Avoid These 9 First-Time Home-Buyer Mistakes

When you decide it’s time to buy your first home, there’s a lot on the line. Are you ready for the responsibility? Will you be okay financially? Should you look at houses or condos? What if you end up not liking the house you choose? These and other concerns can make what should be an exciting time in life a source of worry and stress.

The more you know about homeownership and how to shop for a house, the less likely you are to make common first-time homebuyer mistakes. Follow our guidelines and you’ll find it easier to make confident decisions and avoid homebuyer’s remorse. 

Spending more than you can afford can lead to various outcomes, none of which are pleasant.  There might not be enough money left after the purchase to make repairs or buy furnishings. Worse, the costs of home ownership, such as utilities, taxes, and routine maintenance, can create ongoing strain on finances. Paying too much for a house might mean having to skip vacations or a new car for the next few years. Or much worse, you could risk foreclosure if you can’t afford your mortgage payments. 

Rather than an isolated mistake, “going over budget” can include a series of missteps. To avoid first-time homebuyer mistakes, you should:

• Have a reliable, consistent income.
• Work to reduce debt and improve your credit score.
• Save for a down payment.
• Learn how much you can spend and stick to a realistic price range.
• Calculate monthly expenses (and how your budget will handle them).
• Budget for repairs and renovations if needed.
• Be aware of “hidden” costs like closing costs, HOA fees, taxes, and insurance. 

It can be a waste of time to head out to open houses before you know your price range. You could be looking at $400,000 homes when you should be focused on those in the $200,000 range. Instead, shop for a lender first. Banks and mortgage lenders (Nations Lending is the in-house lender for Berkshire Hathaway HomeServices Select Properties) will help you determine just how much house you can afford and lock in an interest rate. Be sure to explore government-backed loan programs, too. The VA and USDA give loans, and many states offer assistance for first-time home buyers. 

How long you plan to stay in a home matters more than you might realize. Because of the substantial upfront costs of buying, it will take a while to break even compared to paying rent. Real estate advice often refers to the 5-Year Rule, meaning that moving within the first five years could result in losing money. Because of the current state of the real estate market, many experts have extended the recommendation to at least 10 years.

It’s worth noting that the housing market varies in different parts of the country. Here in the Midwest, homes are more affordable, so the breakeven point can be shorter than in other regions. An analysis in 2015, for example, listed 3.6 years as the breakeven point for St. Louis. The market has changed a lot since then, but a number of Rent vs. Buy calculators are available online for a better idea of the current timeframe.

First-time homebuyers can feel a sense of urgency when they find a house they love. They’re tempted to waive a home inspection to get a leg up on the competition, especially in a hot market. 

A house may look great, but there could be serious (and expensive) problems lurking beneath the surface. With an inspection, these issues are revealed, so you’ll know exactly what you’re getting into. It’s then up to you to decide if the pros outweigh the cons and if there’s room in the budget for what needs fixing.

If you’ve ever watched a house-hunting TV show, you’ve likely seen buyers who insist on a specific feature. They may hate carpet, popcorn ceilings, or oak cabinets. First-time buyers need to be realistic. Unless you are building a home, there are bound to be a few things that don’t match your personal style. But many things can be easily fixed at a reasonable cost. By keeping an open mind, you will have a wider array of homes to choose from.

On the flip side of Mistake #5, it’s easy to be wowed by certain aspects of a house to the point of ignoring things you shouldn’t. You may also overlook things you thought you wanted (or didn’t want): Will you be okay with a different neighborhood than the one you had your heart set on? Can you really live with two bedrooms instead of three? Are you ready for the inconvenience of a complete remodel to get the kitchen you want? 

A house that doesn’t check every box might still end up being a great home. But you need to go in with your eyes—and your mind—wide open. Understand your needs, wants, and deal breakers, then consider what can and can’t be changed, and what the home’s flaws will cost you in time, trouble, and money. 

Wanting to roll up your sleeves to work on your first home is admirable. Is it realistic? Do you have the skills, tools, and time to make repairs, replace appliances, or take on a major renovation on your own? If you’re a DIY wizard, that’s great! Just know that projects often take longer and cost more than expected, even for experienced craftsmen. What will it mean if you ultimately need to bring in a professional?

And consider the things that an inspection might uncover. If you’re faced with an electrical issue, a plumbing problem, or something big like a leaky foundation, it may be beyond the scope of your expertise. A professional will cost more, but they’re sometimes necessary, especially when home safety and keeping things up to code are concerned.

A damaged roof, old HVAC system, worn carpet, or a basement full of junk might be taken care of before the house goes on the market. But if not, don’t be afraid to use it to negotiate. A seller might accept a lower offer if you’re willing to take the house as-is. Or, they may be willing to fix the problem in exchange for the asking price.

With the popularity of looking for homes online on sites like Zillow, some buyers think they can handle the transaction themselves. Of all the potential first-time homebuyer mistakes, not working with a real estate agent is probably the biggest.

An experienced agent will get to know you and be able to find available houses that meet your requirements. They can also uncover those diamonds-in-the-rough that you’d never find on your own. 

Because you’re new at this, you’ll benefit from their knowledge of a home’s value and what it will take to make the changes that you want to make. And they can do the negotiating for you, working with the seller’s agent to get you the best deal possible.

First-time homebuyer mistakes don’t have to happen, as long as you’re prepared. Know what you want and be observant, but keep an open mind and stay flexible, too. Most importantly, find an experienced real estate agent to help you, starting with your house hunt and through the homebuying process to closing.  

Are you ready to find your first home? Contact Berkshire Hathaway HomeServices Select Properties. Your dream home is waiting!