Towson real estate attorney J. Neil Lanzi gives advice to first-time homebuyers on what common mistakes to avoid when buying a house.
Owning a home is the epitome of the American Dream. However, the home buying process isn’t always the easiest, and there are plenty of potential missteps along the way. Often times, the excitement of buying a house causes people to overlook the fine print and hidden details associated with making such a large purchase. Here are the 10 most common rookie-homebuying mistakes you should avoid:
1. Not knowing how much house you can afford.
How many rooms are there? What’s the kitchen layout? How much square footage does the backyard have? Although all valid, these questions put the cart before the horse. Before beginning the looking process, research your financing options by going to a qualified lender to get preapproved for a mortgage. It is important to determine how much house you can afford or you may risk falling in love with one you can’t afford. Sellers put a lot of work into the selling process and want to finish with as little hassle as possible. Therefore, they tend to prefer pre-qualified or pre-approved applicants when sifting through bids.
2. Assuming foreclosures are great deals.
Housing values are slipping; so you may not be getting the bargain you think you’re getting. The amount of money owed on the house may not reflect it’s true worth. Also, many foreclosed homes have been vacant for an extended period of time and may be in need of renovation or repairs. Be sure to weigh the cost of fixing the property against the savings of buying a cheaper home.
3. Letting your true feelings show.
Buying a home can become a very emotional purchase. It’s exciting, fun, nerve-racking, tedious, and sometimes disappointing. Since it is also likely one of the biggest purchases you will ever make, it is important to keep a level head throughout the process. Once a seller sees your excitement, they automatically gain the upper hand in negotiations.
4. Not considering the home resale value.
Life is full of unexpected changes, you may need to move one day. It is wise to consider how others will perceive the house if it is put on the market again. Be sure to consider factors that may be important to others and not just yourself, such as school district or proximity to grocery stores or public transportation.
5. Underestimating the cost of owning a home.
Along with the cost of buying a home comes something that many homebuyers don’t anticipate; the cost of maintaining a home. Consider the age and condition of the potential home and set aside a budget for annual upkeep.
6. Failing to budget for property taxes.
Property taxes are inevitable, and will most likely increase over time. Check with the local assessor’s office and your potential neighbors to get an idea of how much you might be paying.
7. Assuming your first offer will get accepted.
Do not get discouraged if you lose out on the first couple of offers, the housing market is very competitive. This is another reason to keep a level head throughout the home buying process.
8. Skipping the inspection.
Sellers aren’t likely to tell you about the less-than-perfect parts of the house. As part of the contract, include a home inspection addendum. Hire third-party inspectors to perform a complete home inspection, including, but not limited to, structural, foundation, electric, plumbing, roof, water, well (if not on public water, quality and quantity), septic (if not on public sewer), radon, water penetration, roof and termite. A proper home inspection clause in the contract will protect you as the Buyer in the event of problems with the new house. Don’t use inspectors recommended by the seller.
9. Jumping the gun.
Many people want to immediately personalize their house with new paint, carpet, fixtures, counters, or landscaping. To do so, they often end up overextending themselves on credit. Buyers should be patient and make changes over time as they can afford them.
10. Failing to include a contingency clause in the contract.
A mortgage financing contingency clause protects you if something comes up after the contract is signed which prevents the sale from going through. These events can range from losing your job to the appraisal price coming in under the purchase price. With a proper financing contingency clause, the buyer should be able to get the security deposit back. Without the clause, the Buyer may either lose the deposit or still be obligated to buy the house.