Buying a house is very different than buying a bicycle. It is a long process that has a lot of legal documents and a lot of parties involved. More importantly, there are a lot of money involved in buying a house.
For these reasons, you must approach every step involved thoroughly. In this article, we will walk you through 18 mistakes you should not make when you are buying a house.
Table of Contents
- Doing it yourself without a real estate agent
- Being too emotional about the house
- Not making a decision quick enough
- Offering too little
- Offering too much
- Skipping house inspection
- Putting in an offer too fast
- Not checking the neighborhood classes
- Making a decision without shopping around
- Searching for houses before mortgage pre-approval
- Using all your approved money
- Falling in love with what you cannot afford
- Not knowing what you real want
- Getting too frustrated
- Underestimating issues with the property
- Thinking that you are ready whereas you are not
- Not consulting with your partner or spouse on your priorities
- Not putting down at least 20%
1. Doing it yourself without a real estate agent
It is important to understand that you need a realtor when buying a house. Although it is possible to buy the house yourself, it is better to use realtors.
Benefits of using realtors include but not limited to:
- Expert guide
- Property marketing power
- Negotiation knowledge power
- Most recent experience
- Ethical treatment
- Helps you during difficult emotional times
You can see that there are a lot of benefits of using realtors. They help you in every step of the process especially when it comes to documentation. In addition, real estate agents come in handy when you are applying for a mortgage. Your lender might find you serious when you are using a real estate agent.
If you are doing it yourself with no experience, you might pay more on the property. It is also possible to be scammed. Yeah, you could be scammed by doing it yourself.
Using a realtor is your first step to getting a better deal and avoiding scams.
2. Being too emotional about the house
There are beautiful houses out there with amazing designs. However, you should never be too emotional about a property. What if you realize that you cannot afford it after falling in love with it? What if you later realize that the property has major problems after an inspection?
To protect yourself, do not fall in love with a house until you know for sure you can afford it and you are buying it.
You might end up buying the first house you are shown because of emotions. The best way to hunt for houses is to look for many houses and choose the one that fits your needs the most. If your emotions get the best of you, you will end up with a house that will not be functional in the long run. You will realize this after coming back to earth. You do not want to miss out on other houses that can serve you better at the same or better price.
3. Not making a decision quick enough
After seeing many houses probably dozens, you will make a decision. How long does it take to make a decision? it depends on individuals.
However, the time you use to make a decision will determine whether you get the house or not. This is important especially in a sellers’ market. Other buyers might get the house if you take too long. You don’t need to be too stubborn when making a decision of a life time. However, you don’t need to be too quick either.
You could pay more than you are supposed to if you rush your decision.. You need to bargain or move quicker when necessary.
4. Offering too little
It is hard to know the exact value of a property worth hundreds of thousands. This is true especially if you never bought one before at this magnitude. Because of this reason, you could end up offering too little on the property.
There is nothing wrong about offering little. You can offer whatever you want but you have to be reasonable. The best way to know how much to offer is to work with your realtor. He/she will tell you the estimated value of the property based on the location and market condition. You can also evaluate the house based on similar houses recently sold in the same area. You can found recently sold home prices on Zillow.com, realtor.com, trulia.com, etc. If you are in a buyers market, it is worthy bargaining. However, if you are in seller’s market; you might need to go a little faster and make your offer as reasonable as it can be.
5. Offering too much
How much do you offer on the property? It depends on the market and location of the property. You might end up offering too much on the property because you think other people will take it.
Maybe you fell in love with the patio, pool, closet, kitchen or yard. No matter how much you like the house, you should never let your emotions get the best of you. You need to think clearly. If you compare prices of similar properties sold in the same area and see that the seller is asking way more than the value of the property, walk away.
This might not be the property of your dream. Some of us like a house because we think our dogs will love playing in its yard. Because of this reason, we get emotional and end up paying way more than we are supposed to. If you are buying a house for your dog, then buy it.
There are times when the market will be a little competitive, especially when you have motivated buyers. If you see that the competition has gone out of control, walk away. You don’t need to pay $50,0000 over the asking price because you like the patio. You could buy another house and use half of that money to build an alien like patio.
6. Skipping house inspection
House inspection is one of the most important steps you must take when you are buying a house. The inspection will help you evaluate the quality and structure integrity of the house.
The inspector will help you see things you don’t see in your showings such as structural problems, electrical and plumbing problems, leaking roofs, sunk foundations, etc. Some of these problems can cost dozens of thousands of dollars. So, if you want to save money and get a good deal; get the house inspected before you pay a dime.
7. Putting in a offer too fast
It is important to time your decision real well when you are hunting for a house. If you take too long, the property might be taken by other buyers. On the contrary, if you put in the offer too fast, you might end up offering more that you are supposed to. There is nothing worse than offering thousands of dollars above the value of the property.
This is why you must be certain about the quality and value of the property before you put in your offer. It takes time to gather all these information. If other people buy it while you are putting facts together, let them. It is important that you buy the right house for the right price.
8. Not checking the neighborhood classes
You can define location classes as ranks of geographical areas based the quality of lifestyle, infrastructural, educations, wealth, etc. Location classes ranks from A to D. A being the best area with better houses, infrastructure, education system, etc and D being the worst with no proper education, infrastructure, safety, etc. Learn more about location classes.
Your realtor will not decide the quality of your neighborhood. It is your job to decide where you want to live. Do you want to live in a war zone with the highest crime rate in the city? A location where roads were built in 1900’s? It is your choice. If you want to live in a save neighborhood, you need to tell your realtors locations they should not include in showings.
Fire them if they don’t follow your rules. Remember this: your money, your rules.
