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7 Common Mistakes First-Time Home Buyers Make
Are you getting ready to shop for your first house? Thinking about becoming a first-time homebuyer? Do you have questions or concerns about how to navigate the home buying process? Our First-Time Home Buyers Guide will help you sort out all the elements of the home buying experience.
There is a lot to consider when starting the home buying process. It's easy to make mistakes if you aren't familiar with the process.
We've put together a list of 7 major mistakes first-time home buyers make and how you can avoid making them.
#1: Falling in love with the home staging
Staging is the careful placement of furniture and fine-tuning the home decor to make the residence appear more spacious and attractive to buyers. It's a highly effective technique -- it makes it easier for buyers to picture themselves living in a home when it's nicely furnished.
When you are shopping for a home, you need to look past the showroom furnishings and the perfectly styled, uncluttered life they suggest. Consider your daily life when imagining life in this house. Will the kitchen countertop still be large enough when your coffee machine, microwave and crock-pot are taking up space? Is there enough cabinet space to accommodate all your kitchen supplies?
Be especially sensitive to space and layout. Staging furniture is purposely placed to make rooms appear larger. The staging sofa may look great in this living room, but will the one you already own even fit? Will there be space for other things important to your lifestyle, such as exercise equipment, a dining room table or a king-sized bedroom set?
#2: Being indecisive
Buying a home is a big decision, and it's important to choose carefully. However, there is a difference between being selective and being downright indecisive.
Some first-time buyers get so wrapped up in the "thrill of the hunt" that they fail to realize when they've found a winner. Even when they find a great house, they can't pull the trigger because "there might be something better out there."
Don't get bogged down with indecisiveness. In this fast-paced market, you need to be prepared to write an offer quickly. If you find a house that meets your criteria and budget, go for it! Don't let go of a practically perfect house (especially in a hot market like Denver) in the pursuit of one that may not even exist.
#3: Shopping while distracted
Shopping for a home requires a lot of focus and attention. You don't want to get under contract on a home and realize too late that you overlooked something important.
Shopping with children in tow can be very distracting. Babies, toddlers and less-than-enthusiastic teenagers tire quickly of parading through homes. It's difficult to effectively evaluate a home while trying to entertain kids at the same time. Hiring a babysitter to keep the kids occupied while you are house hunting can be a worthwhile investment. If you must bring your children, try splitting the duties with your partner and take turns entertaining the kids while checking out the house.
Don't be your own worst distraction, either. Make sure you are dressed comfortably and have the right mindset. Resist the urge to answer texts or browse social media while you are out viewing homes. You may miss out on important details if you are daydreaming or not focusing on the matter at hand.
#4: Do your research
Just because you like and can afford a specific house, doesn't necessarily mean it is the right fit for you. First-time buyers will often get swept up in the excitement of finding "a good one" and move forward without doing their homework. Take advantage of the online tools that exist so you know ahead of time how long the home has been on the market, how much the property taxes are, if there is a homeowner's association, etc.
- Don't skip the home inspection. In our competitive market, it may be tempting to waive the home inspection. But you have other options. For example, you can prioritize the large safety items, waive all inspection issues under a certain price point, or write in your offer that you will use an inspection termination only. This allows you to terminate if there are too many issues with the home and will prevent you from having buyer's remorse. Foregoing this crucial step may end up causing buyers remorse and costly repairs down the road.
- Consider your lifestyle when choosing your new home. Don't shop in the suburbs if you work in the city, love the nightlife, and hate commuting.
- Do a few drive-by visits. Get an idea of how safe, how bustling, or how quiet the neighborhood feels at different times during the day and night. Learning that your potential next-door neighbor has a dog that barks all day before you buy the house is critical.
#5: Skipping the mortgage pre-approval
Mortgage pre-approval is a very important step in the home buying process. You won't know how much money you can spend on a house (unless you are paying cash) without getting pre-approved. It's no fun to start shopping and start falling in love with houses, only to learn that they're out of your price range. Conversely, you don't have to settle for a home in a lower price range if your buying power is higher than you expected.
The amount of cash you have available for a down payment will affect how much you can borrow. The more you can put down, the more buying power you are likely to have.
Being pre-approved is valuable when it comes time to make an offer. It shows the sellers that you are unlikely to have a problem obtaining financing.
You do have to keep your credit in good condition even after you've received that pre-approval, however. If your creditworthiness changes for the worse, you may no longer be eligible to borrow the pre-approved amount.
#6: Failing to budget correctly
Owning a home has worthwhile financial advantages. But the home buying process does include a few costs of which first-time buyers might not be aware.
There will be closing costs (including survey, title search and insurance, property taxes, and homeowner's insurance) due at the time of purchase. The seller may pay some of these, but that is not always the case. A home inspection is another essential expense during the buying process.
Don't forget to make sure you can afford to live in your new home!
- Utility bills may be considerably higher if you are moving from a small apartment to a house.
- Maintenance such as lawn mowing and snow shoveling will be your responsibility. You'll either have to do these things or pay someone to do them for you.
- Some neighborhoods require membership in a homeowner's association. These typically require monthly dues.
- It is wise to keep a savings cushion available in case an urgent repair is needed (roof leak, appliance replacement, plumbing repairs, etc.).
#7: Not working with a buyer's agent
With so much information on homes for sale readily available online, many first-time buyers try to do all of the work themselves. But going at it alone can put first-time buyers at a disadvantage. A good buyer's agent is one of the most valuable tools a first-time homebuyer can have. They know the details about neighborhoods and home values. As experienced professionals, they are more likely to recognize a good deal and when a deal is too good to be true.
A good buyer's agent will:
- Help you refine your search to include just the homes that match your criteria
- Take you to view homes and give expert insight
- Walk you through each step of the home buying process
- Act as your representative in the contract negotiation process
Getting the home buying process started
There is a lot to consider as you shop for your first home. Make sure you talk to a lender to find out how much home you can afford, and then, you can put yourself at a significant advantage by working with one of our skilled buyer's agents.
If you are ready to begin this exciting process, please contact us and we'll be happy to help with your search.
(Editor's note: This blog was originally published in October 2016. It has been edited and updated to reflect current trends).