or family bereavement.”
Jones further advised keeping tax policies in mind when creating a will or marriage settlement agreement. “Revisit your plan on a regular basis to ensure that all liabilities are understood and accounted for,” Jones said.
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Not Negotiating During the Process
“Negotiating for a better price is an important part of the home-buying process, but many buyers are hesitant to be proactive about it,” said Mark Buskuhl, founder and CEO at Ninebird Properties, a Texas-based investment firm. “This can end up costing them more money in the long run.”
Some things you as a buyer might be able to negotiate include the home price, closing costs, mortgage interest rate and other fees. Sellers can also negotiate during the process to get the highest possible amount.
Trying To Do Everything Alone
Some people, especially more experienced buyers or sellers, might try to handle the real estate process on their own. After all, this could save them money in things like real estate agent or attorney fees. But when you go it alone, you run the risk of leaving money on the table or making other people richer.
“Retain the services of a real estate professional who will guide you on the sales in the community and typical negotiation room,” Jones said. “Resist the temptation to go straight to the listing agent by selecting a professional who works for you and protects your interests. Make sure that your agent is full-time and truly specializes in your community of choice. Make sure that your agent advises you on all of the critical dates of your contract. You are signing a legally binding contract.”
Pricing the Property Wrong
There’s a lot of confusion when it comes to pricing a property well. Sellers want to price high enough to get a decent return without alienating potential buyers.
“Another common mistake sellers make is pricing their home too low or too high. If they price it too low, they may not get what their home is truly worth,” Buskuhl said. “Conversely, if they price it too high, buyers might be scared away and the seller could end up having to lower the price later on. A real estate expert can help provide insight into what the market will bear and ensure sellers get a fair price for their home.”
Letting Emotions Get in the Way
Having representation can help both the buyer and seller with any legal or financial issues that come with real estate transactions. But having an objective third party can also help keep emotions from getting in the way of making the most profit.
“Emotions often run high during the sale of a home. It will be easier to be objective if you feel well educated and informed on your position within the transaction and have a strategy in place to manage the process,” Jones said. “Try to avoid retaining family or friends who may not be qualified or be able to be totally objective. This can be a costly mistake in both time and money. Ensure that your selected agent is well connected, based locally but has a national and global reach appropriate to the community.”
Not Considering All Costs of Buying a Home
For buyers in particular, one common real estate mistake is not factoring in the true cost of purchasing a home. This can be a costly error that can make others — such as the bank or seller — richer while cutting into your finances.
“When looking to buy a home, it’s important to consider all of the possible costs that come with it,” Buskuhl said. “Homebuyers need to factor in mortgage payments, property taxes, insurance, maintenance, and any potential renovations they may need to make.”
Skipping the Inspection
A home inspection might not be required where you live, but skipping this part of the process could cost you a lot of money as a buyer.
“Very importantly, do not waive inspections,” Jones said. “Even on a brand-new residence, you should still have an inspection undertaken. If the home is new, then you may be entitled to a punch list of any repairs.”
While you’re at it, it’s also a good idea to get a certified real estate appraisal for any home you’re considering purchasing. “Obtain at least one certified real estate appraisal,” Jones said. “Do not rely on the opinion of family or friends. It is really important to be totally objective during a stressful and emotional time. Seek out appraisers who are experienced in your real estate market so that your real estate assets are properly and impartially managed.”
Skipping Important Renovations or Repairs
Oftentimes, people who are selling their property want to get it listed and sold as quickly as possible. But being too hasty and skipping essential repairs or updates could cost the seller money. This is especially common if the state of the home is putting off prospective buyers, or causing them to put in a lower offer.
“When selling a home, it’s important to make sure that any necessary repairs or updates are taken care of before potential buyers come to view it,” Buskuhl said. “This includes anything from repairing broken fixtures to taking care of any aesthetic issues.”
Even minor renovations could increase the home’s sale price by thousands of dollars. It could also get it off the market sooner, thereby putting more money into the seller’s pocket.
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This article originally appeared on GOBankingRates.com: 8 Biggest Real Estate Mistakes That Are Making Other People Rich
