One of our favorite reasons to work with first-time home owners is to help prevent our rookie clients from making the same mistakes we’ve seen some of our friends and family make. It’s easy to get caught up in the notion of owning a home and overlook important details, ending up with a poor financial investment that’s more of a burden than benefit. In most cases, home buyers simply didn’t know any better. Consider this your chance to learn from the rookie home buying mistakes of others and make smart choices:
- Buying A
Home That’s Too Expensive. Just because you can afford
something, doesn’t mean you should. The current generation of
first-time home buyers has been preconditioned to buy now and pay
later, and we’ve seen the devastating results in skyrocketing debt.
Just because a mortgage lender has approved you for a specific
amount, it doesn’t mean you should max that out. Home owners buying
homes they couldn’t actually afford (because their banks approved
them) was a huge contributing factor to the housing collapse of
2007 and was a lesson learned by hundreds of thousands of home
owners. Not only do you need to be able to afford your home now,
you need to be able to afford it in the future. Consider rising
interest rates, unforeseen emergencies and significant life changes
when determining what you can afford.
- Misunderstanding The Market. A lot of people
get to a specific stage in their life, when their job seems stable
and their finances are on track, and start to get the bug to buy.
However, the market works in cycles and just because you’re ready
to buy, doesn’t mean you should. Buyer’s markets occur every few
months on a small scale, but they also occur on a much larger scale
over the course of several years. It’s really important to research
the market history of any area you’re looking at to see whether it
really is in your best interest to invest. Waiting a few years
might seem painful for those anxious to own homes, but it can make
the difference in home values by tens or even hundreds of thousands
- Ignoring Resale Potential. Talk to your
friends and family and you’ll probably find a few people who are
stuck in their current homes because even after years of investment
and market inflation, they aren’t actually able to upgrade their
homes. That’s because the selling costs negates any profit they
would make on their home, essentially making it impossible to move
upward, without taking a loss. Analyzing the resale potential of
your home will help ensure home flexibility in the future.
- Taking The Seller's Word For It.
Starry-eyed buyers want to believe everything the seller says but
any spoken agreements basically don’t exist. Ensure that all
agreements are written in the contract, including an accepted
offer. Sometimes sellers will verbally accept an offer, and they
really do mean to follow through, but then they receive a higher
offer prior to signing the paperwork. All the hurt feelings in the
world won’t undo a broken promise and verbal agreements don’t hold
up in court. Get everything in writing.
- Skipping The House Inspection. Always, always,
always hire a home inspector. If you can’t afford this step or
think it’s an unnecessary expense, then you aren’t ready to buy a
- Forgetting Extra Costs & Fees. There’s
more to buying a house than mortgage payments. And you may have
already factored in property taxes and annual HOA fees, but did you
consider appraisals, credit reports, escrow, notary and insurance
as well? If you’re borrowing money for your down payment, don’t
forget about paying that back too. The initial purchase of a home
will cost you a pretty penny and it’s important to be prepared for
- Getting Emotionally Attached To A House. At the end of the day, buying a home is a financial investment. First-time home owners often fall in love when they find a house that fits their criteria. However, this emotional attachment to a home can cloud your judgment. In addition to causing disappointment if the offer isn’t accepted, it also blurs your ability to make rational negotiations and ensure that the home is actually a good deal.
A good real estate agent will help you avoid these common pitfalls, and we always recommend choosing an experienced REALTOR® for your home purchase. New home buyers will especially benefit from the expertise and guidance of a real estate professional, and we always love assisting people with finding their first home.
Have any questions about buying your first home? Comment below and we’ll be happy to answer!