How Not To Get Ripped Off When Buying A House

April 9, 2022

Real Estate

How Not To Get Ripped Off When Buying A House

When COVID-19 hit last 2020, first-time home-buying Millennials took advantage of record-low mortgage interest rates. This buying fever resulted in low inventory, high demand, and bidding wars come 2021. Forecasts predict that instead of dying down, spring buying will be at its hottest this 2022. Sadly, this is also a great scenario for people looking to take advantage of buyers.

This year, keep your guard up against opportunist sellers, realtors, and mortgage brokers if you are a hopeful homebuyer. Don’t give in to asking prices well over the current market value or over-the-top loans. Do your research and follow the following advice on how not to get ripped off when buying a house.

Educate Yourself To Make Smart Home-Buying Decisions

 

Attend First Time Homebuyer Education Classes

Making informed decisions is within your reach. You can get in touch with a housing counseling agency regarding the different facets of the home-buying process. Regulated by the Department of Housing and Urban Development (HUD), these agencies are usually impartial, nonprofit organizations. You may opt for one-on-one advice or attend a Homeownership Education course.

Homeownership education and counseling (HEC) can also help with postpurchase matters like mortgage delinquency, staying current on home loans, and avoiding foreclosure.

Use A Certified Home Inspector

When you plan to buy a secondhand car, you have a mechanic check if it’s worth purchasing; the same logic applies with a home. Home inspectors not only uncover problems with the home but will also give you maintenance tips and safety checklists during the home inspection. 

The home inspector’s report is a powerful negotiating tool. You can counter an initially high offer when the home inspector discovers defects and safety issues. It also enables you to walk away if you have a home inspection clause or inspection contingency in your purchase contract. Most banks and lenders won’t approve your loan without a proper home inspection.

Don’t Hesitate To Ask for Help

Aside from approaching HUD-approved housing counselors and certified home inspectors, you may go directly to a real estate agent for homeownership guidance or to a local banker to walk you through the pre-approval screening. 

However, be selective about your realtor. To avoid an unethical or dishonest realtor, you may ask relatives, friends, and neighbors to refer you to a trustworthy agent. See what to watch out for with real estate agents below. 

Look Out For Signs Of A Deceptive Real Estate Agent

 

Your Agent Withholds Information On Costs And Hazards

Realtors have a fiduciary duty to represent your best interest and negotiate on your behalf to the best of their ability. Find another agent when they are not transparent and truthful regarding the current value of the home, the available offers from different buyers, the decision of the seller, and other factors that may pose a conflict of interest. 

A realtor should also declare concerns like hazards, neighborhood nuisances, and deaths in the home in a state-issued property disclosure statement. A real estate lawyer can support you when you need to hold a real estate agent accountable for failure to accomplish disclosure duties. 

Your Agent Insists On His Or Her Inspector 

A realtor can connect you with an independent home inspector. However, if you’re uncomfortable with their recommendation, you can choose another one to do the home inspection. A deceptive realtor may discourage a thorough inspection to facilitate a faster sale and earn commissions.

This unacceptable practice poses safety risks for you and will mean buying a home in unfair circumstances.

If you would not like to avail the services of a realtor or you’re looking into how to avoid real estate commission, you may find a property that is directly FSBO or For Sale By Owner.

Understand And Avoid Mortgage Ripoffs

 

Compare Loan Terms

Builders, banks, and mortgage companies all offer to finance you when building or buying a house. It is your responsibility to compare their rates and select the most reputable lender. When this task proves to be difficult, you may reach out to a mortgage broker.

How much does getting a mortgage broker cost? Who pays the mortgage broker? Be wary when the lender compensates your broker. You will still have to do a check and balance of their suggestions. 

How do mortgage companies rip you off? The broker might convince you to take the most unnecessarily expensive loan of the lender. How much does a mortgage broker make? They could earn between 1% to 2% of your mortgage. 

Don’t Borrow More Than You Can Repay

Don’t let anyone involved in the buying process pull you into overcommitting and getting a mortgage that’s more than you can handle. You risk wreaking havoc on your credit report and facing foreclosure. 

Does It Sound Too Good To Be True?

When you buy a property, there are ways to evaluate the varied information presented to you. You can check the county auditor’s property website to compare home prices. You can ask the neighbors for anything unusual about the house. As for mortgage companies, you can look them up in the Better Business Bureau or the Attorney General’s office.


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