Top 10 Costliest Mistakes for Home Buyers in Portland
Rock-bottom interest rates continue to lure home buyers to the Portland real estate market, just in time for the late-summer, early-fall drop in home prices. This is a great market — and a great time of year — to invest in a home or piece of real estate, but that doesn’t mean deals are guaranteed. Before you start home shopping, read our list of the most common mistakes that buyers make, with or without a real estate agent.
10. Waiting too long. Real estate market inventory levels hit an annual peak in Portland during the fall season. The most recent RMLS report showed 2.3 months of inventory; last year that number rose to 3.1 months in September before falling again as sellers took their homes off the market to try again after the holidays. Nearly every year Sept. and August are the highest inventory months of the year, which means it is an excellent time to buy. Want to stay on top of Portland real estate market news? Subscribe to our top 100 blog.
9. Not looking outside city limits. Yes, there’s only one Portland, Oregon. Life in Portland proper offers amenities that just can’t be found in the suburbs — or can they? In fact, neighboring cities like St. John’s, Cornelius, and McMinnville are comparable to Portland, with historic downtowns, highly rated parks, shops, restaurants, and proximity to transportation and employment. These suburban hotspots are growing faster than Portland itself, thanks to their greater affordability. Right now, the RMLS places the median price for a Portland home at $408,000. Homes in Milwaukie — a stone’s throw away from hip Southeast Portland — are going for $360,200 according to Zillow. And smart buyers can scoop up a McMinnville home for just $323,500, on average. Check out our full list of affordable Portland suburbs here.
8. Falling for scams. Talk about losing money on a home purchase — you could lose all of it by wiring it to the wrong person. Scammers are getting smarter these days, which is why it’s always important to double-verify each step in the transaction. Read more about the latest real estate scams hitting Portland here on our blog.
7. Not shopping around for a mortgage. Yes, it is overwhelming to pour through the literally hundreds of mortgage deals available to the average Portland home buyer, which is why simply going through your corporate bank can seem like a welcome shortcut. But if shopping around for a mortgage can save a few thousand dollars over the time you live in the home, isn’t it worth it? Luckily, you don’t have to search blindly for the perfect lender — we have a list of local mortgage providers that our buyers’ agent recommends to clients daily. Also check out our blog post on grants and money-saving loan programs for first time home buyers in Portland.
6. Moving too fast. Yes, the Portland real estate market can move fast sometimes, but when home buyers make decisions too quickly, they lose. A home is a major investment — maybe the biggest investment you’ll make in your life. Because closing costs can add up to thousands of dollars, selling the home again in a few months is a sure way to lose money, even if the real estate market is improving. Take the time to consider whether the offer you’re making is truly within your budget, and try to view the home with an objective, unemotional eye. Overlooking major flaws in a “bargain” home is a sure way to lose money on renovations down the road.
5. Not figuring in the hidden costs of home ownership. Attention, renters — what you currently pay in rent is not what you can put directly into a mortgage. Owning a home comes with other costs, including maintenance, homeowners insurance and property taxes. Keep in mind utility costs as well: They might vary greatly from what you currently pay. Fortunately, homes sold in Portland are required to have a Home Energy Score report which will give an accurate idea of what energy costs will be with the home.
4. Not starting early to improve credit score. According to Consumer Reports, a credit score going up or down by just a few points can change the mortgage rate you get by half a percent or more. That translates to tens of thousands of dollars more over the lifetime of the loan. Even if buying a home is just a distant idea, check your credit report now and dispute any errors you find. For a list of simple steps you can take to improve or build your credit, head over to Experian.
3. Skipping the home inspection. The home inspection is an important part of the real estate transaction; unfortunately, buyers tend to think they should skip it in order to get in on a “good deal” on a home. This is a little bit like skipping the test drive on a car so that you can buy it before someone else does. Yes, sellers must fill out a disclosure form, but even the seller may not be aware of many issues with the home. And the lender’s home appraisal, though it may sound similar to an inspection, is not a full, in-depth inspection of all the home’s systems and structural components. Often appraisers walk through the home in less than 30 minutes, while a good home inspection can take four hours or more. Read more about the difference here on our blog.
2. Buying a FSBO without a real estate agent. When a friend or family member sells a home, it may be tempting for both parties to forgoe the real estate agent commission and make the transaction without representation on either side. Buyer be aware! A home is not like other things that can be bought and sold — real estate assets require a professional to make sure that everything is done legally, and to avoid disputes down the road. Contact one of our agents to get a low commission rate when both parties are represented off market.
1. Not using a real estate agent in a traditional home purchase. Use your buyers agent’s local knowledge to guide your home search across the Portland metro area, then help you weigh the options before you make an offer. A trusted buyers agent can help you avoid all the money-losing pitfalls on this list, and more. Finally, a good real estate agent will be there even after the sale closes.
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