Buying your first home is an incredibly exciting process. When you decide that you are ready to take the plunge into homeownership, there are lots of people ready to offer their advice on everything from which agent you should use, where you should buy, to what lender you should use… but less often do people tell you what not to do. There are many pitfalls that first-time buyers can fall into if they are not careful.
These are the most common mistakes that agents see first-time home buyers make and how to avoid making those same missteps:
#1. Seeing homes before you are pre-approved
You should talk a lender before you start looking at homes. A lender will help you know what you can and cannot afford. If you start looking for a home before knowing what the bank will lend you, you will often fall in love with a home or neighborhood that far exceeds what you can actually afford.
#2. Having an unrealistic wish list
Everyone wants a home that is newly renovated with a two car garage, fenced in backyard, walking distance to shops and restaurants, and close to work. But chances are, you will not be able to afford it. You need to prioritize the “wants” versus the “needs” on your wish list while always keeping your budget in high consideration.
#3. Using the listing agent to represent you
If you find a great property while at an open house, it is tempting to work with the agent that represents the property since they already know the home and the clients on the other side. But they do will not be looking out for your best interest so you need to research agent and find your own agent that will look out for you and negotiate the best deal.
#4. Putting too much stock in the online home value
Zillow and similar sites do not have representatives that go out to evaluate properties in person so how accurate can their home prices be? These sites come up with prices based on equations, not based on real life comparable market analysis.
#5. Expecting your home to immediately increase in value
If you are buying a home, you should do so because it increases your quality of life, not because the property will potentially increase in value. The property might drop in value after your purchase it or the value may plateau. The market cannot be controlled so it’s best to make this decision to buy because it’s the right thing to do for you and your family, not because of future potential gains.
#6. Underestimating your home expenses
Utilities and repairs can eat up your savings more quickly than you anticipated. A good rule of thumb is to budget 1% of your purchase price for yearly maintenance, repairs, and yard work. Not planning ahead for repairs is one of the biggest mistake a new home owner can make. It never fails – once you own it, something will break.
#7. Rushing a transaction
It’s easy to feel pressured into make a decision, especially if homes are moving quickly. But inevitably, if you allow someone to push you into a decision that you weren’t ready to make, you will regret it. Take your time to learn your market. Once you are ready to make an offer, don’t drag your feet but don’t let others rush your choices either.
#8. Falling in love with a house
It is very rare that the home you buy will meet all of items on your wish list. If it does, it is easy to get emotionally invested and you can make dumb decisions in order to get the house you love. While you might love it now, that will change in the future. This is a business transaction, not a love story.
#9. Buying when you aren’t ready
While it’s easy to say that buying is better than renting and list all the benefits of purchasing a home, it isn’t for everyone. If you are looking to purchase but don’t have the credit to do so, if you aren’t planning to stay in your home for more than two years, or if you cannot undertake home and yard maintenance, then it might be more responsible to continue to rent until you reach a point in the future when you can take on these challenges.
Going into buying your first home should be fun and exciting. By arming yourself with as much information as you can, you can help to make the process enjoyable while ensuring you don’t make the same rookie mistakes as everyone else.