9. Making a decision without shopping around
This is a common mistake for new buyers. They found one or two houses and then say,”We think we found our dream home”. Then the realtor says,”Oh, great, let’s put in an offer”.
The person acting as your realtor is your employee. When you say, stop, they will do. That is how it works. If they are nice and see that you are making a mistake, they might give you advice. However, the opposite happens.
You should always look at many listings. I mean dozens before you make your decision. Do your homework. The more houses you see, the better you become at knowing what will work for you. More importantly, you get the best deals by looking at many properties.
10. Searching for houses before mortgage pre-approval
Unless you are paying with cash or have enough cash to cover the difference, your mortgage will determine your budget.
For this reason, you should look for houses based on your budget. Many people look for houses before they get approved for the mortgage. Why is it a bad idea? They fall in love with houses they cannot afford.
This is a big mistake. Once you like a house you cannot afford, you start thinking on ways you will get it. Some people stretch their budgets, use their retirement funds, etc. You end up using money you should not be touching. For this reason, it is a good idea to look for houses after your mortgage approval. You can still look for houses before, but you must keep your emotions and desires in check.
11. Using all your approved money
When you get pre-approved for a mortgage, your bank/ lender will tell you how much they will give you. This amount can be lower or higher than the budget you estimated. It is a good news when the approved value is above your budget. You can decide to use some of it or use all of it. However, if you get less and you cannot cover the different; you will need to readjust your budget.
Let’s assume that the pre-aproval value is higher than your budget. This means that you have more money than you need. Should you use all of it? Some home buyers readjust their budgets right away. Instead of sticking to $200,000 for example, the make their budget $500,000 because they got an approval for it. Who will pay this money? Is your income going to cover this additional $300,000 without affecting your lifestyle?
If you get approved for more money than you need, use only the amount you need.
12. Falling in love with what you cannot afford
Another mistake home buyers make is falling in love with houses they cannot afford. You will see a lot of houses on your showings. Your realtor will show you houses that are above and below your budget. The reason they do this is to try to satisfy your needs by giving you the best house they can find.
Should you find away to buy an overly expensive house? It is not your realtor’s problem. Instead, it is your problem. This is why you need a budget and stick to it. You should never buy a house that is way above your budget. Doing so, you will be compromising things you did not want to touch when you were making the budget.
13. Not knowing what you real want
It is possible that many of us start the buying process without knowing what we want. Before you contact your realtor, you will need to know what kind of house you want. Your realtor might work with you to come to this conclusion. Or they might show you multiple houses if it is proven to be difficult for you to decide.
It is easy to have conflicts between buyers, sellers, and realtors when buyers do not know what they want. Confused buyers try to find a perfect house to fit an image they don’t have. They will not know what to decide.
It is recommended that buyers evaluate their priorities before house hunting. Ask yourself these questions. How many bedrooms, bathrooms, square footage, etc do I need ? Once you have a general picture of the house you want, you can start the process.
14. Getting too frustrated
It is OK to be a little frustrated. It is in our DNA. Buying a house can sometimes come with frustrations. Maybe you saw a lot of houses and none fits what you want. Maybe you are trying to beat a deadline. Whatever the reason, it is important to know that managing your frustration and anger is the first step to getting the best house !
Frustration lead to bad decision making. You could end up canceling your path to owning a house of your dreams because your emotions got the best of you. So, leave your issues at home and keep it cool when buying a house.
15. Underestimating issues with the house
You might see that the house has problems before you buy it. Maybe you learned this information from the inspector or from the seller. The truth is that every house has problems and there is no such thing as a perfect house.
However, you need to treat every problem very seriously. You must understand that it might look small on outside whereas it bigger from inside. This is why you need an expert to check on the problem before you buy the house. No matter how much you like the house, make your decision based on experts’ recommendations not your emotions.
16. Thinking that you are ready to buy a house whereas you are not
Very often, buyers go through the buying process and later realized that they are not ready to buy. This is because they fail on the first step of buying a house. You need to know if you ready or not. You need to be certain that this is indeed a path you want to take. These could be 13 reasons why you are not ready to buy a house.
When you start the process and change your mind the middle, you mess up a lot of things. Your realtor spent countless hours going through the buying process with you, showing you houses, getting documents ready, etc. and now you are canceling? It would not be fair to your realtor or other people involved in this process.
It is OK to not be ready now. However, you need know where you stand ahead of time before people invest time and money in your false idea.
17. Not consulting with your partner or spouse on your priorities
If you have a partner who will be buying the house with you, you need to be on the same page first. This is very important because each one of you will have an input on the house.
It is morally important to value each and every input of your partner. So, you need to sit down and decide what kind of house each one of you wants. Put together your top 20 wishes each (assuming two individuals) and discuss them. After, you can reduce these wishes to only 10 shared wishes. Once you are on the same page, you an start looking for houses.
Should you move forward without doing this step first? You might end up in conflicts with your partner. Or your partner might let you win because they don’t want to fight with you. You will be minimizing their right of choice to zero and this is not a partnership.
18. Not putting down at least 20%
You might be wondering why the 20% is a magical number. For conventional mortgages you need at least 20% of a down payment. The more money you put down, the lesser you pay every month.
By putting down a big percentage, you reduce your mortgage and your total interest payment as a result. So, the more you put down, the lesser you pay every month.
On the other hand, if you put down less you end up paying a ton on the property. For example, if you choose FHA option, you will put down less which sounds sweet at the moment. However, your mortgage will be high. Your interest charges will be high as well because it is calculated based on your mortgage and interest rate. Also, you will need an insurance on the mortgage.
For this reason, your monthly payment will be much higher than you can handle.
To avoid these issues, work hard and put together a down payment that is at least 20%.
