The 5 Worst Mistakes Almost Every Homebuyer Makes (And Tips to Avoid Them!)

posted on 07-08-2019

by June Ruivivar

Mistakes are difficult to avoid in something as complex as home buying, especially for the first time home buyer.

And it's the simple missteps that can end up costing you for years. After all, you can’t return a home the way you would a pair of shoes.

The good news is that with a little planning, research and professional insight the worst mistakes can often times be avoided.

Here are five home buying mistakes that could cost you thousands of dollars in the long run -- and how to avoid them.

Mistake #1. Not Hiring a Real Estate Agent or Realtor

Most people would say 3% of the selling price is a bit much just for filling out paper work and showing you a couple of homes, but real estate agents do a lot more than that.

A buyer's agent -- not a seller's agent, take note -- has access to homes outside of mainstream listings, market data you probably can’t find on your own and connections that can help you with everything from financing to legal papers and finding a reputable home inspector.

If you've done your part and selected a quality real estate agent, he or she can negotiate with the seller's agent to get you the best deal on the home, at the best price. A good agent should also be experienced navigating the various procedures and contracts necessary to complete the process of buying a home.
 

Mistake #2. Buying a House That Won't Sell

Although a house might be a perfect fit for your needs, it's important to consider its resale value. Be on the lookout for marketable features such as a good view, nearby schools and location benefits, as well as architectural details that set it apart from other homes.

If there are small issues you're overlooking because you're anxious to buy a home, chances are you'll have to get those fixed before you can sell the property in the future. Does the kitchen need updating? Is the house next door a rental residence? Would the house be more accommodating with an extra bathroom? Negotiate the contract to cover all of these issues, or be prepared to walk away.

Don't be afraid to take a realistic view of the property -- the best house in a not-so-good area is still just another house in a crummy neighborhood.

Mistake #3. Getting Too Attached

Don’t hang your hat on a home, no matter how perfect it is. Letting the seller or his agent know how much you want the home can make them hold out for a better offer, or propose their own terms knowing that you’ll bend anyway.

There’s likely to be a similar or better home out there -- take advantage of the buyer's market and keep looking until you find the right fit. If nothing else, be prepared to walk away from the house if you're not getting everything you want out of the deal.

Mistake #4. Forgetting to Make a Contingent Offer

Two things should always appear in a purchase offer: a financing contingency and an inspection contingency. The financing contingency allows you to walk away or negotiate if the home appraises for less than your offer price.

The contingent offer requires a professional inspector to go over the home and declare it safe, and lets you cancel or change terms if any problems are found. Without these contingencies, you risk tying yourself to a home you don’t want and terms you may not be happy with. So if problems are found, work with your real estate agent to make a contigent offer to get a fair home price.

Mistake #5. Borrowing More For a House Than You Can Afford

One of the biggest problems with sub-prime lending was making people believe they could afford homes which they really couldn't. What the bank is willing to lend you isn’t necessarily an accurate indicator of what you can afford.

Have a budget in mind before you start shopping for loans. Your agent, lender, mortgage broker or financial advisor can help with assessing your financial situation and recommending a comfortable price range. Besides the mortgage and closing costs, consider the overall cost of living associated with the property, including homeowners’ association dues, utilities, and property taxes.

Once all of these factors have been considered, ask yourself if you can realistically afford the home and if the price range accommodates your other financial goals, such as education and retirement savings.

The takeaway? If you’re spending the better part of your earnings on a home, it makes sense to ensure you’re making the right choice. A few extra hours of research and questioning can save you a good deal of financial stress in the future. Plus, you'll thank yourself even more once you've successfully negotiated the purchase of your dream home.

Recommended for You:

by Christian Hudspeth What's even better than earning rewards for spending on your credit cards? Getting paid hundreds of dollars worth in sign-up bonuses in three months or sooner -- just for tr...
by Christian Hudspeth Tired of dragging credit card debt around with you? Taking 15 minutes to transfer your debt to a credit card with generous balance transfer perks could save you thousands in...
by Christian Hudspeth If you're going to spend money anyway, then why not get paid for it?Whether you're looking for credit cards with up to 6% cash back, double flight miles, or even a free hote...
by Christian HudspethIn times where interest rates are on the rise, you may start hearing financial advisors and bankers sing the praises of an income strategy called "CD laddering" (short for ce...
by Susan Campbell Those of us familiar with selling property know real estate agents don't come cheap. With real estate agent commission and fees amounting to as much as 6% of the sel...
Beverly Harzog is a nationally recognized credit card expert, author, and consumer advocate. She blogs about credit cards at BeverlyHarzog.com. Being in credit card debt is the pits. I've bee...
by Christian Hudspeth If you haven't already felt the pressure to refinance your mortgage, you're probably really feeling it now. Mortgage rates are still hovering near historic lows. But ...
by Christian Hudspeth If you or someone you know is thinking about getting a home mortgage, you may want to know about the thousands of dollars in hidden charges that some lenders are quietly...
by Christian Hudspeth Money market accounts (MMAs) and savings accounts make great places to set aside your emergency fund money and earn some interest income at the same time.Simply put, these s...
by Christian Hudspeth It's true that auto loans and home loans offer attractively-low annual percentage rates (APRs), while credit cards offer borrowing power without the risk of ever seeing the ...
by Christian HudspethWant to keep your emergency fund safe while earning interest yields that are three to five times higher than a typical savings account? Putting your money into an FDIC-insure...
by Christian Hudspeth Question: Hi there. I need your advice. I'm only 19 and I really need to start investing. Where can I start? -- Tirelo M., Gaborone, Botswana Answer: You've defini...