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9 pitfalls for buyers

It may be your market, but do your homework and don't be lulled into a false sense of security

BY PEGGY BROWN | peggy.brown@newsday.com

August 15, 2008

So it's officially a buyers' market, and you're all geared up to find a home that makes your heart sing.

But, despite advantages in the buyers' favor, at least for now - prices that still seem to be falling, low interest rates and lots of houses to choose from - smart house-hunters need to be wary of the pitfalls of buying.

And take care.

We spoke to experts - real estate agents, mortgage brokers, bankers and attorneys - for their advice to buyers.

1 Make a list

If you don't figure out just what you want, you might just buy the wrong house.

"I always say this to all the young buyers: They have to decide where they want to live and what they're looking for in a home," says Michelle Cohen, associate broker and executive vice president for Century 21 Laffey Associates in Greenvale.

"Does it have the proximity to your job? Especially now, with the cost of transportation so high, it might make more sense to look for a house close to your place of business."

You also have to look at the cost of owning a home - again, with fuel costs high, how much will heating it run you? If it has a large piece of property, keeping it up costs either time (if you do it) or money (if others do), she says. How is the school district? Can you afford the taxes? (They will only go up.)

"You should sit down and write a list of what you're looking for in a home, and really do your homework," Cohen says. Even a house that seems like a bargain may not be one if it doesn't meet your needs.

2 Check it out

Avoid a nasty financial surprise that could ruin a deal.

"I think education is extremely important right now," says Jeff Barker, Bank of America's regional executive for consumer banking. "The buyer should fully understand what will be asked of him or her when they are ready to apply for the mortgage."

It's important to check your credit reports to see if you can fix any mistakes, he says. And be sure to figure out how much house you can afford - most lenders, including Bank of America, have online tables that will help you figure it out.

You'll need to get your financial records in order - proof of income, tax records, a solid source for a down payment and the like, he says. Then, get prequalified so you can show a seller you're a serious buyer who's ready to go.

Barker says that, even though lenders may be taking more care than in the past, "it's not a difficult process for people who can afford a mortgage."

3 First, hire a lawyer

Fools act as their own attorneys in real estate, too - you could get burned. Badly.

You might think you can wait until the closing to hire an attorney - but things can go wrong, so it's a good idea "from the get-go" to find a good lawyer, says Elysia Prinz, manager of Coach Realtors' Northport office.

And they're surprisingly affordable - most attorneys charge a flat fee for the entire real estate transaction, and you'll probably pay somewhere between $1,000 and $1,500 locally, experts say.