Most House-Hunting Errors

Don’t over-estimate your emotions or your wealth.

Buying a house is a very emotional process. You can fall victim to a variety of homebuyer mistakes if you encourage certain emotions to get the best of you. Considering that homeownership has many far-reaching consequences, keeping your feelings under control and making the most reasonable decision is essential.

The aim is to end up with a house that you enjoy at a price that you can afford but, sadly, many people are doing things that hinder them from fulfilling that desire. Let’s look at some of the critical home-hunting mistakes people make — and how to find the best way to buy a house.

CLOSE TAKEAWAYS

• Be honest about what you can afford when you start shopping for homes and plan your quest accordingly.
• Hire a broker or real estate agent.
• Get your mortgage pre-approved.
• Downplaying weaknesses could be an expensive error because the ability to play handyman by yourself could be overestimated.
• Rushing into a deal too soon or taking too long is always dangerous in terms of expense and what kind of property you could end up with.
• Don’t overbid fear of missing out, because it can create trouble with valuation, lease, and house reselling.

It does not know precisely what you can get.

When you have fallen in love with a particular location, it is impossible to go elsewhere. You continue to think of how beautiful your life would be if you had all the beautiful things that it provided, such as the gorgeous, tree-lined streets, the jetted bath, the luxurious kitchen with expensive appliances.

However, if you can’t buy the home, or can’t afford it, you’re only damaging yourself by putting yourself in it. So, it’s best to restrict your house-shopping to property in your financial neighborhood to escape temptation. When you end up searching for things beyond your price range, you’re going to end up lusting after something you can’t afford. This can place you in the precarious role of wanting to reach financially beyond your means or making you feel dissatisfied with what you can afford.

Begin shopping on the low end of the price point when you are pleased with what you found there, so there is no reason to go further. Note that once you buy another $10,000 worth of property, you are not only spending an additional $10,000; you’re charging an estimated $10,000 plus interest, which may double the amount or more for the duration of your lease. You may be better off putting the money into a different reason.

Skipping Mortgage Pre-Approval

What you think you can afford and what the bank is willing to lend may not match up. Make sure to be pre-approved for a loan before placing an offer on a home. The pre-approval process can also help you locate a financial neighborhood.

Be mindful that even though you’ve been pre-approved for a mortgage, anything you do to change your credit score, such as funding a vehicle purchase, will cause the loan to fall through at the last minute. You will have to cancel whatever deposit or earnest money you put up when you entered the arrangement if your actions cause the agreement to fail.

Not Using an Agent

If you’re looking for a home properly, don’t go into an open house without a real estate agent or broker (or be prepared to spit out the name of someone you’re going to be dealing with). Agents are bound to the legal precept that they must behave in the best interests of both the seller and the customer. But when you start working with a seller’s agent before calling one of your own, you can see how that could not place you in the strongest negotiation spot.

Overlooking Important Flaws

Look for homes that have yet to realize their full potential, particularly if you’re on a tight budget. The equity boost from the investments will further push the property ladder upwards.

That said, if you buy a house that needs renovation, don’t buy a fixer-upper; that’s more than you can manage in terms of time, resources, or skill. For starters, if you think you can handle the job and remember you can’t afford it until you get going, any fixes or enhancements you’re trying to do will cost twice as much as you’re factoring in the labor force— and it might not be in your budget. Evaluate your skills, your expectations, and how long you intend to relocate before you purchase a house that is not ready to move in.

Ignoring the Neighborhood

Focus not only on the residence — look at the immediate area. Of course, it’s challenging to forecast the future of your preferred area accurately but inquiring about or studying the potential will help you escape surprises down the line. Many questions that you should be posing include:

• What sort of local improvement plans are in works?
• Is the street likely to become the main street or a standard shortcut for rush hours?
• Is there talk of constructing a bridge or highway nearby in five years?
• What are the current zoning laws?
• So much undeveloped land? What would probably be built there?
• Have home prices been decreasing or increasing in the neighborhood?

When you are satisfied with the answers to these questions, then the position of your future house will maintain its rose-colored luster.

Rushing to Put in an Offer

In a hot market, if you find a home you want, you can need to make a bid quickly. You need to reconcile the need to make a snap decision with the need to make sure that the home is right for you. Don’t forget crucial measures such as ensuring the area is secure both at night and during the day (try to return at various times) and addressing potential noise problems such as passing trains.

Ideally, you should be able to reflect on the decision for at least a week. How well you sleep, and how you feel about it the morning, will tell you a lot about whether the decision you’re about to make is the right one. Taking the time to consider the decision always offers you a chance to explore how much the property is worth and deliver a fair deal.

Dragging Your Feet

Make sure you make the right decision. It’s a delicate juggling act, so don’t wait too long to make it.

Let’s assume you’re a self-employed guy. Perhaps time is money for you, more than for others. The more time and energy you need to take out of your daily activities to find a home, the less time and energy you have at your fingertips. Not indefinitely stretching out the home-buying cycle might be the right thing for your company. Your business’ continued progress would be crucial to pay out the mortgage. When you don’t easily pull the trigger, someone else could, and you’ll need to keep trying. Do not underestimate how time-consuming and routine-disrupting shopping in your house can be.

Offering Too Much

When there’s so much pressure in the market, and you’re seeking a spot you want, so it’s all too tempting to get drawn into a bidding war — or attempt to circumvent a bidding war by first proposing a high price. But with that, there are a few potential problems.

First, the bank will not give you the loan unless the seller lowers the price or pays cash for the difference if the house does not appraise the amount of your offer or beyond. When that happens, you will have to pay out of pocket for the loss on your contract, as opposed to your mortgage. Second, when you sell the house, you may find yourself upside down on the mortgage and unable to sell if business rates are worse than before you bought.

Ensure that the selling price for the home you are purchasing is fair for both the house and the place by checking comparative prices and having the advice of your agent before making a bid.

Neglecting to Inspect

You found the perfect place, accepted your offer, and… you’re in a contract! It’s tempting to think that the moment you go into escrow, but hold on, you’re a homeowner. You need to learn what sort of condition the house is in before you sign off on the deal. You don’t want to be stuck with a money pit or a lot of unnecessary (and potentially expensive) fixes.

That’s why you ought to set up a comprehensive home inspection— your mortgage broker may be requiring it. Holding your feelings in check until you have a clear understanding of the physical state of the house and the soundness of your future investment will help you from making a significant financial mistake.