When we bought our first house, we thought that we were ready.
We had ‘seen’ tons of purchases and closings on HGTV, had gotten the rundown from our realtor, read the stories online really thought that we understood all aspects of home buying at least enough to be good buyers.
But man, we were wrong.
We fell into a lot of the first time home buyers traps. From underestimating to cost of repairs.
Luckily for us, it all turned out okay, but knowing the pitfalls ahead of time would have been great to avoid them altogether. So here goes:
Number one: Thinking you are Chip and Joanna Gaines
If you know that you don’t have the tools or the skills to remake an entire house nor have funds readily available to renovate while you live elsewhere, then don’t buy a house that needs a full $100,000 gut job.
Making this mistake can run the gambit from biting off way more than you can chew and ending up in a money pit, or spending your first two years in a construction zone.
Either way, be honest about your skills, effort, and money you are willing to put into a property.
Sweat equity is good, sweating when you will be able to live in the house is not.
My own mess up: I wanted a house that I could force equity into by buying low and renovating. The only problem is I didn’t have the skills, and when I started touring the houses and saw mold, structural damage, full house 80k gut job renovations, I started realizing that my idea of a fixer-upper was more cosmetic. Like flooring, paint, and maybe a bathroom renovation or 2. Luckily my husband had a smarter head and insisted on a ‘paint-only’ house. We ended up happily buying in the middle.
Number Two: Underestimating the cost of repairs
The offer we place on a house is based on the market value (given comparable sales) minus the cost of repairs needed.
When you are walking the house and looking at broken items that will need to be fixed, if you underestimate the cost of repairs then you’ll offer the wrong amount.
Yes, home depot might be selling flooring for $1.50 a sqft but is that the carpet you want in your home? And does that include the installation?
You might find that you should have offered $5000 less on the house if you had known that the flooring would cost $8000 instead of the $2000 you initially thought.
Take some time to walk Home Depot and Lowes and look for real prices of fixtures, flooring, cabinets, etc. that you would buy. Not only is it fun, but it provides excellent knowledge. So when walking through a home, you have an estimation of the cost of the items needing replacing or fixing.
Remember, it’s ok if a house needs some work, but you don’t want to get a surprise on the bill when you go to do it.
You know your style and how you’d like your home to look, do your homework on the actual cost of making your vision a reality.
My own mess up: When we walked through our home it looked like an ax-murder had taken place on the teal green carpet. Our realtor estimated 2000 to replace the carpet, and we made a mental note that it wouldn’t be bad to replace it all. That wasn’t a bad estimate, except it was for the lowest grade carpet. The actual cost – with family discount- was closer to 4500 since we ended up picking a premium carpet. That would have been great to know while we were writing the offer.
Number Three: Falling in love with the house and ignoring all the problems/price
Before you start envisioning yourself sipping tea on the back patio, make sure that the home doesn’t have any problems you are overlooking.
It’s easy to walk into a house, notice all the nice finishes and miss that huge big 15′ cliff in the backyard, or that the house is leaning at a 15% grade to one side. And on that note, you never see all the details in a home when you look the first time.
For one reason, you aren’t in the home that long, and you are trying to look at as many things as you can so you are bound to miss things. Try to look at the house different times of the day and if possible, during different types of weather.
My own mess up: We looked at a house that was the perfect price, the perfect size, and the perfect layout, only one problem. It had the water runoff from the street running openly through the backyard. And on heavy rain days (like the day we visited) the water was so heavy it flooded the backyard. We tried to convince ourselves it would be okay, but in the end, we realized that our ‘future’ kids would probably drink the water and climb into the sewer drain. We had to walk away.
Number Four: Borrowing the maximum amount the bank is willing to lend you
Just because the bank approved you $1 million, it doesn’t mean that you should borrow that amount.
Banks will always be more than happy to charge you more money than you should because they get more money.
And even though they work the numbers to ‘show you’ you can afford more, you know your situation. On paper, your disposable income might be higher than in real life. For example, there are numbers that aren’t on paper (or factored in by the mortgage broker). Like the $500 you give your parents every month or just how uncomfortable that monthly payment would make you feel.
My own mess up: Our banker kept telling us we could borrow $10,000 more because it was only a few dollars more each month on our payment. In the end, we stuck to our guns and borrowed $40,000 less than she was encouraging us to. And I am so glad we did.
Number Five: Negotiating against yourself
Sometimes we get so scared of what we think the sellers will think, or that we don’t want to offend the sellers that we negotiate against ourselves and give higher prices than we should.
We don’t think the seller will come down because of ____ fill in the blank reason so we don’t ask. Remember that the seller is in it to make money and sell the house. If you ‘offend’ them in the beginning and make an offer they ignore, then offer again at a higher price if you really want the house.
Trust me, if your price is close to, or what they are looking for they will take it even if you ‘offended’ than initially. In a hot market, this can carry some risk especially if properties are frequently going into multiple bids situations. I’m not telling you to lowball, but be fair and offer what you will work for you.
Number Six: Not considering the school district
Even if you don’t have kids yet, if you are buying a home in a neighborhood that is predominantly families, then you should consider the school district.
If you are planning on having kids, then eventually you will need the school system and you don’t want to find out that it’s unacceptable when you’re ready to enroll.
If you are thinking you might sell the house or rent it in a c couple years, then it’s also important to consider because your potential renters or buyers will care about it.
Of course, if you are retired, or buying your forever home and don’t (or won’t) need the district then nevermind 🙂
One caveat: School districts change over time. Sometimes they get better, sometimes they get worse. So even if you made a good choice when you bought the house, it might be different when you are ready to send your kiddo to school … so always be on the look out.
My own mess up: Luckily my husband and I ensured the school district for the house we wanted to buy was good, but we know stories of folks who bought homes only to realize that they will need to send their kids to private school because they didn’t realize the school district was so bad.
Don’t fall for it
There are so many areas of home buying that you could buy a hundred houses and never encounter the same issues. But as first time home buyers, these are the common ones that can turn an average expected purchase into a serious money pit you regret buying.
But now that you know what are some pitfalls to avoid. You can shop for a house with a little less fear than you did before.
You don’t have to be scared. You don’t have to be worried about your purchase bankrupting you.
You can buy a home with confidence knowing that you are aware and can mitigate these common expensive mistakes.