The house hunting and home buying process is nothing short of simple, especially at a time when financing options exacerbate costs, many housing markets are experiencing low inventory, and sales prices are through the roof. While we happen to think that some of the new trends that took off during the pandemic — like delayed negotiations and virtual tours — really helped to level the playing field for motivated buyers, a staggering number of homebuyers are still missing the mark and making costly buying mistakes.
In a recent study, Adobe reported that 90% of Realtors encounter challenges with their clients' documents and cited that lack of organization is a huge setback throughout the buying process. Consequences reported include:
- Delayed or stalled real estate transactions (59%)
- Financial loss or unexpected expense (47%)
- Increased stress and frustration (46%)
- Contractional disputes and legal issues (36%)
- Missed opportunities or advantages (35%)
The survey also reports that homebuyers overlook administrative tasks related to buying a house. While it may be an issue for first-time homebuyers more often than repeat buyers, in this economy, all fast-moving buyers are subject to common mistakes. Overlooked administrative tasks are often related to financial details, including fees and closing costs (58%), terms and conditions related to contingencies (57%), and timelines and deadlines (48%). Though mortgage lenders put a heightened focus on a buyer's credit report and income ratio for conventional loans during the mortgage approval process, they aren't there to educate about the homebuying process. Those on a mission to buy their dream house may overlook the additional costs or financial issues that arise in competitive markets.
40% of Buyers Feel Concerned, Uncertain, or Pessimistic
While real estate agents play an important role by helping clients navigate the unknown, a homebuyer who has organized documentation also has a competitive edge in a fast-paced industry. Real estate professionals revealed in the survey that a shocking 46% of homebuyers don't have a clear understanding of their own financial capabilities and limitations, making it difficult (or near impossible) to find a home that meets their wishes for a realistic purchase price or monthly payment.
With 25% of Realtors reporting that their clients have little to no understanding of the importance of administrative documents or contracts, it's understandable that buyers feel concerned, uncertain, or pessimistic about finding a house. 74% reported that their clients experience financial burdens or additional expenses as a result of neglectful document organization.
How to Succeed in Organization
A mere 1% of homebuyers have 100% of their paperwork and documentation set before initiating the buying process. To course-correct homebuyers and improve that percentage, professionals recommend that homebuyers prioritize paperwork to make the process efficient, and help them save money:
- 58% recommend thoroughly reviewing all documents; 38% request that buyers seek clarification sooner rather than later, especially concerning any terms or clauses that are unclear. Yes, this is the time to ask about about private mortgage insurance, funding fees, pre-approval, the mortgage rate, lender fees, school district ratings, and inspection contingencies.
- 39% recommend that they organize and compile all necessary documents in advance; 47% ask homebuyers to complete documents accurately and promptly
- 29% also recommend a consultation with legal or financial professionals who can answer important questions and reduce the likelihood of delays. Learn about credit score requirements. Ask for advice on mortgage lenders and homeowners insurance. Understand expected housing expenses (including recurring monthly expenses) as well as hidden costs, and the potential handling of expensive repairs. If you're planning for construction, learn about zoning laws. Also remember to learn how your credit cards (or credit accounts) can play a role in financial decisions.
- 68% prefer documents stored as a PDF, while 10.7% favor Google Dogs and 8.9% expect Microsoft Word documents.
