The home-buying process can evoke a broad spectrum of emotions. There’s excitement, anticipation, stress, anxiety, fear, and everything in between.
These emotions swirling around in your head add to the challenge of making smart, disciplined decisions. In fact, they frequently drive people to commit huge errors they end up regretting for years after.
It doesn’t matter whether you’re buying your first house or going into the home-buying process for your fourth or fifth time; buyers are prone to making mistakes. The key is to do sufficient research ahead of time and surround yourself with a solid team of advisors. If you do that much, you have a good shot at avoiding these egregious but all-too-common errors.
The first mistake people make is to succumb to pressure to buy. This regularly happens to homebuyers between the ages of 25 and 35. It’s during this phase of life that many people choose to buy their first home, and the many fear the sensation of falling behind.
If you’ve been told that you’re throwing money down the drain because you’re renting instead of buying, don’t accept that statement at face value. Lots of expenses come with buying a house, and those can do you in financially and emotionally if you aren’t ready for them. You should only buy when you are ready.
Technically, you can buy a house without the assistance of an agent. There’s no law that says you have to be represented when you go hunting for a home.
However, choosing not to hire an agent is one of the more foolish mistakes many first-time buyers make. There are hundreds of little issues that can surface during the search process, as well as at the closing table, and you really wouldn’t want to get caught on the wrong side because you decided to go the cheap route.
“Loan programs, costs, rates and service can vary greatly among lenders. Seeking loan preapproval allows you to test the waters with lenders and compare loan terms and conditions, preparing you to make the most informed decision,” real estate agent K.C. Hernandez says.
“Lending institutions can offer loan programs ranging from cookie-cutter and traditional to exotic and creative. Shopping multiple lenders allows you to find the right fit for your financial situation.”
You might get a good deal if you consult just one lender, but it’s smarter to shop around and see what other offers you can rouse. Don’t go crazy, though. Experts agree that consulting with more than three lenders is generally a waste of time.
The biggest weakness homebuyers have is their emotions. In an ideal world, you’d be able to evaluate various houses that are on the market based on the numbers, not on how you feel about aesthetic features that matter very little in the long run.
As soon as you fall in love with a house, you’ve placed yourself at a disadvantage. This compels you to overlook potentially serious issues, overvalue the property, and make rash decisions you wouldn’t make if you hadn’t become emotionally attached.
If you’ve had a tendency to fall in love with things in the past, be aware of this and ask your advisors to hold you in check.
The idea of missing out on something, or getting defeated by someone else, can make a person do crazy things. This tendency becomes evident when you make an offer on a home and the seller comes back to tell you there are other offers on the table.
A bidding war is bad news. You may be in a position to increase your offer and still get a good deal, but you risk overvaluing the house and paying too much simply because you’ve become aware of an increased demand.
To guard against this, you should always set a stop limit and be prepared to step away from a deal if you suspect you’ve grown more intent on outbidding someone than owning that particular house.
At the other end of the spectrum, you could also make the mistake of lowballing. Of course, you should definitely aim for the lowest possible price, but you have to be realistic when you make an offer.
Ridiculously low offers not only run the risk of being rejected, but they can also prolong the process and frustrate the seller. It’s probably best to come in just below where you ultimately would like to end up. This gives you a little negotiating room without offending the seller.
You should always, always, always order a home inspection when you shop for a house. There is no situation in which it makes logical or financial sense to neglect an inspection. The failure to obtain an inspection could end up costing you tens of thousands of dollars long after closing. At the very least, it will tell you which projects you’ll need to tackle after you assume ownership.
The final mistake to avoid is failure to budget for closing costs. Many homebuyers — especially first-timers — don’t recognize that closing costs are an integral part of the process. As a result, they spend nearly all their cash on the down payment and then have to scramble to make ends meet.
As a rule of thumb, you can expect to pay between 2 and 5 percent of the purchase price in closing fees. So if you’re buying a $200,000 house, closing costs will likely run between $4,000 and $10,000.
Buying a home is one of the most important decisions you’ll ever make. Whether it’s your first house, a second home, or an upgrade from a starter home to your dream residence, we specialize in helping families navigate the process of purchasing real estate.
At Green Residential, we know the Houston real estate market better than anyone else. Whether you’re interested in living in The Woodlands, Sugar Land, Downtown, or anywhere in between, we can help you find the perfect place.
Contact us today and we’ll be happy to help you get the ball rolling.
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