12 most costly mistakes even smart san mateo county home buyers make and how you can avoid them
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Learn the 12 Most Costly Mistakes Even Smart San Mateo County Home Buyers Make...and How You Can Avoid Them.TRANSCRIPT
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Most Costly Mistakes Home Buyers Make
Thanks for joining tonight’s webinar. We will begin shortly. To download the slides, please visit
http://budurl.com/WebinarHandout
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Tonight’s Speaker
Raymond StoklosaManaging Broker and Co-Owner
The RayChel Realty Group
Phone: (650) 655-2500
www.LivingWellinSanMateo.com
Purpose and Goals of Tonight’s Webinar
PurposeEmpower and Educate Home Buyers
GoalsShare with you the common home
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buying mistakes even smart people make and how to avoid
Leave you more aware and informed about buying a home
Questions During the Webinar
Home buying experts are available to answer questions throughout the presentation
This is an interactive learning environment. You will get the most value from this program by having your specific questions answered.
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having your specific questions answered.
The only dumb question is the one you don’t ask
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Questions During the Webinar
You may type questions in at any time during the presentation – Question box on your screen
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12 Most Costly Mistakes Home Buyers Make…and
How You Can Avoid Them!Presented by
The RayChel Realty Groupw w w . R a y C h e l R e a l t y G r o u p . c o m
Presented by
Raymond StoklosaManaging Broker and Co-Owner
The RayChel Realty Group
Phone: (650) 655-2500
www.LivingWellinSanMateo.com
It’s All About Value
• Value means getting your money’s worth• Best way to get your money’s worth is…
Buy Mistake Free!
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Common Mistakes Smart People Make
Trip Hazards Along the Road to Home Ownership
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Mistake #1: Underestimating Location
Location, Location, Location!
Location is the…• Most venerable principle in real estate• Single most important influence on value
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• Single most important influence on value
Location Will Determine
• How well you’ll enjoy living in the house• How much it sells for when the time comes
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The Importance of Location
An Inferior Location Will…• Restrict the property’s appreciation• Hinder your ability to sell the property
B th b t l ti f t bl
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Buy the very best location you can comfortably and confidently afford.
People Want to Live Near Jobs & Services
• Homes Retain Value BestLocated within 35 miles from major city centerServed by Superior SchoolsStrict Limits on Growth and DevelopmentSubstantial Commercial Base
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Substantial Commercial BaseWell maintained streets, parks & neighborhoods
What Makes a Good Location?
• Served by a Well Performing School District • Quiet Neighborhood• Low Traffic Street• No Ugly Eye Sores
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• Free of Nuisances
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When Buying … Shop Location First
• You Can’t Change the Location• If you don’t like the city, neighborhood,
street or site, PASS and look no further!
Buy the very best location you can
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Buy the very best location you can comfortably and confidently afford!
Mistake #2: Not Recognizing Incurable Defects
What is an incurable defect?
Any “adverse condition” that cannot be rectified with a reasonable amount of money
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reasonable amount of money or effort.
Adverse Conditions
• Busy Street or Freeway• Proximate to Commercial or Industrial Area• Neighborhood Nuisances• Land Prone to Soil Movement
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• Near Undesirable Landmark• Next to Active Railroad Tracks• Airport Flight Path• Stigmatized Property
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Consequences of Incurable Defects
Property with an Incurable Defect is worth less than a property that doesn’t possess the same defect – all other things being equal.
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If you buy a property at a discount because of an incurable defect…
• You will have to sell it at a discount• Or, you will have difficulties producing a
timely sale
Remember…
The best time to think about selling a house is BEFORE you buy it.
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When Buying …Be Aware of Incurable Defects
It’s OK to buy a home with an incurable defect…
Just don’t over pay for it!
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Mistake #3: Ignoring Inept Designs
What is an “inept design”?
• Flaws that affect style, proportion and functionality
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Inept Design Flaws
• Reverse floor plan• 4 bedrooms, 1 bath• Huge retaining walls• Isolated master bedroom
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• Severe hillside lot• Shared drive-way• Access through BR to BR
Consequences of Inept Design
Value of a home with an Inept Design is diminished by the severity of the ineptitude
Always ask yourself…
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“How difficult or easy will it be to sell this property when the time comes?”
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When Buying…Be Aware of Inept Designs
It’s OK to buy a home with an inept design…
Just don’t over pay for it!
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p y
Mistake #4: Bidding Blind
Lack of Knowledge About Current Market…• Conditions• Price structure• Trends
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Trends
When Buying…Review Market Analysis
• Shop & Compare• Similar Homes• Recent Sales• Pending Sales
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• Guard Against Over Paying!
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Mistake #5: Buying Emotionally
Buy Emotionally at Your Own Peril• Control Your Emotions• Detach yourself• Assess your personal needs• Evaluate the home’s merits
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Evaluate the home s merits
Treat every real estate purchase as an investment…your most important investment.
Mistake #6: Not Negotiating Seller Concessions
• Every transaction is different• Determine the leverage points• Discover who has a Competitive Advantage?
Negotiate If you don’t ask you’ll never get!
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• Negotiate - If you don’t ask, you’ll never get!
Mistake #7: Poorly Packaged Purchase Offer
• Strong Offer Package demonstratesBuyer’s Ability and Desire to Buy
• Poorly Packaged Purchase Offer
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y gIndicates Inability to PerformImplies Lack of CommitmentSuggests Potential Buyer’s Remorse
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What Goes into a Well Package Purchase Offer?
