Buying a home often presents interesting 'lessons learned' that if not avoided, can cause a headache that far outweighs the joy of the experience. Buying a home should be fun! It should be an unforgettable experience on your journey through life, whether by yourself or with a family. This is one of the biggest decisions you'll make in your lifetime, so it's important to be prepared, and learn from the mistakes of others. Here are common mistakes we've found many home buyers make, with insights on how you can avoid them:
1 - Anticipate The Expenses
Home ownership extends beyond the loan. There are a number of costs at every stage of the process, from before you own the home all the way up to and through ownership. For starters, there are a number of fees you need to be prepared to pay (appraisal fee, credit report fee, application fee, escrow fee, etc.). Once your offer is accepted, you have to start thinking about repairs, renovations, property taxes, and insurance.
After you lay all these out, create a budget and see exactly where you're currently spending money. You may find you're spending too much on happy hour, and that amount could be the breaking point for your dream home. This exercise will also help you determine what you can afford, and expenses you're currently spending money on that can and should be avoided.
2 - Inspections Are For Everyone
It can be tempting to leverage your buying power by skipping the home inspection, but it's too risky if you're buying a home that has been around for a while. While the excitement of winning the bid war can influence us to make rash decisions, the hidden elements an inspection catches can save you tens of thousands of dollars. It's just not worth buying a home blind unless you have a substantial renovation budget set aside.
Our advice, always get an inspection and ask the inspector what they are inspecting. No home inspector is the same. Be sure they are analyzing the foundation, supports and plumbing at a minimum. We even recommend walking through the house with them asking questions along the way. What's that smell? Is it mold? Is the slant in that windowsill a foundation problem? If you don't ask and it's overlooked, your pocketbook will be hurting. An inspection may run you around $450, however a missed foundation problem can cost you $20,000 or more to fix.
3 - Get Pre-Approved and Save the Headache
Take a moment to think from the perspective of the seller. How will you weed out the serious contenders vs. the not so serious? By exploring their situation beyond the bid. Anyone can bid a high number, but sellers like you to be able to back it up. With a pre-approval, you can confidently place a bid, and know that the seller sees you as a serious contender. On top of that, knowing your loan amount will save you a ton of time and money. You may spend countless hours looking at homes beyond your budget, only to be crushed when you realize you can't afford it. That's emotionally taxing, and it's no fun. Or, the table may be turned. You are looking at houses well below your budget when you could be looking for something a little more long term and substantial.
4 - Resale Value Really Does Make a Difference
Buying a home is an investment, so look for features that make it appealing not only to you, but to potential buyers in the future as well. And we're not just talking about 'long term' future, think near term. Buy a home that can easily be sold in 5 years if circumstances change.
How can you determine this? A few key things to think about are home functionality. Is this a home a family would buy or an older retired couple? What demographic does the neighborhood appeal to? How are the schools? Are there any future developments in the area that may be appealing to home buyers? What key features of the home either help or don't help your cause for selling? All important questions to keep top of mind.
5 - Keep Your Emotions In Check
Our emotions can sometimes make us overlook the negatives in the near term, but it won't last forever. If you overlook a home's downfalls because you 'fell in love', it's likely buyers remorse will set in. As difficult as it may be, balance your emotions with your business sense, thinking about your home purchase as an investor. One of the biggest reasons people buy homes is from the 'investment' standpoint, we must not forget this. The honeymoon phase will ware off, and reality will set it. So put on your reality goggles.
This also comes in to play when you're making a bid. “Home Love” can sometimes lead us to bid higher than the house is worth. Don't do it. Keep your bid realistic and well within range of your budget and what the house is worth. Overpaying for a house isn't only a poor investment, but it will eat into your pocket book and can greatly impact the direction of your finances for years to come.
From start to finish, you should have an exceptional home buying experience. Our streamlined processmakes it easier than ever to buy a home, and helps you avoid common mistakes like this and more.
If you're in the market for a new home, browse our marketplace and let us help you have the perfect home buying experience. Plus, if you close the deal, we'll rebate the 3% buyer side commission to you.