Buying a new home is a fun and exciting process. You are choosing a place where you will spend the next several years (or maybe even decades) of your life. A home is also a major purchase, and is the largest purchase most people will make. This means you want to be smart when buying and avoid making costly mistakes. Below is a lit of common mistakes that buyers make when shopping for a new home.
1. Focusing on the color – Buyers tend to get caught up on superficial details such as room color. Color is easy to change – you just need to do some painting. Look past the color of rooms and imagine your favorite colors on the walls instead. Painting is relatively cheap and easy to change. Don’t overlook a house over something as trivial as paint.
2. Not doing the research – Don’t buy a home on an impulse. Do your research before putting in an offer, and certainly during your option period. Research things such as the school districts, number of foreclosures in the area, flood zones, future construction projects, crime statistics, taxes and insurance. Talking to neighbors is a great way to get inside information on a neighborhood.
3. Making a list of likes and dislikes – An extensive list can cause a buyer to eliminate great properties and never see the potential of others. It is fine to have a list of one or two things you absolutely must have and one or two that you cannot have. Other than that be flexible. It is difficult to find the perfect house that fits all of your wants exactly. Keep an open mind and think about how you can make a house perfect for you instead.
4. Getting emotionally attached – Sometimes buyers will find a house and fall in love with it. This makes you become attached, which can be a bad thing. Being attached to a house means you are more likely to overlook problems that the rational part of your brain would object to. Being emotional about a property can make you pay too much and can make you more likely to overlook or justify defects. Try and stay objective, and be prepared to walk away from the house if the deal becomes bad.
5. Making an offer based off list price and not home value – In a perfect world every house would be listed for sale at fair market value prices. Most are, however there are many out there that are listed at too high of a price. The seller might think the house is worth more than it is, or may owe more money than the house is currently worth, thus pricing the house higher that it should be. Unless the house is truly unique and there are no comparables to it, do a market analysis first and make sure the asking price is in line with what other similar homes are selling for.
6. Not budgeting for extra house needs – Buyers tend to think that their monthly house costs will consist of the mortgage payment, insurance and taxes. There are always extra costs that you don’t think of, particularly when moving in to a new place for the first time. These hidden costs might be minor, but they will add up, so you need to be sure to have extra space in your budget for extra expenses. Some extra expenses include light bulbs, shelf paper, lawn equipment, curtains or blinds, paint, door locks, and furniture.
7. Thinking a personal home is an investment – A house is an investment, but most people have to live in their home for a long time before they see the value increase to over the purchase price and expenses, if ever (depending on current market conditions). If your sole reason in buying a house is hope of profit one day, you are doing it wrong. Buy a home wisely so that you will not lose a massive amount of money quickly, but also buy it for the comfort and convenience it will offer you. Also, negotiate a good deal, but don’t torpedo your dream house over a few thousand dollars just to try to “win” the negotiation. That amount won’t matter much over the long term anyway.
8. Not planning to stay for 5 years – If there is a good chance you will need to move in under five years, buying might not be the right option for you at this time. You will incur a lot of fees when selling your house, and unless you bought it way under-value, you will likely lose quite a bit of money selling it within a few years of purchase.
9. Skipping the important inspections – Always get an inspection done on a home before you buy it. An inspector can help identify problems with the house that are not quickly visible to the untrained eye. Since a house is a large purchase, don’t skimp out on other inspections either such as a termite inspection or a pool inspection.
10. Buying based on your old market-area prices, not the new market-area prices– House prices vary wildly – from state to state, city to city, and even neighborhood to neighborhood. If you are moving to a new area, spend some time researching house prices in the new area first. You want to be sure your expectations are in line with what houses in your new area will cost.