We hear a lot about “buyer beware” but sometimes, we are our own worst enemies. Unfortunately, this also applies when buying a home which is the biggest financial decision you will make. Therefore, education, planning & setting up expectations are key for a successful experience.
So, here are 10 major mistakes that buyers make:
1. You start looking at homes before getting pre-approved for a mortgage
Your first step in the complicated process of buying a home is to talk to a mortgage loan officer. For a lot of people discussing their finances is extremely stressful, uncomfortable & invasive but you need to know your buying power before you start looking at homes. Why is it so important?
- You don’t want to fall in love with a home only to find out when you are ready to put an offer that you cannot afford it.
- We are in a ‘seller’s market’ and homes go quickly so you want to make sure you are ready to put an offer in ASAP. Being pre-approved makes you a stronger buyer and may allow your agent to be creative if you end up within a multiple offer situation.
- Some real estate agent won’t take you to look at homes before you know what & how much you can afford.
- A nice surprise may happen as well when you find out that you can afford more than you thought.
2. You choose to work with the seller’s agent
You need your own representation. An agent that will be 100% by your side, keep your information confidential and will have your best interest in mind. In court, you wouldn’t use the lawyer who represents the other side, right?
3. Focusing on cosmetic upgrades only vs. condition
It is important to look for good bones & updated mechanics vs. updated kitchens & bathrooms. Make sure the roof, HVAC system, windows, electric & such are in good condition and don’t fall in love with a house that has granite counter tops but requires everything to be replaced. Focus on material defects and not cosmetic ones.
4. Don’t compromise on important things
What is important for one is minor to another. However, there are some major factors that you can change like the location & size of the house so for an example, if you know that living on a busy road is something that bothers you, don’t compromise or you will have major regrets in no time.
5. Ignore re-sale value
You finally decided to start looking for homes why on earth would you be thinking about what will happen when you decide to sell, right? Wrong! Don’t say things like “oh, this is my forever home” or “I am not worried about it” because if something happens and you need to sell the house and move ASAP, you need to remember that the market is not always seller’s market. You want to have a home that has a better chance to sell quickly even when the market conditions are not ideal.
6. You decide to skip inspections
Home inspections give you detailed information on the home condition at that specific moment. It is not foolproof but it identifies material defects and problems with the house. Make sure you attend your home inspection because this is your way to learn about your home and what type of maintenance will keep your home in good condition. Deciding to skip home inspection may leave you in the dark on the home condition & might even cost you a lot in repairs of issues you had no idea existed.
7. You don’t understand the home buying process & extra expenses
When I meet new buyers I take time during our first meeting to discuss the home buying process, their timeline, expectations, finances and any concerns they have. Then we build a plan of action that will work for them. You need to know what happens at every step of the home buying process or it will turn into a big confusing monster.
You also need to understand how much money will you need to buy the house. What is the difference between down payment & closing costs? When do you pay for inspections or appraisal and why?
8. You are being too picky or can’t decide what you want
You feel like you know exactly what you want and you refuse to compromise. Well, that is nice on paper but in reality, like dating & marriage, you end up compromising on something (if he can only close the cabinet doors after taking a plate, right?). Only you can decide what you are willing to compromise on but within the current market condition of low inventory, you might have a hard time finding what you want. Make a list of “need” vs. “want” to help you.
Another issue is when a couple can’t agree on what they want; location, size, or even condition. Before meeting with a real estate professional discuss your needs & wants and if that doesn’t help after seeing a few homes revisit the list until you are in agreement.
9. Fall in love with the first house or take too long to decide
There is nothing wrong with knowing exactly what you want and making immediate decisions, however, it is good to compare a couple of options to make sure that is the best option for you.
On the other hand, if you cannot decide on a home and need to time to discuss or sleep on it, chances are that you will be missing out on quite a few homes in a seller’s market.
10. Making big purchases & opening new credit cards prior to settlement
So you found the home that is perfect for you & applied for a mortgage loan. The mortgage company will run your credit as part of the approval process. Opening new credit cards or making large purchases (for an example using credit cards to buy new appliances or taking a new car loan) will change your credit score and as a result, will change your eligibility. The last thing you want is to lose your home over this.
By avoiding these mistakes, you will find the process of buying a home less stressful and end up with a home you love & no buyer’s remorse.