Real estate: 5 Mistakes Made By Eager Buyers

Now is the time to invest in the real estate market if you are fortunate enough to have the funds and secure a loan, but there are still many pitfalls to avoid. While there are plenty of deals to be had, there are also some traps if you're too greedy or your expectations are too high. Here are 5 mistakes to avoid when you're home hunting.

1. DIY
"Flipping" real estate became trendy during the boom period where homes were selling for several times the actual value. A flipper would purchase a cheap home that was in need of extensive renovations, perform the majority of the work themselves, and then sell it for a profit. While it can work (although most would advise against flipping for profit in the present market) if you have some skills, most people are better off purchasing a home that is move-in ready. That way, you can wait until you build up some capital before you start any projects.

2. No Emergency Plan
So you've saved up a down payment, secured a loan, and can comfortably afford the monthly mortgage for your dream home. Do you have an emergency fun saved up yet? Before you buy any real estate, you should have several thousands of dollars (six months worth of living expenses is recommended) in savings. That money should be separate from any retirement or other investments. Having a small fund saved up can help you save your home in case you become ill, unemployed, or if there is a natural disaster.

3. Inspections
Investing in independent inspections is a must before committing to buy. Many houses may contain mold, rot, or other serious problems that are not easy to see during a walkthrough. Additionally, inspections are a great negotiation tool. Even minor problems that will require repair can be used to talk down the price. Buyers have their pick in the market, so you should be choosy. Remember that problems found during inspection can also raise insurance costs, so pick a real estate agent who is good with bargaining chips.

4. Avoid Auctions
Unless you're a risk-taker, can afford to lose thousands of dollars, and know what you're doing, you shouldn't be messing with auctions. It may be tempting with many banks trying to unload derelict properties, but spurned owners often leave their former homes in shambles. Squatters may even take up residence since they may have been sitting unused for so many months. At auction, you bid based on a picture and have no rights to an inspection. Once you buy it, you're stuck no matter what the outcome.

5. Bad Agents
If your real estate agent continually shows you properties out of your price range, that don't meet your expectations, or they are often late and disorganized, find another one. They get paid when you buy, so not only are they wasting your time, but their own as well. There are plenty of agents seeking buyers, so don't hesitate to drop a bad one.