Monday, January 16, 2023 / by Evelyn Lopes
8 First Time HOME BUYER MISTAKES | WHAT they are and HOW to Avoid them!!
Thinking about buying a home? It's so exciting, especially when buying your first home. The temptation is to run out and start looking at homes (which is the fun part!). BUT, before you do that, check out this list of 8 critical mistakes that most first time homebuyers (and even some seasoned buyers) make and more importantly find out how to avoid these costly home buying mistakes..
There are a lot of moving parts involved in buying a home- especially for first-time home buyers. There are some common and critical mistakes that you will want to avoid.
1- Looking at homes without being pre-approved:
Believe me, there is nothing worse than finding a home you absolutely fall in love with and later learning that it is $50,000 out of your price range. By finding out what you can borrow from the bank upfront you will save yourself a lot of heartache. Ensure that you get a Mortgage Pre-Approval and not just a pre-qualification- there is a difference and it can cost you!
2- Not having enough money in the bank:
Buying a house is not an inexpensive endeavor. If you use all of the money in your bank account for the down payment and closing costs and have nothing left over, the bank may deny your loan approval at the 11th hour. They cannot take the chance that you will buy the house and then have not enough money to be able to pay the mortgage. Save up what you think you will need for the house and then save up even more before you start shopping.
3- Calling the number on for sale signs:
The agent whose sign is in the front yard represents the seller. Therefore their primary goal is to sell that house and get the seller as much money as possible. They cannot also have the primary goal of getting you the best price. If you use that agent to write your offer, it is rarely in anyone’s best interest. It costs you no money to hire your own REALTOR® to represent you in the purchase of a house.
4- Failing to Understand the true cost of homeownership:
Not only will you pay the mortgage, and pay all of your utilities, pay for homeowners insurance and property taxes, but you will also have to fix things when they break. If you have always been a renter your landlord takes care of this. Now that responsibility falls on you. It’s always a good idea to put some money aside for unexpected repairs when you buy a house. This way if something breaks, you will have some money put aside and available in your emergency fund. By keeping money set aside, specifically for home repairs you won't be strapped for cash when anything needs to be fixed.
5- Expecting to find a home that has 100% of all the features you want:
If you find a home with 75% of the items on your wish list you are doing well. For example, you may want a new home, with a finished basement and a backyard with a hot tub for under $800,000 in a good area. But is that easy to come by? What if the home has all of those things except for the finished basement or hot tub? You can always finish the basement later as well as adding the hot tub at a later time. The key is getting into a home that fundamentally meets your "must have" requirements, and one that you can grow into for at least the next 3-5 years.
A key to reaching your goals is to begin by having a candid conversation with your REALTOR® , BEFORE you begin house-hunting in order to set realistic expectations for what you can get in your price range.
When evaluating homes, keep in mind that the things that you can versus the things that you can NOT change about the home, such as the location or the neighborhood- you can’t buy a house and change its location, however, If you hate the blue exterior you can always paint it any color you like down the road.
6- Not fully understanding the market conditions and how it affects you.
It is crucial that you understand the type of market you are currently in, when looking at homes as each type of market will affect your strategic game plan and options. Is it a Sellers’ market, a buyers’ market or a balanced market?
Ask your realtor to explain the current state of the market, but more importantly ask how the market conditions impact you and what options you have available to best serve you during the current market condition. An experienced Realtor will be able to both inform and guide you through the process.
7 Haggling in a Sellers’ Market
If the market is hot and houses are selling quickly with lots of competition from multiple buyers? This is not the time to come in with a lowball offer. In a sellers’ market sellers are in the driver seat, meaning they have the leverage in this negotiation. Instead of coming in with a low price try offering terms that would be appealing to them. For example, if the seller doesn’t want to move until the end of May so the kids don’t have to change schools six weeks before the end of the school year, could you allow them to remain in the home until then before moving out? Would they prefer to close at the end of the month rather than the beginning of the month to avoid having to pay an additional mortgage payment? Find out what things are important to the seller via your realtor and try to craft an offer that is compelling to them.
8 Not trusting your agent to do their job
Your REALTOR® has most likely helped first time buyers many, many, many times. They know what they’re doing. This is why you have hired them – to guide you in this transaction. If you constantly second-guess their advice, call the seller or the seller's agent directly to ask questions, you are not helping yourself get the best deal of the best terms. When sellers know how eager you are to get their home, they are less likely to negotiate on price or terms. Assuming, you have hired a REALTOR® with experience that you trust, let them do the best they can to assist you.
We love helping first time buyers achieve the dream of home ownership. My name is Evelyn Lopes with the Evelyn Lopes Realty Team and iPro Realty, serving Caledon and the surrounding communities including; Halton Hills, Erin, Brampton, Mississauga and Orangeville.
Have questions? You can call me directly at 905-965-5902 or you can scan the QR code to schedule a call.
If you would like a copy of our FREE REPORT- Critical Mistakes First Time Home Buyers Make you can call us for a copy or you can visit the link below.