• Fully Completed & Signed Purchase Contract• Genuine Pre-Approval Letter• Proof of Funds • Fully Approved Disclosure Package• All Advisories Signed
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• Personal Note to Seller with Photograph• Copy Earnest Money Deposit Check
Mistake #8: Superficial Due Diligence
Stop! Look! Listen! And Look Again!
• Buyer must exercise reasonable careReview disclosures carefullyQuestion omissions and inconsistenciesRead AdvisoriesRequest insurance claims history
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Request insurance claims historyInvestigate Property ConditionObtain written reports
Mistake #9: Not Buying a Home Warranty
Home Warranty Protection Plan• Contractual guarantee to repair or
replace malfunctions appearing in certain systems within a specified time period after payment of deductible
• Covers Certain Major Malfunctions
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FurnaceWater HeaterPlumbing stoppagesHeat Pump
• Coverage May Vary – Read Policy!
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Mistake #9: Not Buying a Home Warranty
• No Home Warranty Covers:Known pre-existing conditionsMold and mildew problemsItems improperly installedCosmetic defects
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Cosmetic defectsPrevious or attempted repairsHazardous materials issues
• HWPP is big protection forlittle cost
Mistake #10: Closing Cost Surprises
Closing costs are …• Charges for Services• Incurred by Buyer and/or Seller• Allocated by Custom• Controlled by Contract
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Review an Estimate of Costs Before Signing Offer
Review an Estimated Closing Statement
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Mistake #11: Working with the Listing Agent
• Listing Company is the Seller’s AgentAll Sales Associates Represent the Seller
• Listing Company must…Promote and protect the Seller’s interests
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Negotiate the best business deal for the seller, not the buyer
The Seller will be represented by a professional…Why shouldn’t you?
What is the Role of the Buyer’s Agent?
Buyer’s Agent Duties…• Advocacy• Technical Expertise• Professional Advice
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Won’t a Buyer’s Agent Cost Me More?
• No…You Pay Nothing More• Commission Paid by Seller• Buyer’s Agent Works for FREE Until You Buy a
Home
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When Buying…Hire a Buyer’s Agent
The success or failure of your transaction will greatly depend on your selection of an agent to represent you.
How and Who Will Represent You…Is Your
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Choice
How to Select a Buyer’s Agent?
Use a comprehensive questionnaire to help evaluate an agent.
“The Home Buyer’s Guide to Selecting an Agent”(Will Be Emailed to You for Attending)
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Mistake #12: Financial Unpreparedness
• The Poison Pill of Home Buying
• Not Putting Your Financial House in Order Before Shopping for a Home is Setting Yourself Up for Failure
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Find a Loan First, Then Find a Home
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What is a Genuine Loan Pre-Approval?
Firm Loan Commitment• Unambiguous statement acknowledging receipt
of loan application & underwriting confirmation• Income, Debts, Assets, Employment, Credit
History and FICO Score Verified & Substantiated
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History and FICO Score Verified & Substantiated• Maximum Interest Rate & Loan Amount Stated• Expiration date noted
Why Do You Need a Genuine Pre-Approval?
A Genuine Loan Pre-Approval• Demonstrates your credit worthiness• Determines your purchasing power• Determines your financing options
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You won’t waste your time looking at houses you cannot afford.
Pre-Approval vs. Pre-Qualification
Get Pre-Approved, Not Pre-Qualified
• Pre-QualificationAn informal estimate of what you can afford
• Pre-Approval
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ppA formal written commitment you can rely on stipulating the maximum loan amount, interest rate and terms
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Bonus Mistake #13
Bonus Round
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Mistake #13: Failure to Understand
Roles and Responsibilities of the Parties• Buyer• Seller • Agents
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Home Buying is a Process, Not an Event• Series of coordinated actions• Haphazard approach is the #1 success blocker
Review the Purchase Contract
Contract is the Transactional Road Map
Ignorance of Contract is the fundamental cause of…
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• Disputes between buyers and sellers• Dissatisfaction with the transaction
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The Three OOPS!
It is almost always a mistake to…• Buy a home when you expect to sell soon• Start you house hunt before doing your
homeworkB h th t t t d t
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• Buy a home that meets your current needs, yet ignores your long term needs
Technology Tools You Can Use at Home
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www.LivingWellinSanMateo.com
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Home Search
http://LivingWellinSanMateo.com/home-search/
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Ask a Real Esate Question
http://LivingWellinSanMateo.com/San-Mateo-Real-Estate-Question/
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Upcoming Webinars
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Webinar: Financing a Condo
Finanancing a Bay Area Condo
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Monday, November 16th 6:30pmTo Register Visit:
http://budurl.com/CondoFinancing
Webinar: Trustee Sales
Trustee Sales – The Most Dangerous & Most Profitable
Way to Buy Real Estate
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Tuesday, November 17th 6pmTo Register Visit:
http://budurl.com/TrusteeSale
Webinar: Selling Your Home
Selling a San Mateo County Home You Can’t Afford
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Thursday, November 19th 6pmTo Register Visit:
http://budurl.com/SellMyShortSale
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Free Conversation
Raymond StoklosaManaging Broker and Owner
Chela StoklosaAgent and Owner
Rebecca WilliamsonAgent
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g g g g
Phone: (650) [email protected]
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