If it's feelings, and nothing more, you've got trouble


November 17, 1991|By ELLEN JAMES MARTIN

Real estate agents feel the electricity in the air when those looking at a home become "hot buyers." It's an emotional feeling similar to falling in love.

But letting your emotions lead you into a home purchase is one of the five most common errors homebuyers make, real estate specialists say. Even in today's buyer's market, someone caught in the emotional frenzy of a home purchase can easily overpay.

"This is the best market for buyers since World War II, so don't slip on a banana peel," says Carolyn Janik, co-author of the Penguin paperback called "All America's Real Estate Book."

There's nothing wrong with feeling good about a home. Maybe you're captivated by the landscaping, decorating, room patterns or the way the afternoon sun falls through the French doors in the dining room. But it's crucial to gather objective data before you sign your name to a sales contract, Ms. Janik stresses.

After first seeing your dream house, pause before committing. Go back to your agent's office and ask for data from the computer comparing the house with three or more similar properties that have sold lately or are on the market in the same neighborhood. The idea is to avoid overbidding.

Remember, your agent isn't a neutral observer in this process. Chances are, the agent who's been ferrying you about is legally bound to get the highest possible price for the seller. So, you may want to study the comparable data at home, on your own, rather than let the agent interpret it for you. Another good way to get a quick sense of neighborhood values is to drive by the houses on your comparable list.

Suppose your homework shows that the price asked for your dream house with the French doors is in line with the market. Then go back for a second visit, carrying a list of the features you want in a house. Check off the features that are there. Now, if you still think the house is right, make a bid.

Being led by your heart rather than head is just one of the common errors committed by homebuyers. Here are others cited by real estate specialists:

* Falling in love with a house and then going for financing.

"The better way is to go for financing before you go house-hunting. Otherwise you have to rush around to find a decent mortgage in a couple of days," says Peter G. Miller, the Silver Spring-based author of "The Common-Sense Mortgage," published by Harper-Collins.

Selecting a home loan shouldn't be a hurried afterthought. A variety of mortgage terms is available these days, and getting a loan that works to your advantage can save you thousands of dollars in interest charges.

It's smart to shop lending institutions before you shop homes. You'll not only find the lender with the terms most favorable to your situation; you also can gain a letter saying you're qualified for a loan up to a specific amount.

Pre-qualification gives you leverage with the seller by conveying the fact that you're a sure bet for financing. It also gives you a clear impression of what you can afford so you won't overshoot the mark and be disappointed.

"Why have Cadillac tastes on a Subaru budget?" Mr. Miller asks.

* Criticizing the house in front of the seller.

Many people have the mistaken impression that by finding fault with a home they'll humble the seller into offering better terms or concessions. They try to buy a home the way they would a ceramic pot in a Mexican market. You might get a few pesos off the pot by pointing out the hairline cracks.

But pointing out the flaws in someone's home is more likely to make the seller livid than to save you money.

TC "When you criticize someone's home, you're really criticizing them. They'll feel insulted and suddenly they'll become unavailable, unbending and uncooperative," Mr. Miller says.

If your remarks come before the deal is forged, it will be tougher to negotiate. If they come after the contract, you can forget about the seller agreeing to any little favors you might ask -- like the right to move your grand piano into the family room before closing.

* Becoming so captivated by a home that you pass on the chance for a home inspection.

By hiring a home inspector, you learn about the guts of the property before you're fully committed to the purchase. Are the appliances, heating or cooling systems malfunctioning? Is the plumbing or wiring bad? Is the roof in need of replacement? These are the kinds of questions a professional inspector can answer.

A house can look perfect with a fresh paint job and brand new carpeting. But that dosen't mean it won't present problems for the unsuspecting buyer. Indeed, there may even be problems that the sellers don't know about.

Many homebuyers are overconfident about the ability to judge a house by walking through. They also rebel against the notion of paying a couple hundred dollars to an "expert" when they're facing extraordinary financial hurdles to buy the home.

But making your home purchase contingent on the results of an inspection can pay off in more ways than one. You can back out of a sales contract on a house that's found to have serious problems.

* Buying another house before you sell your own.

All too often, people put the cart before the horse. If they're trading up, they'd rather pick out the new property before they market the one they already owm.

"Not selling your existing house first is a mistake," says Eugene Gallagher, principal broker of ERA-Gallagher & Co. in Bethesda. Even in a buyers market, a contingent contract is a weak contract. And having your trade-up property lined up puts pressure on you to let go of the old one more cheaply than you otherwise would.

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