Top 10 House-Hunting Mistakes
Mistakes are bound to happen when looking for a house. Whether it is not knowing what you can afford, skipping mortgage pre-approval, or overlooking important flaws, there are many ways that people shoot themselves in the foot when it comes to house hunting. Here are the top ten mistakes that people make before signing on the dotted line:
1. Not Knowing Your Budget
People often fail to buy a new home by overestimating how much they can pay monthly and borrowing from banks. While this might seem innocent enough, if you have no idea what you can afford from month to month, then you’ll never be able to compare potential homes appropriately – and might end up getting stuck with a property that’s way too expensive.
It is essential to know exactly how much you can pay monthly. This number will depend on your income, what kind of debt you already have, and how much money you would like to put into savings each month. Knowing this figure will help narrow down the field of homes within your price range.
See Also: How to Save for New House
2. Not Opting for Mortgage Pre-Approval
Another mistake people make when house hunting is not securing a mortgage pre-approval before shopping around. While this may seem like common sense to some, many people who have been saving for years simply don’t want to wait the extra few weeks it would take for their banks to run the numbers. However, the problem with this approach is that you can’t price out any homes until you know exactly how much you can afford. This means settling on a home before knowing what your limits are – and, in effect, getting yourself into financial trouble later down the road.
When buying a house, lenders want to make sure that you can afford to pay it back and will be able to do so for the next 15-30 years. This means you’ll need to provide them with your income statements, details on any other existing loans you have, and account information.
Also See: Paying Mortgage Faster
3. Not Shopping Around
Another common mistake that people make when house hunting is not shopping around. While it might seem like the perfect deal right off the bat if you don’t look elsewhere as well – whether for better prices or more favorable terms – then you could be losing out on some money. For example, if someone offers to sell their home directly to you without an agent involved, it might result in a lower commission rate for the seller’s realtor; however, this does not mean that they’re necessarily getting a fair price. Many factors come into play (and need to be considered) when deciding on an asking price, and these things (such as location, square footage, etc.) might not be appealing to everyone.
Shopping around will help you make more informed decisions and will help you compare different properties on their own merits. It’s also an excellent way to figure out whether or not you’re getting a fair price for the house that you like.
See Also: Why Location is Important in Real estate
4. Not Making Use of a Real Estate Agent
Another common mistake is not using a real estate agent, either directly buying from the seller if they are selling a property without one or by skipping one at all throughout the home-buying process. If you choose to buy without an agent, make sure to get all of the necessary documents (that you would typically receive with one) in writing and request that the seller provides you with their agent’s contact information. While some people think that they can save money by doing this, it might be beneficial to go with an expert who knows what they’re doing and can help navigate any potential pitfalls of purchasing a new home.
Using an Agent’s services can help you through the process by providing advice on putting together a strong offer and negotiating with the seller or their agent. You can go through our Article on Benefits of working with Renal Broker.
5. Not Having A Clear Vision
One of the most common mistakes people make when they start house hunting is not being prepared to see what they want from home. When many people head out to find a new house, it’s as if they have no idea as to what is out there, what options are available, or even where to start looking for one in the first place. This kind of approach can leave you overwhelmed and confused – which will ultimately result in wasting your time going down dead-ends and not finding anything suitable for your needs.
Before you go house hunting, it’s essential to do some research and find out what your needs and wants are, as well as how much you can afford. You should also consider whether or not an existing home has potential for renovation or if it would be better to build something from scratch.
6. Not Looking for Important Flaws
When house hunting, it’s so easy to get caught up in the excitement of finding a new home that you might overlook some important flaws – whether they’re major structural problems or small cosmetic ones. While it’s easy to brush off dings and dents as ‘nothing major,’ what will happen when those surface issues become larger over time? If you do find anything serious, such as mold growing throughout the home, then try to negotiate for a lower price; otherwise, feel free to bid your luck on something repairable if you can’t secure a better deal.
Here is a list of Important and Common flaws that you should be aware of:
- Structural problems (i.e., cracks in ceilings and walls, holes in the roof/foundation).
- Water damage (including water stains on the ceiling, mold or mildew growths, etc.).
- Bad odors (if the house smells like stale smoke, pet urine, cooking/kitchen smells, etc.).
- Electrical problems (i.e., faulty wiring or outdated electrical systems).
- Leaky plumbing or appliances that have been poorly maintained.
- Plaster/wallpaper damage (due to water or humidity problems).
- Poor insulation.
- Poor ventilation or air circulation.
- Drafts/cold spots throughout the house.
If you think that something might be wrong with the house, it’s a good idea to bring along an expert for confirmation – such as a general contractor, plumber, electrician, etc. They’ll know what telltale signs to look out for and should be able to provide their professional opinion on whether there might be any problems down the road. Ideally, however, it doesn’t hurt to do some research on your own beforehand and familiarize yourself with these things (if you’re not already).
7. Lacking Knowledge About Financing & Mortgage Scams
If you’re planning on buying a new home, you need to have a good hold of how much you can afford and what financing options are available to you. Suppose you don’t do your research about available mortgages and rates. In that case, there is a good chance that you’ll end up paying too much for the property , which will lead to increased monthly payments, higher interest fees, less flexibility in terms of budgeting and money management, etc.
