Buying a home is an exciting time in your life and buying your first home is a great accomplishment, however there are some things to be aware of so you don’t get buyer’s remorse. If this is your first time here be sure to hit subscribe button so you always stay up to date on the latest real estate article.
Today’s article is going to be all about first-time homebuyers. You know first-time homebuyers get pulled in all sorts of different directions from parents neighbors friends siblings and others on the home buying process.
There’s a lot of noise out there, so I thought it’d be really beneficial for you. If I came up with a list of 9 items 9 mistakes that first-time homebuyers are making, in hopes, that you can avoid making these mistakes. So that being said let’s begin.
The first mistake and biggest by far are those first-time home buyers going out and seeing properties without being financially qualified. This one is so important guys, I don’t know if every first-time home buyer they’re all getting together and maybe like a meetup group and conspiring and saying, hey let’s not talk to lenders until we go out and see houses, but that is the wrong way to do it.
You have to get pre-qualified, get financial qualification before you go out and see houses guys. You’re setting yourself up to fail, talk to a local lender beforehand get pre-qualified. why do we do this. Why is this important why do real estate agents tell you to do this. Well you don’t know what you can afford until you’ve been told what you can afford.
There’s going to be options in the home buying process where you can go this route or without your out but your budget and what you pay that’s not your choice. That’s the lenders responsibility to come up with the numbers. There’s going to be the slick websites out there.
There’s going to be the mortgage calculators online and you might think you can afford something but until you talk with a local lender and they tell you what you can afford. Everything else is meaningless. All of that other stuff is absolutely meaningless.
Do you may think you can afford a 6 down another house close to downtown when in reality, you can only afford a $300,000 townhouse 30 minutes from downtown. So go out there, do you do diligence guys.
I know you want to hit the pavement. I know it’s exciting, I know you want to open up doors and go through and to our properties and you have your checklist but the first thing before we even get to your checklist of what you want in your house is to go out there. Get financially qualified and talk with a local lender.
Mistake number two is looking for a unicorn, yeah that checklist, that we just talked about that has everything you want on it. I hope you wrote that in pencil and not pen because we’re going to have to make some adjustments that house with the two-car garage fenced in backyard finished basement, open kitchen that’s walkable to all your favorite restaurants and shops that house does not exist.
It only exists in your mind and if it does exist guess what. It’s twice your budget so it’s time to start reconsidering and know that you’re going to have to make some adjustments. Your house should meet about 75% of your criteria and then it’s up to you to make up that last 25% guys.
Remember you’re not living on HGTV. There’s more value to buy something outdated and then slowly upgrade it along the way rather than exclusively and only considering houses that have granite and stainless steel appliances.
Mistake number three is using the listing agent to represent you. Okay so let’s say you go to an open house you love it and you want to write an offer. So you talk to the listing agent there they say they can represent you they know the house, they know the seller. It’s going to be an easy transaction right wrong the listing agents.
Best interests are in serving the listing agents clients who happens to be. I don’t know the seller how can they represent both sides fairly you may think that the listing agent will cut their Commission. Let’s say 1% help out smooth transaction. Well what if the house is overpriced by 5%. Are you really saving money? this is possibly the largest financial transaction you have done up until this point in your life.
You want someone in your corner, you want someone that will help you out in the transaction when the deal goes sideways. If something goes wrong that agent is always going to side with the listing the seller. The owner, you want someone in your corner just as you research houses and mortgage companies and lenders also research good buyer’s agents that are expert negotiators in the DC area.
You already know one great buyer’s agent, myself I’m pointing at myself and in your area go in research and find a great buyer’s agent. It is absolutely worth it.
Mistake number four is looking too much into the homes online value. Okay guys, so real talk, I’ve held hundreds of open houses in the DC area. I’ve interacted and met thousands of you on the weekends guys. It’s what I do it’s my job but I had yet to meet anyone from Zillow that is coming in and saying, hey I’m here for the Zillow’s Zestimate, I’m going to appraise this house and see what it’s worth and then put it on the website.
I haven’t met that person yet because that person does not exist. Nobody from Zillow or any other website that calculates price except for I don’t know maybe the government County website but no consumer website visits houses in person. Think about it, How can you accurately determine a property’s value and a property’s net worth, if you’ve never been inside the house.
You can’t Zillow even admits that there’s estimates are wrong Zillow’s own CEO sold his house for 40% less than the Zillow estimate. it’s almost comical when someone will present us with an offer and then cite the Zillow estimate or cite another online estimate of why the home should be priced.
The way that is really you’re going to get the site equation as to the comparable value of the house. There’s a much easier way look at the recent sold it’s not rocket science. Look at the recent souls compare the interior exterior square feet location. This is basic stuff, do not use a fancy algorithm to come up with prices it doesn’t work.
So mistake number five is expecting your house to increase in value. Guys it’s not all rainbows and unicorns. The reality is after you buy your house it might not increase in value. In fact it may even decrease in value depending on your market.
You should be buying your home because it’s a smart financial decision, because it’s the right thing to do for your family, because it increases your livelihood, because it increases your quality of living and if the market side tangent.
Here, if the market which by the way you can’t control and I could you agree with that, that you can’t control the market. If the market just happens to go up. As you purchase your house and as you’ve held on to your investment. More power to you, congratulations, you got lucky and this is a tough one guys because the truth hurts and if you’re disagreeing with this maybe you need to take a deeper look.
