12 most costly mistakes even smart san mateo county home buyers make and how you can avoid them

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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

The RayChel Realty Group

Tonight’s Speaker

Raymond StoklosaManaging Broker and Co-Owner


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


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.


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


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


Phone: (650) 655-2500


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


Mistake #1: Underestimating Location

Location, Location, Location!

Location is the…• Most venerable principle in real estate• Single most important influence on value


• 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


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


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


• 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


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


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


• 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.


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.


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


Inept Design Flaws

• Reverse floor plan• 4 bedrooms, 1 bath• Huge retaining walls• Isolated master bedroom


• 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…


“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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Mistake #4: Bidding Blind

Lack of Knowledge About Current Market…• Conditions• Price structure• Trends


Trends

When Buying…Review Market Analysis

• Shop & Compare• Similar Homes• Recent Sales• Pending Sales


• 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


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!


• 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


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


• 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


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


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


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


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


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


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


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)


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


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


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


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


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


Mistake #13: Failure to Understand

Roles and Responsibilities of the Parties• Buyer• Seller • Agents


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…


• 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


• 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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Upcoming Webinars


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Webinar: Financing a Condo

Finanancing a Bay Area Condo


Monday, November 16th 6:30pmTo Register Visit:

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Webinar: Trustee Sales

Trustee Sales – The Most Dangerous & Most Profitable

Way to Buy Real Estate


Tuesday, November 17th 6pmTo Register Visit:

http://budurl.com/TrusteeSale

Webinar: Selling Your Home

Selling a San Mateo County Home You Can’t Afford


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


g g g g

Phone: (650) [email protected]

LivingWellinSanMateo.comYouTube.com/LivingWellinSanMateo