I have nothing against people owning homes, even though I’m regularly down on the retail real estate industry and the debt associated with mortgages. It would be great if we had better housing options and could choose from a wider array of building materials — but the market is what it is and, sometimes, buying a home is the right thing to do.
For those times when buying a home is the right course, the challenge becomes making sure you’re really getting good value for your money. After spending years in the real estate industry, these are the mistakes I would scrupulously avoid.
Buying More House Than You Can Afford
This is a killer — and telling your real estate agent how much you qualify for is almost a guarantee of seeing a steady parade of homes at that price range, many listed by your own agent. Isn’t that an amazing coincidence? Not really. If you live in a larger urban area see if there’s a Redfin agency in that town. Redfin agents get bonuses based on positive customer reviews, and tend to be lower pressure than more traditional offices.
Not Investigating the Neighborhood Adequately
How many successful marriages are there among people who got to know one another for 20 minutes or less before getting hitched? One of the painful aspects of the real estate market is people will buy a home in a neighborhood they’ve visited for less than an hour on a Sunday morning. In many ways the neighborhood is more important than the house itself — and certainly more illustrative. You need to know if the streets flood after a rain (a real problem here in Florida), and what the noise level is like on weekend nights, Check for basketball hoops, and whether there are any annexations or assessments pending. You need to understand the neighborhood traffic patterns. We once bought a house in a quiet suburban neighborhood, unaware that drivers used that street as a detour when traffic got heavy on the main road. Cars would fly past that house morning and evening. We turned it into a rental.
Not Asking to Pay Your Own Taxes and Insurance
If you have excellent credit and well established payment history, you should ask to pay your own taxes and insurance, instead of loaning that money to the mortgage servicing company. Even if they say no, at least you asked.
Skipping the Final Walk Through
I’m somewhat skeptical of the value of home inspections, and started doing my own. My final walk-through involved coveralls and a flashlight. Another item you want before you get to the final walk-through is the seller’s disclosure sheet. If the seller says there were no water leaks, but you find water-stained wood in the attic or closets, that’s a problem.
Also spend some time talking to the neighbors. If one house in the neighborhood has a problem with bad siding or Chinese drywall, the chances are good several more will as well, as neighborhoods all tend to be built in the same time frame. Also find out where your utilities come from. If your utilities come from a different town than the house is in, sometimes that means there’s an annexation in your future.
Getting Emotionally Attached
Buying a home is a business deal — and the more you treat it like business, the happier you’ll be with the home you end up buying. The biggest mistake I see home buyers make is getting emotionally attached to a property, and overlooking seemingly minor issues that become major irritants later.
Loading Up on Contingencies
The more contingencies in your offer, the more likely you are to lose the deal to another buyer, especially in today’s market. Do your own research, check out neighborhoods thoroughly, and look the house over carefully, always checking the roof, siding, and foundation with your own eyes, even if you also have a professional home inspection. When you do find that pearl of great price, then go for it. Don’t try to give yourself too many outs, because then you’ll just start second-guessing yourself. One contingency that should remain is an out if your funding falls through.
Just remember this is business, and you’re taking on a very large commitment. It’s worth being thorough and doing a careful investigation. Once you find that perfect property, stop messing around and get down to business. It’s a simple formula that will serve you well on your next home purchase.