These common home buying mistakes could cost you time, money, and sometimes the chance to buy your dream home.
Buying the oddball home.
Homes go up in value when other homes with similar layouts in the same neighborhood sell for more. These “comparables” or “comps” allow an appraiser to officially justify an increase in value, and therefore you’ll have more equity if you want to sell or refinance. So it’s important to buy a home that is uniform to most of the other homes n the neighborhood, or else the appraiser will have few or no sales to use as comps. So don’t purchase the only 2-bedroom home in a neighborhood full of 3 and 4-bedroom homes, and never buy the nicest house in a bad neighborhood.
Focusing on cosmetic issues.Too often, home shoppers walk into a sizable home with a great floor plan in a wonderful neighborhood, but automatically cross it off their list because it has ugly carpet, bright paint colors, or the kitchen or bathrooms are outdated. Don’t be afraid of cosmetic fixes, and in fact, you may get a better deal and have less competition because of them. It’s easy and cheap to get the minor cosmetic fixes and updates done, but adding square footage, putting on a new roof, or the opportunity cost of buying in the wrong neighborhood etc. can get prohibitively expensive.
Becoming emotional.Of course buying a home stirs up feelings up hope, elation, and even a little fear, but buyers need to remember that the most important thing is that they focus on making good business and long-term decisions.
Not having a strategy.House hunting takes a lot of time, energy, and diligence, but without proactive planning you might just be spinning your wheels. So make sure to sit down with your Realtor and formulate a plan of attack so you end up finding the right house at the right price in the right neighborhood most efficiently.
Paralysis by analysis.There are two ways we choose a home: with information or with emotion. Hopefully, you’ll use both when house hunting. But some times, people get so focused in on analyzing every single statistic, detail, and shred of data that it holds them back from making any offers or having a chance at buying any house, their ultimate goal! Fear of making offers, not looking at the market realistically, and expecting to get every single item on your list of needs and wants for a home are all symptoms of paralysis by analysis.
Overlooking important problems.At some point in your house search, you’ll probably walk into a home and very quickly think, “This is it!” But no matter how much it “feels right” or you love the house, don’t ignore flaws or problems. Always get a home inspection and pay close attention to the big-ticket problem items like foundations, roofs, electrical, plumbing, etc. just because you love the house.
Not checking your credit report and getting preapproved.When do you start the home buying process? Ideally, you should begin getting your finances in order 6-12 months ahead of time. In addition to saving for your down payment and carefully budgeting, you’ll also want to check your credit score and take action to boost it as much as possible. The difference between a good and a great credit score could make a huge difference in the loan you qualify for, your interest rate and payments, or even being an attractive homebuyer to sellers and getting your offers accepted.
About 2 to 3 months before you’re ready to get in a Realtor’s car and start shopping for homes, you’ll want to sit down with a mortgage professional to get preapproved for a loan. That will let you know exactly what you qualify for, what’s affordable for your budget, and therefore which homes in what price range you’ll be able to hunt for, saving everyone’s time - and probably money.
Picking your real estate agent and lender blindly.You’ll need a great working relationship with your Realtor and mortgage lender, one that’s based on trust, market knowledge, and industry experience. It’s too big of a decision to just go with the first Realtor who approaches you or someone just because you know them. Contact some neighborhood experts, ask your friends and coworkers for great recommendations, read Yelp reviews, review their website and testimonials, and don’t be afraid to interview perspective agents and mortgage professionals.
Not hiring a home inspector.Your home is probably the biggest investment you’ll make in your life; way too important to skip the few hundred dollars it takes to get a home inspection. A home inspection will disclose both cosmetic flaws and the big, important problems with the house that could cost you thousands of dollars down the road.
Not researching your neighborhood.Remember the old home buying wisdom, “Location, location, location?” Well it still applies, as you’ll want to get to know the neighborhood very well. Are there train tracks nearby? Street noise? Crime problems? Good schools? Is it an easy commute to your work? Are values generally going up in that neighborhood? These are all questions you’ll want to ask with the help of your real estate agent.