First-time buyers, without the burden of a home to sell, could benefit from the current “buyer’s market” and record low mortgage rates. But woe to the overconfident buyer. Here are five common mistakes first-time home buyers tend to make.
1. Snubbing the Real Estate Agent
With so many websites offering a mass of data on listings, some people think, “who needs an agent?” Most people, actually. Finding a home and figuring out comps (the price of comparable homes on the market) is the easy part. Managing the nuances of offers, inspections, financing and all the other pivotal steps to buying a home is where many new buyers tend to get tripped up.
When you hire an agent to act as your “buyer’s representative,” he or she is obligated to put your interests first, even if his or her commission is paid by the seller and based on the sale price. Skeptical? That’s all the more reason to find an agent on your terms. Ask friends and acquaintances for referrals and interview two or three candidates before deciding.
2. Guesstimating How Much You Can Afford
Many buyers mistakenly take a do-it-yourself approach to financing. They use online calculators to estimate how much house they can afford, dive into the house hunt and then get a dose of cold water when lenders refuse to qualify them for that amount. Not only are lenders reading loan applications closely, they’re verifying employment and running credit checks multiple times during the process.
Make a date with a mortgage broker or banker before you get serious about your search. Remember, too, that the costs of buying and owning a home go well beyond the sticker price. While online calculators do take into account property tax and insurance, it’s up to you to account for maintenance costs, moving fees and association dues.
3. Making Arbitrary Offers
With housing inventory running high and sales at record lows, in most markets, there’s no shortage of houses for sale and sellers desperate to get out from under them, which may be all the more reason to hold out for the right house and the right price. But when you find that perfect house, don’t assume you can make a lowball offer or make unreasonable demands. Even in hard-hit markets, nice houses in desirable neighborhoods are fetching multiple bids.
If the house has been on the market for months, you probably don’t need to worry about other buyers lining up behind you. Make an offer based on recent sales for comparable homes, foreclosure activity and market trends, and don’t be afraid to start the bidding low. If the house is fresh on the market (or recently foreclosed) and other buyers are circling the block, put your best foot forward but don’t get suckered into a bidding war.
4. Focusing on the House, Not the Neighborhood
In hindsight, many buyers say they wish they’d taken their due diligence a few steps further to really get to know all the perks, quirks and hassles of living in a particular place. You can always fix up the house, but there’s no easy remedy for annoying neighbors, oppressive homeowner association rules and marathon commutes. As a first-time buyer, you’re oftentimes not aware of all the things you should think about that aren’t about the house.
Spend as much time as you can in your future neighborhood, ideally on different days and times. Eat in the restaurants, drop in a yoga class, test drive your commute.
5. Letting Charm Cloud Your Judgment
No one will fault you for falling hard for a charming older home. But, unless the house has been painstakingly remodeled or you’re prepared to pay for repairs and upgrades, an old house can quickly lose its allure. If you’re considering an old home, don’t let the home inspection be your last line of defense. Negotiate a long due diligence period. That gives you time to get real estimates from contractors and back out if need be.
If you have questions about any of these home buying mistakes, please contact us. You can use the comment link below to do that, or click through to our website and fill out our inquiry form, or send us an email. We’d love to hear from you!