Buying a house is a huge investment – perhaps the biggest you’ll ever make. While it’s certainly an exciting opportunity, the prospect of spending a huge chunk of your savings on real estate and dealing head-on with all the big decisions that come with it can be quite scary, especially for first-time home buyers.
More often than not, first-time buyers let their emotions overrule their judgment. They either get too swept up with shopping for their new living space or are unable to compromise even a little on what they are looking for. Of course, it’s understandable that you would want your future home to look a certain way and offer certain facilities. However, your inability to be flexible can make this entire process quite harrowing.
What’s worse is that it may even leave you with buyer’s remorse, rendering you unable to enjoy your new space.
Whether it’s your first rodeo or you have some prior experience with real estate investment, you can always use some home buying strategies to make things easier for yourself. Here are the five critical mistakes most first-time home buyers make and how to steer clear of them.
Common Mistakes First-Time Home Buyers Make
Take a look at some costly mistakes first-time home buyers tend to make and tips on what not to do before buying a home.
1. Not Knowing What They Can Afford
This is the first time home buying 101.
If you are buying a home for the first time, you need to make sure you don’t invest in something that’s too expensive for you. According to most industry experts, this is the biggest mistake most young people make when purchasing their first property.
Setting a budget is one of the primary steps to buying a house for the first time. If you are planning to apply for a loan, you need to confirm the amount the bank will finally lend you before beginning your house-hunt.
Meanwhile, if you are buying a home on instalments, you need to figure out what you can afford on a monthly basis. In order to do that, you need to be smart about your spending habits and maintain a household budget. You can start with noting down your total income and then subtracting all of your monthly expenses – including utility bills, transportation, taxes, insurance, credit card payments, and grocery to name a few. The remaining amount would be your net income.
This would give you a clear picture of how much you can afford to spend each month if you are buying a home. As a first-time home buyer, you need to look for a house within this price range. Because if you look at more expensive options, you’ll inevitably end up comparing what you can’t have with what you can and the former is definitely not going to measure up with the latter, leading to you being dissatisfied with your final purchase.
Moreover, as far as starter homes are concerned, a lot of investors prefer buying affordable homes with minor cosmetic flaws that they can sell for a relatively higher price after adding some value to it.
2. Spending All of Their Savings
There’s much more to buying a house than the initial down payment and the monthly instalments. Most first-time home buyers completely disregard additional costs while buying a house and basically spend all of their savings on acquiring the property. That’s a huge mistake.
The most important house buying advice anyone can give you is to not splurge. Buying a house is not a one-time expense. As a homeowner, you will have to spend a significant sum on repairs and renovation work around the house, buying new furniture and essentially customizing your new home according to your needs. If you are applying for a loan, you would also have to pay the bank.
Therefore, make sure to not go over budget and blow up all your savings. Even if you like the very first house you visit, you should still look around for a little bit longer. Of course, house hunting can be exhausting and overwhelming, but you need to set some money aside to deal with the inevitable expenses that are bound to surface later.
Depending on the area and the residential society where you buy your house, you might also have to pay some additional charges. If you choose to buy an apartment, you will most likely be subjected to a union fee as well.
People buying a house for the first time must not deplete their retirement or emergency funds to meet the down payment requirements. If you can’t afford a house that fits your basic needs right now, start planning ahead and postpone the purchase until you can pay the required amount without breaking the bank. Some of these tips to save money while living in Pakistan might help you out.
3. Overlooking House Inspection
This is exactly what not to do before buying a house for the first time. No buyer should ever put down any payment or sign a legally binding contract without carrying out an in-depth house inspection.
Obviously, most sellers try to rush through this step while finalizing the deal. However, if you want to avoid any future problems (and expenses), you must schedule an appointment with the seller and your real estate agent to visit the property you are interested in. It’s always better to check out things for yourself than relying on others’ information.
One of the most important home buying tips is to check the foundations of the property. Huge cracks in the walls or ceilings are huge indicators of weak foundation. As a first-time home buyer you also need to keep in mind that ugly wallpaper and chipped paint can be fixed, but adding another room or fixing water damage would severely affect your budget. Therefore, make sure to inspect the plumbing and electrical wiring, check if the house is properly ventilated and ensure it is located in a safe neighbourhood with a low crime rate.
You can also speak to your future neighbours and ask them questions about the availability of certain utilities and the traffic situation in the area. Moreover, it’s always better to visit the property more than once during different times of the day to get a better idea of the overall environment.
4. Being Too Picky
One of the best tips for buying your first home is to be a little flexible. Everyone wants their future house to look a certain way. But unfortunately, most first-time home buyers have to compromise on quite a few things simply because they can’t afford what they want.
Of course, this doesn’t mean you should settle for a home that doesn’t suit your needs. For instance, if you are a family of four, you might not be comfortable living in a two-bedroom unit. However, things like outdated décor are something you can upgrade with time. If you keep looking for your dream house that miraculously fits your budget, you would probably spend several more months living in your current home and paying rent.
So, if you’re buying a house for the first time, you need to make sure it checks all of the major boxes. You need to ask yourself some questions:
- Is the house spacious enough for all the members in your family?
- Is there a parking space for your car?
- Are there any bus stops nearby?
- Is the property close to your children’s school?
Do not fixate over things that are not in your budget, as this is the most common mistake first-time home buyers make.
You can always change the ugly wallpaper in your living room and replace the old-fashioned windows in the drawing room once you’ve settled in. In fact, as suggested above, first-time home buyers might even save some money by investing in a house that needs some minor upgrades and then flipping it later for a higher price.
5. Not Choosing a Real Estate Agent
What to do when buying a house for the first time: get a real estate agent.
Most sellers use minor upgrades to trick inexperienced buyers into paying a higher price. However, having a good real estate agent by your side would help you out massively. Not only can they locate properties that fit your requirements but also help you negotiate and close the deal.
A real estate agent would also possess knowledge about the entire process, including the required paperwork. They might also notice things that you won’t during house inspections.
Since buying a home is one of the biggest milestones in a person’s life, first-time home buyers are bound to be a little emotional. In this scenario, having an agent will keep you grounded. However, only contact an agent once you have sorted out your financial details, home loan payment and most importantly, have finalized your price range for buying a house.
If you’re looking to buy a house for the first time, make sure to check out the properties available for sale on Zameen.com.