When it comes to financing a property, you have a few options – traditional, private, and alternative lenders. Traditional lenders are banks and lending companies that offer loans with set terms and interest rates. In contrast, private lending is usually done by smaller-sized/local banks or companies that might be more flexible in their loan conditions – sometimes even offering better deals for people with good credit. Lastly, alternative lenders can include peer-to-peer services (i.e., LendingClub), sellers who take back second mortgages on the properties they’re selling (known as Bridge Loans), etc.
With any mortgage or financing package, it’s essential to understand all the details before you put your name on any dotted lines. Often, you’ll be signing a highly complex legal contract – one that might say something along the lines of ‘you cannot back out for any reason. If you’re not sure about what’s being offered or what will end up on your bill at the end of the day, then it might be a good idea to consult with someone who knows more about these things before you sign anything.
8. Not Researching the Neighborhood
While it’s easy to get caught up in what a house has to offer, it’s also important not to forget about the neighborhood itself and how you might fit into it. You might find a perfect home somewhere that doesn’t have the amenities you were looking for but is close to shops and local attractions.
It may be worth considering whether or not you’ll be able to enjoy living in a certain environment if there are no nearby entertainment spots, parks, schools, or public transportation routes available – as well as whether or not you’ll feel comfortable raising children there. In addition, if there is evidence of drugs, violence, or any other social problems in the neighborhood, then it might be something to avoid.
Here are a few ways you can quickly check out a neighborhood:
- Look for crime reports in the area.
- Speak with your neighbors to see if local kids are well behaved and attend school.
- Visit the area during different times of the day.
- Check whether or not any registered sex offenders live near the house you’re looking at.
- Make use of apps like Nextdoor to find out what’s going on in the area.
You can see our Article on How to find good Neighborhood.
9. Rushing an Offer
If you’re in a competitive market and several people are bidding on the same house, then it’s easy to get caught up in the moment and make an impulsive decision. In most cases, waiting is your best bet – especially when there is still some room for negotiation.
It’s essential to be careful about what you put down as an offer – how much will the seller accept, are there any pre-conditions they’re looking for included, etc. Putting in a low-ball bid just because you want to ‘win’ might end up being more of a hassle than it’s worth – especially if the balance has to be paid upfront or there are other necessary conditions that aren’t within your means.
Putting in the first offer is the best move – it shows that you’re serious about buying the property and allows the seller to get an idea of what kind of value they can expect. If you find yourself constantly competing with other buyers, then you might want to consider raising your bid amount (keeping any pre-conditions in mind) or looking elsewhere.
Also Read: Tips on Buying a House in Sellers Market
10. Not Bargaining
The seller is always looking to get more for their house – they want to make as much profit as possible after all. If you’re not entering the negotiating phase with the right attitude, it can be challenging to convince them that your offer is worth considering.
If you go into the negotiations with a strong mindset and are willing to walk away if no progress is made, then the chances are that both sides will be able to work out a deal that works for everyone. Start by identifying what things are essential (i.e., how urgently you need this house) and focus on what can be compromised so both parties can benefit from the exchange.
Keep in mind that buying isn’t ‘all or nothing’ – closing some of the negotiations while leaving other details for later can be helpful when it comes to reaching an agreement. When in doubt, don’t hesitate to ask the seller what they’re willing to do – you might be surprised by how much flexibility there is.
Hopefully, this article has helped answer any questions that may have come up regarding finding a new place to call ‘home.’ House-hunting can be stressful, but there are many mistakes you can avoid if you’re careful. Follow the tips above and don’t make these common house-buying errors to find your dream home in no time!
How can I make an offer on the house?
You can make offers on houses in a few different ways. The first is to contact the listing agent directly and ask about submitting an offer. You can also submit your offer via snail mail or email, perhaps with the help of the listing agent’s office. These are just suggestions, though – you can choose to do things however you want as long as you have all the necessary paperwork.
How do I know how much to offer for a house?
This can be difficult to answer – it’s best to try and get a sense of where the market is at for similar properties in the area. Look online or speak with real estate agents about how many houses are going for right now. You can also make offers on several different houses to see which one will accept your bid – this way; you’ll have an idea based on what they all go for.
What are some things to look for when inspecting a house?
When you’re inspecting a house, look for problems that might be hard to fix. Cracks in the foundation, termite issues, electrical problems – these can all lead to expensive repairs later on. Keep an eye out for significant issues like sagging ceilings or floors. It’s also best to check where the water comes from (the kitchen and bathroom sink) and where it goes (in the toilets).
Suspiciously low prices can often indicate bigger problems further down the road. Look out for houses where the walls/paint is peeling or visible cracks in door frames. If they were trying to fix up the property before selling, then there’s probably something they’re not telling you about it.
Also See: How to Patch and Repair Drywalls
Should I get a pre-approval from a mortgage lender before making an offer on the house?
Yes – it’s a good idea to consult with someone first. They’ll be able to look at your income and credit history and let you know what kind of house you can afford as well as how much more money you might need for closing costs or other related fees.