The Top 10 Mistakes First-Time Homebuyers Make

The prospect of purchasing a home is understandably daunting. There’s a seemingly endless amount of paperwork to collect, your personal finances are examined with extreme scrutiny, and then there’s the emotional turmoil that comes with falling in love—even if it’s with a house.

Since there are plenty of moments during the homebuying process that might give you pause, we put together a quick list of mistakes you can be certain to avoid. Do yourself a favor and learn from those who’ve gone before you.

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1. Fixating on the 'Perfect' Home

It’s safe to assume that most aspiring homeowners fall into this trap at some point in their home search. Putting an offer on a home is akin to buying an engagement ring—it’s a big financial investment and it carries the weight of commitment. It makes sense that people tend to look for their next home like they’re looking for a soulmate.

But it’s important to remember that no house (or person, to really extend this metaphor) is actually perfect and your “dream” house may, in reality, only exist in your dreams. Instead of insisting that a house check every single box on your list, prioritize the permanent features that are important to you, and be ready to turn a blind eye to cosmetic imperfections. 

“Things like white cabinets, dark hardwood floors and quartz countertops are customizations that can be changed, says Jen Gralitzer, Neighborhoods.com Regional Sales Manager. “What is more challenging to fix—or near impossible—is the location, lot size, and nearby schools.” 

Which leads us to …

2. Ignoring the Neighborhood

When it comes to buying a home that will increase in value and serve as a long-term investment, location is everything. While it might be tempting to purchase the prettier house in a less-than-ideal area, ultimately, it’s the location of your home that both determines your lifestyle and has a large impact on resale value.

In most cases, it’s wise to take a cue from Chip and Joanna and find the “worst house in the best neighborhood.” Remember: You can change pretty much everything about your home except its location. Take the time to find a neighborhood you love that fits your lifestyle.

3. Straying From the Budget

There’s no surer route to heartbreak than falling in love with a home you can’t afford. From the moment you start your home search, it’s important to have a solid grasp of your budget (and associated costs!) and to tailor your search to your financial situation.

Neighborhoods.com neighborhood expert John Bray cites “setting unrealistic expectations” as the most common mistake he sees from first-time homebuyers.

“Looking at homes online is perhaps the motivator to get you excited, but if you don't understand mortgage origination and qualification, you need to get in touch with a good lender that will let you know how much you can comfortably afford. Price isn't as important as payment, and you should know your debt-to-income ratio before you begin your search. It's a large part of the affordability factor, and perhaps it's possible that you can afford a better home that you initially thought.”

4. Selling Yourself Short

While it is essential to establish and stick to your budget, it’s also important to evaluate all of your options when looking for a home and neighborhood. 

First-time homebuyers Cristina and Jack lost out on a home they were really interested in because they underbid.

Christina explains:

“The first home we put an offer on, we decided to offer way below the asking price, hoping it would spark negotiations. At the time it was a seller’s market in Dallas so that was a really dumb decision on our part—we didn’t have a real estate agent at that point. The sellers wouldn’t even negotiate with us because they felt our offer was too low.”

Remember: The homebuying process is a series of evaluations and negotiations, and it’s just as important to know what you can afford as it is to know what you cannot afford. Recent homebuyer Paige adds, “We didn’t think we could afford our neighborhood but looked anyway and we’re so glad we did. Don’t automatically rule something out because of price.”

5. Refusing to Negotiate

Knowing when and how to negotiate can be the difference between remorsefully waving goodbye to the house that got away and happily claiming the keys to your new home. Sometimes, the most important negotiations happen within yourself, or within your family.

It’s essential to know what elements you absolutely require in a new home and neighborhood, and where you’re willing to show some flexibility. Similarly, you and your partner or family may have competing interests or ideals when looking for a new home, and it’s important to know where you can compromise.

The same rules apply when it comes time to negotiate a buying price or the terms of the sale—be confident in what you are unwilling to change, but also be ready to adjust some of your more flexible standards if it means getting the home you’ve dreamed of. 

6. Forgetting to 'Look Under the Hood'

While new finishes and flashy appliances can certainly increase the cosmetic appeal of a home, remember that a fancy faucet is only as good as the pipe that carries water to it. When you’re evaluating a home, looks can be deceiving and the structural soundness (or lack thereof) of a home isn’t always readily apparent.

“Do your due diligence during the home inspection process,” Gralitzer cautions, “but don't freak out over minor issues. Every home will reveal something. If you have a stellar agent, they will guide you through this.”

While no home is perfect (remember point one?), make sure you understand exactly what underlying issues you may be inheriting and what they might cost in repair or upkeep.

7. Downplaying Associated Costs

With every home purchase, there are associated costs that you may not think of if this is your first time buying property. Expenses like earnest money and closing costs should be expected, along with the actual price of the home, and it’s essential to prepare for them in advance.

And while these costs might catch you off guard, remember they’re just the beginning. Does your dream home include a massive yard? Or perhaps it’s a historic home that requires a little more love? Every home has elements that will require you to invest time or money, or both, in long term maintenance.

Make sure you factor in upkeep costs when calculating monthly expenses. When setting out to purchase their first home, recent buyers Kelsey and Omar sat down to evaluate every cost associated with owning a home. 

Kelsey explains:

“We took a look at our income, and how much we were willing to pay monthly on a home. It’s important to make sure that you’re incorporating all the ‘extras’ that come along with homeownership, not just the mortgage—utilities, water, garbage, power and gas, homeowners insurance, repairs, etc. They should all factor into calculating what your total monthly cost will be.” 

8. Underestimating the Sacrifice

Saving for a downpayment is not easy (even if you don’t need 20 percent), and making sure your finances are in order requires a lot of time, energy, and paperwork. 

“The mortgage process can get into the weeds of your finances so it’s a good idea to streamline your expenses and live leaner 60 to 90 days before you begin your mortgage application,” Jen Gralitzer explains.

While this may entail a short-term sacrifice, it will be rewarded when you’re able to purchase your new home.

9. Failing to Find the Right Agent

Your real estate agent can define your entire homebuying experience, for better or for worse. One of the most common regrets from first-time homebuyers is failing to find an agent that they trusted and valued.

First-time homebuyers Sophie and Luke neglected to thoroughly research their agent. “I wish we had looked for an agent who specifically had our needs and desires in mind,” Sophie laments. 

While it may be tempting to use your high school buddy or your cousin’s roommate's sister as your agent, it’s in your best interest to find an agent who’s an expert in their area and has the experience and resources to help you find the right home.

And while some people mistakenly think forgoing an agent will save them money (using an agent doesn’t cost you anything as the buyer), the opposite is often true.

“From pricing strategies, to submitting offers, to negotiating home inspection items, and knowing contractors, they can save you money,” Bray says.

10. Thinking Short-term

At the end of the day, buying a home is a long-term investment, so it helps to think five or 10 years down the road.

While it may be tempting to try and cut corners to save money or skip thorough research and inspections to hurry the process along, such short-sightedness often backfires. What’s the number one piece of advice she would give a first-time homebuyer?

“Be patient,” advises Cristina. “This is a big decision that requires a lot of careful thought and planning.”

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