Everyone can learn from others’ mistakes, below are some things to understand
Interest rates are higher than we’re used to but don’t worry too much, we might be at the start of a 7-year cycle where prices are much higher by the end of the decade. I think prices might even crawl up a little more in 2023. Like always, the sooner you buy the better because waiting for interest rates to get back to even 2.7%, could take a number of years. And buyers who wait will be buying at higher prices.
Buying your home can be an exhilarating and rewarding experience for many, there are few things as bad as feeling buyer’s remorse after making a purchase. As such, if you’re a first-time homebuyer, you owe it to yourself to learn from others’ mistakes so that your experience goes as smoothly and as financially rewarding as possible.
From failing to plan ahead to harboring unrealistic expectations about the purchasing process, new homebuyers need to watch out for a lot. “There are plenty of mistakes first-time buyers make, and may vary depending on different situations and markets.”
Not planning ahead
Buying your first property takes a lot more effort than simply opening up Realtor.ca in your web browser and clicking on your dream house. In fact, many prospective homeowners lack a clear understanding of their financial situation or the practical considerations that go into home ownership. This can lead to them overestimating what type of residence or neighborhood they can afford, which will complicate things when it’s time to choose their real estate agent.
Anyone planning to buy a home should start planning at least a year ahead of time. This means checking your credit, engaging with your mortgage person to see what you can do to prepare, and even checking out neighborhoods that interest you. Most people start their preparation by looking at properties listed for sale, and that’s good, but it’s easy to get ahead of yourself. When the time comes to buy, you will save yourself a ton of stress and money knowing that your finances are in line.
If you’re unsure of the best way to get started, make finding a good Realtor your first step.
Not shopping around for savings
When shopping for a car, those who pay the sticker price the first place they look are likely to pay more than someone who shops around. Naturally, buying a home can be a similar experience, only with wider margins and loftier price tags. As such, you may be surprised to learn how little shopping around most buyers do before a real estate transaction. From the Realtor choose to work with to lenders, lawyers, insurance, and inspectors, most first-time homebuyers go with the first quote that they get. As a first-time buyer, take your time to make sure you’re comfortable and that the professional you’re going to work with is giving you the best value.
Luckily for those who are imagining a grueling, time-consuming process, shopping around for quotes is fairly quick and straightforward. Especially if your first hire is an experienced Realtor. A quality Realtor will have a list of professionals you can interview for the services you’ll need. Don’t get caught paying more than you should and getting less. You can save thousands of dollars with just a little research.
Stretching their budget
Unfortunately, not everyone can afford the most beautiful home in the very best neighborhood that checks off all the boxes on their wish list. Most people’s home-buying decisions are based on a budget determined by their personal or family finances. Unfortunately, first-time homebuyers often use their heart rather than their head, pushing their budget past where they are financially comfortable.
There are also a lot of expenses that go into buying a property that new homeowners rarely think about when planning their purchase. This can lead to major mistakes and a lot of avoidable stress when it’s time to pay up. Get pre-approved ahead of time and stick well within that budget. On top of that, plan a little cushion in your savings for closing costs, thorough inspections, and unexpected repairs after closing on top of the down payment.
Not using a realtor
It’s nice to save money when buying or selling a home but there is one expense you don’t want to neglect. I’ve heard horror stories and some may be tempted to forgo using a real estate agent buying or selling but it can be an expensive mistake. Sellers feel that they can put the sale together themselves and some even try to encourage potential buyers to avoid professional representation but the risk isn’t worth it in the end.
Foregoing the professionals can complicate your homebuying experience in ways beyond the financial, too. This is a mistake for any homebuyer, as there are myriad steps and parties involved in every real estate transaction. Even if you’ve bought or sold a few properties before, there are mistakes that sneak into different real estate transactions easily.
However, you can still save money by shopping for quotes when hiring a Realtor too. Licensing guidelines require every Realtor to offer the same basic services but a Realtor with more experience is an asset. Some experienced Realtors offer more affordable commission options too. Don’t fall for the old guilt trip that Realtors use to protect their commission. A lot of Realtors will say, “don’t use a Realtor® offering lower commission because you get what you pay for.” That may be the case sometimes but it’s rare. There are very good Realtors providing exceptional service and top-notch services at a lower cost.
The real estate industry has evolved over the last 2 decades and it’s more streamlined now. With a lot of competition, there are a number of real estate brokerages offering better value. Full service at full price can be a value but full service at a more affordable price is a better value.
Having unrealistic expectations
It’s amazing how quickly hidden expenses can start popping up after you’ve purchased your first property. So if you’re expecting to save a lot of money as a homeowner compared to renting, you might find the saving not as substantial as first imagined. Many first-time homebuyers don’t set [themselves] up with proper expectations when it comes to owning a home. Anyone planning to buy their own home should consider all the costs of home ownership, meaning everything outside your mortgage.
From property taxes to the cost of maintenance, the number of new expenses on your plate will vary based on the type and condition of the home you buy. Nevertheless, there are always some costs you should keep in mind. Budget for utilities, repairing any issues found during your home inspection, lawn care, seasonal maintenance, improvements, or any other things you can see yourself needing. Like you would set aside some money for bills, start a little home maintenance saving account each month. Putting even $100 aside each month in a home maintenance account will make a surprise repair less stressful.