Lauren
Buying your first home is an exciting time of your life, however there are some things to be aware of so you don’t get buyer’s remorse.
First time home buyers often get so much conflicting and different advice from their parents, friends, and family when it comes to buying your first home. Because of all the noise out there, I thought it would be valuable to share some first home buyer mistakes I have seen, so that you can avoid making these mistakes.
The first home buyer mistake I am going to mention is starting to seriously look for a place before you have been financially qualified. This one is so important. I fully encourage people to start looking around early, months early actually, however before long you will want to get pre-qualified, so you know what the maximum offer you can possibly put down is.
You really need to talk with a lender before you start seriously looking at properties, because you really don’t know what you can afford until then. You really are setting yourself up for disappointment if you think you can afford a $900,000 house in Perth, when in reality you can only afford a $450,000 home on the edge of the suburban area.
I know you’re excited to see houses and I know you have your checklist, however that is meaningless without financial qualification. So go out there and talk with your bank or lender.
Another first home buyer mistake is immediately assuming renting is wasting your money. There’s actually quite some sense in renting, and there are plenty of situations where people are much better off not buying right now. It’s very simple. Renting versus owning depends entirely on your own unique personal circumstances.
Before deciding to buy, try and figure out your ‘Why’. That is, why are you going to buy a property? You really must consider all the options before you decide if it’s right for you. It is very true that many people who are at retirement age have made significant money out of the equity in their home, and this makes up the largest portion of their wealth. The lesson here is that purchasing long-term is probably the best financial decision to make with the caveat that purchasing right now, this month, may not be the best plan.
Another first home buyer mistake is looking for the perfect home. Speaking of your checklist, you hopefully wrote it with a pencil and not a pen, because you might need to make adjustments on what you’re looking for. That four bedroom home with a two car garage and pool that is walkable to your favourite shops and restaurants, and within your budget likely does not exist. It only exists in your dreams.
If it does exist in real life, it’s more likely to be twice your budget, sadly. Think about what’s most important to you and prepare yourself that you’re not going to get everything. The goal is to find a home that meets 75% of your criteria and then it’s up to you to make up that last 25%.
Buying your first home is stressful enough without becoming a perfectionist. There’s something romantic and valuable in buying a home that fits most of your needs, and then over time, making changes, so it becomes yours, then just looking for the ultimate home immediately.
Another first home buyer mistake is underestimating your expenses. Things like initial costs, taxes, land rates and unexpected repairs eat up a lot more than you initially think they would, when you are all starry eyed and buying your first home. It seems to be a general rule of thumb to estimate around 1-3% of the home purchase price ends up being spent on maintenance repairs and major repair work. Yes, once you buy a place, the costs never seem to stop I am afraid.
My final first home buyer mistake to mention is jumping in, without taking your time to learn. Don’t ever let anyone make you feel like you have to decide and make an offer before you're ready. If you jump in on deals when you are feeling rushed, or that you don’t have all the knowledge or have a well considered plan, like a business strategy for the property yet, then I feel that it is inevitable that the outcome will not be what you were ideally hoping for.
Yes, you may lose a house because you’ve taken the time to think it over and by the time you’re ready the house is off the market. It’s easy to fall in love with a house, however there will be other houses. It’s ok to take your time, and miss a few deals.
There is a difference between feeling rushed and dragging your feet, though. If you consistently see that properties go under contract after the first weekend or in a short period of time, then that is a sign that the market is hot and you need to strike quickly. Please take your time to learn about the market and get an idea of how fast things are moving so that when you are ready to move forward, you are full bottle with knowledge.
