* Failing to Build A Team

Because most of us shop for a home only once every six or seven years, it’s almost impossible to keep up with all the changes in the housing industry. That’s why I believe the most important step you can take is building a team of experienced professionals to assist you in your search.

This would include an accountant, a mortgage banker, a lawyer, an inspector, and an appraiser. Perhaps most important is a real estate agent whom you trust. Because the agent is actively engaged in this business, it is their job to help you coordinate all the other team members to promote and protect your interests.

I regularly meet first time buyers who refuse to seek help, preferring to "go it alone" and work only with sellers on a direct basis. In my opinion, this is a foolish approach to the homebuying process. Denying yourself the many benefits of an agent’s experience is not a smart way to find a home.

* Choosing the Wrong Location

Location is still the most powerful factor in the value of any property, and some areas are more popular than others. That’s why it pays to take an appropriate amount of time to familiarize yourself with alternative neighborhoods and communities.

One of the principal benefits of owning a home is your personal satisfaction and happiness. And if you select the wrong location, you will eventually end up disappointed in your new home. Always visit a home location at different times during the day to see what living there will be like. If you only see the home at lunchtime, you may not know that there is heavy traffic in the morning and afternoon. At the very least, you should talk to neighbors and ask what issues affect their community.

Even within a specific community, there are better lots and less desirable lots, ones that are secluded and others that have very little privacy. Your home should reflect your lifestyle, and if you compromise too heavily in this area, you may regret your purchase

* Selecting a Lender Without Shopping Around

Making a mistake on the lender or the loan itself is a terrible error because you are punished financially month after month for as long as you own the house. You should always shop and compare among at least three different lenders, and seek help in the comparison from an experienced person you trust. By obtaining a faxed "good faith estimate" from several lenders, you will be able to spot hidden fees and unattractive rates.

And just as bad is selecting the wrong type of loan. I am amazed at the number of otherwise thoughtful borrowers who select an "interest-only" adjustable rate loan with rates tied to LIBOR and few, if any, caps or ceilings on adjustments. I still recommend a thirty year fixed rate loan in almost every situation, and especially for first time buyers.

* Buying a Home Without an Inspection

When I started in the real estate business in 1978, residential inspections were a rarity. Most buyers asked their parents or a knowledgeable friend to walk through the home and give them an approval. Today, a professional home inspection is a must for every home sale, whether on a new or resale home.

And while inspectors in Georgia are not licensed in any way, there are solid professional organizations which maintain high industry standards. I have been particularly impressed with the American Society of Home Inspectors, but there are others as well. Buying a home without a comprehensive inspection is the equivalent of buying a used car without taking even a test drive.

* Signing a Document You Don’t Understand

The world of residential real estate sales has become much more complex as the years have gone by. In 1978, the standard Georgia Association of Realtors contract form was two pages. Today, it is seven pages, including more than a full page on the inspection contingency alone. Two-thirds of a particularly confusing page is devoted to agency disclosure, and another large paragraph labeled "disclaimer" attempts to make no one responsible for anything.

To make matters worse, while real estate professionals are trained to know which forms to use in which situations and how to fill in the blanks, they are not allowed to give legal advice of any kind. And while some agents resent having their offers reviewed by an attorney, most are happy for the input.

Remember that this is a binding contract to complete perhaps the largest purchase of your life. I think it makes sense to have your attorney review every sales agreement before you sign. And the same goes for the documents you will be asked to sign at settlement. This review can be easily accomplished with a fax and a phone call, and will give you tremendous peace of mind.

While the above mistakes are especially grievous, I have gathered a few more that I want to share with you next week. By learning about these lapses in judgement now, you can better protect yourself against serious mistakes in the home buying process.