How to Avoid First Time Home Buyer Mistakes
Working with first time home buyers in the Raleigh area is one of my absolute favorite parts of real estate. Addressing the common mistakes first time buyers make upfront leads to a much smoother transaction because we can point back to our infographic below and remind them of the initial conversation.
There are so many options available to first time buyers, that they are typically unaware of. This leads to an attitude of gratitude from first time home buyers, once we show them how they are able to save thousands of dollars.
First timers range in age, from millennial buyers to older adults looking to settle down in the Raleigh area. Either way, there are great financial opportunities for these new buyers, and
So what are the commonalities among first time home buying mistakes?
Not Educating Yourself as a First Time Buyer is a Mistake:
One of the first things you should do when you decide to buy a house is educate yourself. If you jump into searching homes for sale online without a proper understanding of the home buying process your emotions could lead to poor decision making. The other day, a client from California called us and informed us she would be moving to Raleigh, NC. She told us that she was planning to buy a home in the next three months and had never visited the Raleigh area. We recommended she make a visit here before buying real estate in the area. Three days later she told us she called a builder and bought new construction.
This is common among buyers. They set their mind on accomplishing something and their emotions control their decision making. This is an example of how not to buy a house. Having never visited the neighborhood, or the home in person, it's tough to truly know what you're buying.
If you haven't visited Raleigh we don't recommend you spend hundreds of thousands of dollars on a house until you do. It should take more than three days to make an educated decision as well.
Not everyone is going to make education, or a loan pre-approval the first step in their home buying process, but not making it part of the process at all is a common first time home buying mistake. Buyer beware.
Over Extending your Budget is a Mistake
If you're a first time home buyer there is a good chance you aren't fully aware of ALL the costs of homeownership. The best way to understand what you can afford is to be reasonable, and logical. Emotions will take you to a place you don't want to go, and if you haven't been pre-approved there is a good chance you may be looking at homes in the wrong price range. This a mistake among all types of buyers.
A pre-approval should be the second step in your home buying process, after you educate yourself on different lenders and first time home buying options. Different lenders will have different first time home buyer programs, and some will be local to Raleigh, while others will be state or national grants.
Even as a Realtor®, and homeowner, I am still learning new costs that I couldn't have possibly accounted for initially. My home inspector found a problem with the HVAC and upon further investigation the unit was completely shot. A $5,500 investment that had not been accounted for when I originally went under contract on the property. Fortunately, the sellers bought a new unit so we were able to proceed to closing without my budget being affected.
Not all sellers will account for problems with the home found on the inspection report. There's a good chance you'll have a list of items to be paid for at time of closing as well. Familiarize yourself with the hidden costs of buying a house, the costs of homeownership, and pad these numbers appropriately for things that may happen.
One of the best ways to determine what you can afford is to reverse engineer the process. Start with everything you know you will be paying like electricity, water, tv/internet, other utilities, food, etc. Once you account for everything you will be paying for monthly, pad the number by several hundred dollars to leave room for savings, hobbies, traveling, etc. Take your monthly income and subtract your monthly expenses. This will leave you with a number that you should add padding to as well.
A lot of people don't realize how different the costs of renting and homeownership are until they actually own their first house.
Not Knowing your Priorities
If you're buying a house alone it's different than buying a home with a significant other or a friend. When you purchase real estate for yourself, you make your own list of priorities, needs, and 'want-to-have's.' This can lead to an easier home purchase since it's only you. If you're buying with someone else than you need to account for everything they want in a home as well -- you also need to make sure they're on the same page as you about buying real estate.
We have often seen buyers where one party wants to buy, and the other party isn't ready to commit to homeownership just yet.
This can complicate the home buying process for everyone involved. You need to have a conversation with the other party involved and make sure that you are both 100% ready to buy a house. After this conversation, you'll need to sit down together and start planning out what you both want in a house.
If you jump into your home search online without truly understanding each other's wants it will lead to complications later on. It's important first time home buyers understand everything upfront, so they're fully aware of all that is involved.
Wrong Real Estate Team
Buying a home is not an easy process. We work hard to simplify it, and it's something we are constantly tweaking. Our list of vendors has been changed too many times to count because we are always trying new ones and figuring out who the best is.
Hiring the wrong real estate team can cause all sorts of additional stress for first time home buyers. There's a chance you don't have a definitive idea of who the best vendors and resources are in your home buying process. It starts with finding a top local Realtor to assist you, and this person will have a list of names to help with your home purchase.
If you're searching homes for sale as a first time home buyer, you should also be searching for real estate professionals who are going to best assist you with the transaction.
Buying With Emotions vs. Reason
One of the mistakes first time home buyers make involve buying a home based on emotion vs buying a house based on reason. Everyone struggles with this, even myself, and others who know what to expect in the home purchase process. It's going to be a roller coaster ride, you have to be ok with saying no to something you love, in order to find something you can love within your budget.
This is not easy. In fact, shopping for a home is a lot like dating. Chances are you've met different types of people, just as you've seen different types of homes. You have an idea what you like, and what you are searching for. Then it's time to start dating
You want to go out with different types of people, just like you want to view different homes for sale. If you find one you like, and your priorities line up with your budget, than you are ready to make an offer. Here's what happens after your offer is accepted.
What's funny about the dating buying a home analogy is that we tend to make things into something they are not. For instance, if you aren't sure about a home and it is purchased by someone else, you might immediately begin to think you'll never find another one like it. You'll turn the home into something it is not. This is similar to dating, where you realize you aren't sure whether or not you want to be with someone, and then she starts dating someone else you instantly confuse her for something she isn't.
You have to be prepared to make proactive decisions, and leave your previous decisions in the past.
Final Thoughts on the Mistakes First Time Home Buyers Make
A lot of first time home buyers walk away happy, and with highly successful real estate transaction when they follow the proper homy buying process. It doesn't matter if you're buying new construction or a luxury home, you're still going to want to work with a top local Real Estate Agent. Falling into the hands of the wrong real estate team can completely ruin a home purchase. We've seen it happen many times at Raleigh Realty, where a buyer brings in a new mortgage lender we have never worked with, and they fail to secure funding.
Another important thing to note is that Zillow Home Values and Real Estate Listings are wrong. You will be missing out on a ton of available properties if you're searching homes for sale online there. They also don't collect accurate data, so how could their home value estimator (zestimate) be correct? It isn't.
If you're going to buy a home for the first time, do your homework, determine budget/priorities, find a great lender and real estate team, and date around!
Hi there! I'm Ryan Fitzgerald, a REALTOR in Raleigh-Durham, NC and the owner of Raleigh Realty. Chances are you and I share a similar passion, Real Estate! I also have a passion for technology, sports, and people. Would love to hear from you. Drop me a note in the comments section below and feel free to share this article socially!