How to Avoid 10 Common Buyer Mistakes
First-time homebuyers face a steep learning curve. There’s much to know, much to learn, and a great potential for mistakes with potentially costly consequences. How can you avoid making these mistakes? Here are some issues to consider.
1) Rushing into the transaction
Buyers looking for homes in extremely tight markets may feel pressured to make an immediate offer and might even have to in order not to lose the home that they want. Instead, it makes more sense to become familiar with the local real estate market and know exactly what your money will buy before you start home-hunting in earnest.
2) Not asking enough questions
First-time home buyers, by definition, simply don’t have home-buying experience. It may be uncomfortable to ask questions, but ask anyway. Your real estate agent can’t answer unasked queries.
3) Searching forever for the “perfect” house or condo
Many buyers run themselves and their real estate agents ragged as they repeatedly dismiss homes that meet most (but not all) of their criteria. A buyer who turns down a house that meets almost all of their needs may lose the best available property, as well as good financing if market conditions change.
4) View a variety of properties
First-time home buyers should always view different homes or condos before making an offer. That way you can better understand the marketplace and know more about local prices. Real estate agents will often recommend that buyers, and particularly first-time buyers, avoid jumping on the first property they see. But buyers should also avoid dragging their feet when they find a house they love.
5) Avoid buying too much house
Many properties can seduce buyers into becoming “house poor,” spending so much for a home that they must forego vacations, dinners out and other forms of entertainment. Pre-approval through a mortgage lender can help determine a reasonable target price range and also identify the mortgage programs that can work best for you. Once you have that budget, stick to it.
6) Waiting to save enough 25% for a down payment
While that is an admirable goal, it might be many years in the future for most first-time buyers. Instead, especially in real estate markets with rising values like Toronto, buy now with little down. Consider using your RRSP money towards a down payment, or asking your parents for a loan. After all, by the time you have saved enough for that big down payment, the home that you want to buy might have gone up more than the amount that you saved.
7) Be realistic
We know it can be tough to ignore a lovely home’s curb appeal, but what about practical matters? Is there enough space? Does it have parking? Good construction? Low maintenance? How far to work? It may seem like boring details, but they are just as important.
8) Not having your own representation
The odds are almost 100% that the property’s seller has a real estate agent on their side. What about professional help for you? Your own real estate buyer’s agent can give you equality at the bargaining table. And there is no charge for their services either!
9) Skipping the home inspection
A professional home inspection is simply a must when you are buying a resale home. For new homes or any sort of condo, we generally don’t recommend a home inspection as their use is more limited. Speak with different home inspectors before you start your search so you can get an idea of how they work, what they cost and what they recommend.
10) Don’t under-estimate closing costs
There is more to buying a home than the deposit and down payment. Your real estate agent and mortgage lender can help you to determine your potential closing costs. Everything from land transfer tax to legal fees, this is information you need to avoid unwanted financial surprises.
Is there any more that you can do? Of course these is. Understand that buying a home is a complex process, so prepare yourself before you enter the real estate market, speak to those who have bought recently and keep asking questions.
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