Written by Amanda Westrheim
1. Not being pre-approved for the mortgage. You’ve probably heard this one 1000 times. You probably just rolled your eyes. But the reality is, there is absolutely no point in looking until you’ve gone through the mortgage approval process. There’s nothing worse than finding the perfect place, only to later learn you can’t afford it. Or, what if you could have afforded more? Wouldn’t that be great? Most agents, at least successful ones, will refuse to show you anything unless you’ve got your approval on paper. We can recommend the best mortgage brokers and banks in the business. It’s free! So just get it done. Please.
2. Being too picky. This is your first home. You’re not going to stay in this home forever, so be realistic. If we’re working within a budget, we will find the best bang-for-your-buck. First-time homebuyers often have to compromise on something because funds are limited. You may have to live on a busy street, accept dated décor, make some repairs to the home, or forgo that extra bedroom. Of course, you can always choose to continue renting until you can afford everything on your list - you'll just have to decide how important it is for you to become a homeowner now, rather than in a couple of years. When prices could be higher. Interest rates too.
3. Not committing to one agent. Once you're ready to start seriously shopping for a home, don't go it alone. REALTOR®s are licensed, ethical salespeople that take their jobs very seriously. We are here to hold your hand, and walk you through the process, every step of the way. It is not best to simply call the agent whose name is on a For Sale sign, since they have already committed to working for the Seller. It is a serious conflict of interest. Besides, your agent will spend countless hours touring you through properties, driving you around in their car, negotiating at all hours to get you the best deal possible. We will give you our attention and loyalty, but expect the same in return. It’s in your best interest to have complete representation for your big first purchase. Don’t go it alone!
4. Lacking vision. Even if you can't afford to renovate right away, it might be worth it to live with something dated for a while in exchange for getting into a house you can afford. If the home meets your needs in terms of the big things that are difficult to change, such as location and size, don't let physical imperfections turn you away. Besides, doing home upgrades yourself, even when you have to hire tradespeople, is often cheaper than paying the increased home value to a seller who has already done the work for you. Let your work reap the future rewards!
5. Getting too emotional. Buying your first home will absolutely come with its ups and downs, but you must keep a level head. Don’t let your ‘love’ for a prospective home cloud your judgment. Acting overexcited can make you lose commonsense and rationale. Your agent will ensure that you are paying Fair Market Value. Regardless of how much you might like a place, overpaying could hurt you in the long run. Sometimes it’s easy to just accept, but if the price isn’t fair, stay calm and stick to your guns.
6. Relying too much on family and friends advice. Everyone likes to think they’re an expert in real estate. The reality? Only the experts are experts! Friends and family will consistently try to tell you how to go about buying your first home. From how much to pay, to what bank to use, which inspector to call…take their advice with a grain of salt. There may be merit there, but more often than not, they just overwhelm you and undermine the professionals. So, your parents bought their home 20 years ago…how is that relevant to today? A lot has changed in the real estate industry over the years! Your best friend watches a lot of HGTV and knows how much you should offer? You get my point. They mean well, but they’re just going to confuse you. Thank them for taking an interest in your big moment, but then ask for space to do this on your own. If you have a good relationship with your REALTOR®, it will all work out. And when it’s all over, you can invite them to your Housewarming party to celebrate!
7. Getting cold feet. I have seen this happen many, many times. It’s sad. You’ve only been looking for a week, and the perfect home comes up. It ticks all the boxes on your wish list! You take a look, and it’s perfect. But then you decide, you haven’t seen enough yet. You ask yourself, what if another one even better comes on the market? What if I regret buying this one? You won’t. Your heart is telling you to go for it! I have seen buyers mourn the loss of a great home for years. It’s the one that ‘got away’. The reality is, if the home is that great, other buyers will think so too, and someone almost always snatches it up. It could have been you, but you froze. When it’s right, you’ll know. Go for it!
8. Forgetting the other costs. Home inspection, lawyer, appraisal, moving expenses, insurance, taxes, utilities. These fees all add up and are additional costs on top of your down payment. Far too many times I have witnessed buyers so overjoyed with their mortgage pre-approval, that they feel invincible and run out and buy a new car. If I can get a loan for $250,000, I can surely get a car loan for $35,000! Big mistake. Much to your surprise, when you submit your contract for the mortgage, you will have been declined. Your debt service load is now too high. Wait until after you buy the home to make any large purchases. You need your cash on hand and your credit low.
9. Skipping a home inspection. This is in no way a smart move. Just because you worked as a laborer in construction one summer does not make you a pro. If your dad is a plumber, great, but he can only check the plumbing! Inspectors are geared with the knowledge and tools required to ensure the house is safe and sound. They look for moisture behind walls, test the amperages from electrical and even run the appliances. It’s the best inexpensive service in this industry and one that should not be taken lightly. Even brand new construction can come with unforeseen issues.
10. Not taking resale into account. One day, you will most likely sell. Life can come with unexpected changes, and in some cases, you have to sell much earlier than you planned. You need a good exit strategy. One of the most important items not to overlook is the mortgage penalty. A good mortgage broker will discuss with you the banks requirements for paying your mortgage loan out early. I have seen Sellers hit with fees upwards of thirty thousand dollars for ending their term prior to the expiration date. Ouch. Also, market timing and future salability. What’s happening in the neighbourhood? Where are trends? What’s the forecast? Are you setting yourself up for large gains in equity, or are you buying in a building that is at the end of its life and will need a ton of repairs? Your REALTOR® will assist you with it all.