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10 First-time Homebuyer Mistakes


Mistake 4: Trusting a Verbal Agreement When Homebuying

A handshake won't hold up in court if a seller decides to go back on his word, but a signed agreement will.
A handshake won't hold up in court if a seller decides to go back on his word, but a signed agreement will.
iStockphoto/Joselito Briones

You've jumped through all the hoops -- you did the research, got pre-approved, found the house you want and put in an impressive bid to show you're serious. After some back-and-forth haggling, finally you get the call -- the seller has accepted your bid! You crack open a bottle of bubbly to celebrate all your hard work.

A day later, you rush over to finish off the paperwork only to find when you get there that the seller has backed out. A few hours after the seller agreed to your offer, another buyer swooped in and outbid you. You've fallen for the oldest mistake in the book -- trusting a verbal agreement.

These sorts of double-crosses happen all the time. So, it's always good to secure agreements in writing before you start celebrating and packing up the moving truck. Verbal agreements are not binding, and you will find that you have little legal recourse.

This unwritten rule goes for the real estate agents as well. If you choose to hire a buyer's agent, wait until you have a signed an agreement with the agent as a matter of housekeeping. It should state that the agent will keep your information confidential, so that they won't, for example, go telling the seller how much you're willing to shell out. It should also specify that you won't owe the agent normal compensation if you end up finding a house on your own, without his help.

If all goes well, the seller will live up to his or her word and everything will be hunky-dory. Or will it? Next we'll take a look at some of the unexpected charges that can add up.