I’m all about increasing value and adding value and I just want to be straight up with you it’s naive to think the other way. I’m not saying go out and buy an overpriced home and then you have trouble selling it for more later. I’m not saying buy in a neighborhood that doesn’t show appreciation.
I love adding value and I love finding deals but you should be buying for the right reasons and you should have the right mindset. If your whole idea is all planned and scripted out you’re going to buy your first home living it for seven years have your first kid, get pregnant with your second and then sell that house that’s increase in value by 10% they get a bigger house.
Well what if the market goes down? if your goal is to jump into the market at the exact right time and then sell and jump out at the exact right time and time the market, you are not going to win, you are going to lose.
You should be buying your home for the right reasons like I said to increase your quality of life for your livelihood, for yourself, for your family, not to time the market. Be very careful and just know your house doesn’t automatically appreciate.
Mistake number six is under estimating your expenses, things like utilities and unexpected repairs really eat up a lot of funds more than you may have. Initially thought the general rule of thumb is to budget about 1% of the purchase price for yearly maintenance repairs and major yard work.
You know there’s a saying it goes something like once you buy a house things start breaking. Well it’s. It’s true there are a lot of hidden costs involved in maintenance and repairs and while you know you don’t need to know all of the hidden costs.
It sounds kind of weird saying it that way what you do need to know is that you need a budget account and save for the hidden costs of owning a home. you’ve heard the expression winter is coming. well after you buy a house repairs are coming and you should expect the unexpected.
Mistake number seven is feeling rushed. now this one’s a tough one let me tell you what I mean. don’t let anyone ever tell you or force you to make a decision or to put in an offer before you are ready. if you’re unsure about it, it will be inevitable that it will not turn out in your favor. you may lose out on a house because you’ve taken your time to analyze it and by the time you’re ready it’s already off the market guys
it’s easy to fall in love with a property but there are more houses that hit the market. now with that being said if you are in a market where the market moves fast and you’re consistently seeing that the good properties get taken off the market within the first weekend.
it may be time to reconsider your strategy it’s okay to take your time and to learn about the market but once you are ready and once you know the market and once you’re ready to put in an offer do it quickly and do it aggressively.
there is a difference between dragging your feet and feeling rushed. you don’t want to feel rushed, you don’t want to drag your feet, educate yourself learn about the market so when you are ready you strike and you strike quickly
The eighth mistake that first-time homebuyers make is falling in love with the house and we talked about this a little bit earlier. guys don’t do this it’s going to be very rare that the house that you buy will immediately meet all your needs.
Now and all your future needs it does great good for you but if you’re like the rest of us you’re going to love the house now and then in two or three years or five or seven years you’re going to get the itch to move.
I’m a big proponent of acting logically and rationally when it comes to buying houses and if you fall in love with a house that’s on the open market. you will overpay for it or you’re going to get outbid and then you’re going to compare that house to every other house that comes on the market.
Don’t do this have a short memory when it comes to houses that are on the open market. Why, because someone else is going to buy it. houses are going to disappear they’re going to go under contract but guess what a house around the corner is going to come up for sale.
A better house is going to come up for sale. Don’t use your gut you only have so much energy. Don’t expend your energy on falling in love with a fairy tale. If this is going to be your house that you’re going to live in for the next 20 years, great, congratulations but now is not the time to fall in love. don’t fall in love and don’t celebrate until after settlement.
I’m going to end this list of first-time homebuyer mistakes with something that might catch a few of you off-guard and that is mistake number nine, that we’re seeing is that the fallacy that renting is throwing money away. A mistake that we’re seeing first-time homebuyers make is that they are buying a home when they should be renting.
Now let’s break this down. Why am I, I’m a salesperson. I sell houses for a living. The reason that there’s food on my table even though it looks like I’m super skinny, is because I sell houses but I’m convinced that there are people out there, that are buying houses for the complete wrong reason to make their parents happy to impress their siblings. You got to figure out your why.
Why are you buying. if you move around every two years you should be renting, but if you have kids and you want to be in the same school zone for the next nine years, you should be buying figure out your why we reverse engineer why you are purchasing and it’s not because you saw a good deal online or because you watch an HD TV show and now you want an open kitchen.
I think once you figure out why you’re doing what you’re doing whether it’s buying or selling and everyone’s different it just comes down to personal circumstance then you can move forward purchasing if that’s the route or if you want to rent for a few more years.
There’s two more items I want to touch on this and that is the one first item that if you look long-term at people that are retirement age, most of their nest egg is made up in the equity of their house and the second thing is that most people that are at an older age have a very large portion of the wealth, made up through real estate investment.
So the deal is long-term real estate investing, real estate purchasing is probably the best financial decision you can make with the caveat that buying right now, because your friend just bought and you want to keep up with the Joneses may not be right for you.
So think about your current situation know that buying long-term, it’s probably the way to go but at the same time there is a fallacy out there that renting is throwing away money which is completely false.
Alright ladies and gentlemen there you have it the nine mistakes that first-time homebuyers are making. I hope you found this article helpful if you did be sure hit that thumbs up button. Lets me know that you enjoy the article. Okay thanks again for reading until next time create a octaves day take care.