Real estate mogul, Shark Tank investor (and eCommission endorser) Barbara Corcoran tells CNBC’s Make It that people who are buying a home for the first time need guidance in order to prevent some common mistakes.
“The faster you buy your first home, in my opinion, the better,” Barbara said, even though the process can be difficult, confusing and expensive.
She goes on to drill down to the four most often-made mistakes:
Not factoring in closing costs
We all know how closing costs can grow as the closing goes on — perhaps an extra 2 percent to 5 percent of the total cost of the home.
“The biggest mistake that first-time home buyers make is they forget that they need closing costs—not just the down payment of, say, 10 or 20 percent,” Barbara told CNBC.
Focusing on the house and not the neighborhood
First-time buyers may fall in love with the house without taking a good look at the neighborhood. Remind your clients that the surrounding area is a major factor in determining the value of your home.
“It’s going to be 85 percent determined by the block in the town you’re living in,” Barbara says. “So you’re much better off falling in love with a rickety old house on a good block than a lovely, pretty house on the wrong block.”
Not knowing your credit score
A client’s poor credit score may ultimately mean wasting time and energy. Be sure to get this score checked and confirmed early on, before the real action begins.
“The loan you get to buy the property will be totally dependent on your credit rating,” says Barbara.
She suggests having your client take the time to improve their score before shopping.
Not getting pre-approved for a mortgage
Make sure your clients are qualified for a mortgage before any further action is taken. Of course, getting pre-approved is a step beyond getting pre-qualified.
If your client is pre-approved they can basically “walk in and say, ‘My bid is an all-cash bid,’” Barbara says. “What ‘all-cash’ really means is your bid’s not contingent on you getting financing from a bank. You’ve already cleared that with the bank, so you’ve got all cash to close on the property.”
Click here to read the article in Realtor magazine.
Click here to watch Barbara’s appearance on Make It.
Click here to discover how eCommission can help you fortify your cash flow.