Life is full of milestones, from birthdays and anniversaries, to graduations and career advancement. Many of life’s major events happen as the result of hard work, and most are cause for celebration. There are some, however, that are fraught with anxiety. Buying a home, especially a first home, is number one on that list
Life is full of milestones, from birthdays and anniversaries, to graduations and career advancement. Many of life’s major events happen as the result of hard work, and most are cause for celebration. There are some, however, that are fraught with anxiety. Buying a home, especially a first home, is number one on that list.
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Even though first time home buyers suffer from nervousness that can cause problems, veterans are not immune to home buying mistakes which can be avoided. Unlike other major events in life that require decision making based on a set of complex factors where through experience over time we become more proficient. Home buying doesn’t happen often enough to rely on personal experience to guide us.
Mistake 1 – Ignorance is Not Bliss
The first mistake home buyers make is assuming that they are supposed to know and understand everything about the process. This is not to say that ignorance of procedures and protocols should stop you from buying or that not knowing everything thing there is to know guarantees there will be problems.
Fixing this problem requires that it exists in the first place. Many home buyers feel that expressing ignorance to a realtor, banker or seller makes them look like an amateur and therefore prone to being taken advantage of. Nothing could be further from the truth. While most people you will deal with are honest, unscrupulous vendors and sellers count on your pride as a means to take advantage of you.
Mistake 2 – Eyes Wide Shut
Pride and greed are the source of this mistake which is buying more house than you can afford or need. As much as the subprime mortgage crisis was the result of loose lending practices it also depended on buyers willing to delude themselves that they would be able to afford more house than they actually could.
Falling victim to this mistake is not nearly as uncommon as you might think and it happens for two very good reasons. We all feel we deserve the biggest and the best and that is normal. Realtor’s are salespeople and they earn their living on commissions, the bigger the sale the bigger the commission. Add one part buyer pride in wanting the biggest and best and the realtor’s desire for the largest possible pay day and you have a recipe for disaster.
Avoiding this mistake is as easy doing your homework and budgeting for what you can afford. Stick to your guns and don’t let either the realtor or yourself convince you that you are best served by buying more home than you can afford. Remind yourself and your realtor that if in a few years your circumstances change you can always sell and buy something larger.
Mistake 3 – Denial is More Than a River in Africa
Finding the perfect home is hard. Finding the perfect home and negotiating a great price is even difficult. Both pale in comparison to finding a great house and negotiating outstanding terms only to be turned down by the bank. Failing to qualify for a mortgage can be costly to more than your ego. It can result in the loss of deposits and other expenses that can run into the thousands.
Fixing this mistake can serve two masters, streamlining the buying process and keeping you on budget. Realtors and sellers love mortgage pre-qualification because it signals to them that you are a serious buyer which can also go a long way to improving your negotiating position.
Mistake 4 – Money Pit or Pothole
Whether they’ve seen the 1986 Tom Hanks movie The Money Pit or not many homebuyers are terrified of being transformed into Walter Fielding, Hanks character who is duped into buying what he thinks is a great deal on a house only to find out that the real reason it is some attractively priced is because it is disrepair.
Confusing a moneypit with a home in need of minor repairs, potholes, is not uncommon. Overestimating the cost of repairs can be as big a mistake as underestimating. Finding a ready to move in home is not always possible or the best deal which is why as part of the buying process finding a reputable contractor can be as important as getting the right banker and realtor.
Mistake 5 – The Grass is Always Greener
No-one is perfect. We don’t expect perfection from ourselves or others. In fact when it comes to people we like a little imperfection it gives us character. Well the same is true for homes. When shopping for perfect house don’t let the perfect become the enemy of the possible. No house, unless you have an unlimited budget and time and are building from the ground up is perfect, period.
Mistake 6 – The Eye of the Beholder
As far as my wife is concerned I am the most handsome man in the world. The reality, I’m afraid is somewhat different. My point is that beauty is a matter of personal preference and I may love the paisley wallpaper in my master bathroom and it make give you motion sickness. Wallpaper, paint, carpet, really anything that is not structural in a home can be removed and replaced with something that is more pleasing to your personal aesthetic. Just be sure to factor the cost of revisions into your purchasing budget.
Mistake 7 – For Richer or Poorer
While buying a home is not a lifetime commitment it is a long term promise with very real potential consequences for an untimely ending of the relationship. Buying a home is not a once and done proposition and the costs of home ownership are greater than the mortgage and property taxes.
Don’t make the assumption that because the bank thinks you can afford the home that you can. Failing to factor in all you ongoing expenses is a sure fire way to wind up in foreclosure. Anticipate as many expenses as possible when determining your budget, including heating and cooling, repairs and upkeep, improvements and don’t forget things like commuting. After all a house in the country may be less expensive than the city or suburb but it will be significantly more expensive to commute.
Mistake 8 – Surprise!
You’re expecting triplets! The neighbors just sold to Walmart and they’re putting up a shopping center right next door. Where did all this traffic come from? Surprises come in a variety of forms, some are our own doing, like children and some are not. When shopping for a home you may not be able to anticipate everything but you should never be shy about asking questions.
Talk to prospective neighbors, and municipal officials about zoning and planning, drive around the neighborhood and ever widening circles to get a feel for the surrounding area. Visit at different times of day and if possible different times of the year. The bottom line is the more you ask and research the less likely you are to be surprised.
Mistake 9 – Blind Faith
As I mentioned earlier, most of the people you will deal with during your home buying experience will be decent, honest individuals who can be trusted. In a perfect world, we all could just assume that because realtor A did a great job with your brother-in-law and Banker B got your best friend an amazing interest rate doesn’t mean that the same will hold true for you.
In international diplomacy the term Trust But Verify means that while one party would like to believe that information being provided is accurate they would still like to see it with their own eyes. The same holds true for buying a home. Trust your banker, realtor, the seller but verify as much as possible independently.
Mistake 10 – Make a Wish
Birthday wishes and wish lists are fantasies. They are hopes and desires and wonderful dreams to be held dearly. But they are dreams and not all dreams can or do come true. The final mistake home buyers make is wishing. Whether it is trying to find a home with every single item on their wish list checked or wishing that they’ll be able to afford monthly expenses that exceed their monthly income, wishes should be limited.
The final and biggest mistake is wishing because it covers a range of possibilities but it the danger of it can be summed up in one word, reality. When all is said and done you will have to live with the reality of your decisions and no amount of wishing is going to change that.