Buying a home will be one of, if not the biggest, purchase you’ll ever make. That pressure is enough to intimidate anyone.
Lucky for you, we consider ourselves pretty knowledgeable when it comes to the business of home buying. We know the common mistakes first-time homebuyers make and later regret.
From the house hunting process to deciding the best way to finance your first home, we’ll steer you clear from repeating the footsteps of any regretful first time home buyer who has bought before you.
Here are some of our top tips:
1. Make a list. When you go to the grocery store you generally have a list detailing the ingredients you need for a dinner recipe you’re trying that night, the snacks you want to bring for lunch that week, or the one or two household items you’ve run out of and don’t want to forget to grab while you’re there.
The same goes for house hunting. Make a list of things you want or in some cases need in your new house. It will keep you on track to find your ideal home.
2. Ask yourself - What will you need in the future? You may be a young, single bachelor or bachelorette now, but what will the next three to five years hold for you—marriage, children, pets?
Look back at your list from step one. Instead of that “man-cave” or “hot tub” you checked as a priority, you might consider upping the number of bedrooms you need or the size of your backyard.
3. Be flexible and have an open mind. Don’t let what you see on HGTV leave an unrealistic idea in your head of what houses should look like. Especially for first-time homebuyers who are on a budget, you likely won’t find everything you want in a house. Small cosmetic items shouldn’t make or break a house for you (often those items can be replaced easily). Maybe consider buying a “fixer-upper”?
4. Think ROI. Buying a home is an investment and investments should earn you money in the long run—not cost you. Consider the resale value you’ll one day be able to get on that house. Buying into an up-and-coming area is a great way to ensure a positive return on your investment when you decide to sell one day.
5. Get a second opinion. When you think you’ve found the perfect house, bring a family member or a trusted friend to check it out. Often they will have an unbiased view of the house and be able to identify faults you might have missed while you were obsessing over its “perfection.” Take our word for it, you’d rather find out about any issues while they’re someone else’s, not yours.
6. Do your homework. Yes, you heard us right. It’s time to be responsible, you are about to be a homeowner, after all. Look into the neighborhood’s reputation. Does the area have a high crime rate? What kind of issues has the house had in the past? How many previous owners has the house had? Ask questions along those lines and make sure you have all your answers before you sign.
7. Inspections are a good thing. Since we’re on the topic of having all the answers... get your prospective house inspected. When you’re walking through a home you only see what’s on the surface—and nowadays staging can hide a lot. An inspection can shed light on a whole host of issues from plumbing to structural.
8. Beware of flips, they can be total flops. Beware of flipped homes. Investors will purchase a home, quickly renovate its surface features, and sell it for a profit (to a doomed buyer). We say “doomed” because in many instances flippers will neglect major issues with the home and pass them on to the buyer to deal with. Fortunately for you, you’re reading this list of tips and will be smarter than that poor buyer.
9. Keep financial priority first. It’s especially important for first time home buyers to go into their home search knowing what their budget is. Often times a buyers budget will depend on how much a lender is willing to give you. The amount a lender will approve you for is contingent on factors such as; what your current income is, the amount of debt you may have, how much of a down payment you can put forward, among others.
10. Consider all expenses, not just the price tag. Keep in mind your monthly mortgage payment won’t be your only expense. Calculate closing costs, property taxes, mortgage insurance payments, water, electricity, and cable bills, and furnishing costs too. It’s a good idea to save as much as you can before making a purchase on a house so you can feel financially secure after the big purchase.
11. Look at the market. The price a property is worth is directly related to what is going on with the market at that time. One thing you can do is be aware of how much comparable home are listed for and have sold for in the past—at least you’ll know if you’re getting a good deal or if you’re being scammed.
12. Watch out for pricing strategies. Sellers sometimes price their homes low, looking for a bidding war and attempting to get as much money as possible from the sale—outsmart them.
13. Be prepared to negotiate. Be realistic and have all the information necessary to negotiate a seller’s asking price. Be careful not to offend the current homeowner by offering less than market value for the home but certainly if you believe the home isn’t worth asking price—go for it.
Use any issues that were discovered during the inspection, or the lack of curb appeal to bring the seller’s price down.
Owning a home is a great achievement and certainly something to be proud of. Once it’s yours don’t lose sight of all of the hard work that went into purchasing your first home. Although it won’t likely be your home forever, you will always remember your first home.
Are you ready for the next step? Start your search.