We know that buying a home isn’t always straightforward and especially, for first-time homebuyers, there are many challenges in today’s market. There’s a high demand for houses, and as a result, prices are higher, which means bidding wars and multiple offers. We’ve worked with several first-time homebuyers, so we’ve put together a list of the most common mistakes that we’ve noticed and how to avoid them.
1. Bidding Too Low
When you’re a first-time homebuyer, you might think that the cheaper the price of the property, the better. That’s not necessarily true, it probably means that investors are passing on the homes, which could be a red flag that something is wrong with the house. For example, it may need a lot of repairs to be livable or it has structural issues that need major fixing.
Pro Tip: If you are looking at a fixer-upper, we recommend getting a professional inspection. Keep in mind that it’s not advisable to make an offer if you don’t know what problems the house has. After you properly assess the property, make sure you have a suitable offer that’s neither too high nor too low. Stay reasonable.
Also, looking into properties that might have been on the market for a little longer. Your agent should be able to pull a list of homes and limit them to a longer “Days On Market” (DOM)
2. Not Considering the Long Term
When buying your first home, we advise you to think long-term. While taking into consideration the cost of the home is important, other factors should be involved when you decide to buy your first home. Your first home should be somewhere you enjoy living, not somewhere cheap, and where you couldn’t envision yourself living for the next 5 – 10 years.
Pro Tip: Think into the future. Are you thinking of getting married? Will you have kids? Do you want to live in the city? Aligning your ideal house with your future goals is important to get a clearer image of the house that would fit your future aspirations.
3. Focusing Only On Upgrades
If you don’t have enough money to modernize a house, don’t worry about it. In fact, you should be concerned if the owner is trying to sell the home very quickly since newer upgrades may signal that there are other, more serious problems with the house. Upgrades can also bring down resale value because buyers might not want or be able to pay as much for a house with newer appliances and furniture.
Pro Tip: Research the home’s history, especially if the owner is trying to sell it very quickly or is moving out of state or leaving the country – it might be due to some construction problems or other workmanship issues, etc. Do your due diligence!
4. Not Inspecting The Home Enough
Make sure you not only inspect the house yourself but also be there when the home is being inspected so that you can ask questions and get clarity on anything you find confusing. Home inspections are important because they can give you a detailed report on what kind of condition the home is in, what problems it might have, and what you will need to do to make the house livable. For example, an inspection might state that there are some cracks on the wall or a window does not open correctly – these are usually easy fixes but it is better to know before buying rather than after moving everything into your new home!
Pro Tip: If you’re not an expert in home inspection, don’t let your real estate agent or someone else handle it. Normally, this inspection takes about 2-3 hours, depending on the size of the house, and includes a review of the foundation, plumbing, roof, electrical and heating systems, and drainage. Get a professional to ensure that it’s done correctly and comprehensively. Remember this inspector works for you!!
5. Not Taking into Account the Long-Term Costs
When deciding on a home, you need to do some long-term cost projections and consider all of your expenses beyond just your mortgage payment. It is important to remember that your housing costs will go up over time. These costs could include closing costs, commissions, moving expenses, repairs, and other maintenance. Property taxes can change if you buy a home in an up-and-coming neighborhood rather than one that has already been established. Utilities like water/sewer bills and even cable should be additional expenses on top of your mortgage. House or home insurance should be taken into account as well as the cost of upkeep – lawn care, landscaping, painting the exterior of the house, etc. All of these costs should be taken into consideration before making your decision.
Pro tip: If you are considering buying a house, make sure you understand all associated costs before signing anything. It may be worth the time to create a secondary budget that allows for these costs to be included.
6. Not Considering Their Credit Score
If you do not have good credit, then this might impact your ability to get a loan and purchase your home. Keep in mind that the better your credit, the lower your interest rates will be and it might also affect how much money you can borrow for your home loan.
Pro Tip: There are many great first time home buyer programs which are meant to help individuals work through this process for the first time. If you are still concerned about your ability to qualify, there are even programs that will help work through this process such as Neighborhood Assistance Corporation of America.
7. Not Asking For Help
Some Buyers will try and work through this process on their own. This is not advisable. Given how many professionals can come and help, it is silly for Buyers to work through this process on their own. In many cases they can get the help of a real estate professional or licensed Real Estate Agent. Often Sellers are willing to compensate Buyers for this expense.
Pro Tip: Buyers should find those individuals whom they trust that can help guide them through this purchasing process.
The housing market is tough for first-time homebuyers but you can make it easier on yourself by avoiding these common mistakes. It’s a stressful time and there’s a lot to consider with the cost of the home, your budget, the quality or state of the house, and potential future costs, taxes, or fixes that you may have to undertake but need to account for now. Our goal is to help make this process simpler and hopefully less stressful for you.
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