Top 10 Mistakes of First-Time Homebuyers

Post by Ken Grech, a top Simi Valley real estate agent. Search Simi Valley real estate listings. Buying a home may seem a daunting task, but a little preparation will ease the way.

1. Not knowing how much house you can afford.  Many new home buyers spend a lot of time researching home, comparing kitchen layouts and backyard square footage, but very little time researching their financing options. One of the first things buyers should do is talk to a qualified lender and get preapproved for a mortgage. Without first figuring out how much you can afford, you risk falling in love with one you can’t afford.

2. Assuming Foreclosures are Great Deals.  Just because the previous owner owned $450,000 on a house before the Bank took it over doesn’t mean it’s worth that much now. Values have slipped significantly, so you may not be getting the bargain you think with a foreclosure. Also, most homes owned by lenders or banks have been sitting vacant for months and may have been vandalized. That could require extensive renovation or repair. Weigh the costs of fixing up the property against the saving you’ll likely reap by buying a lower priced foreclosed home.

3. Letting your true feelings show.   No matter how much you’ve fallen in love with a house, don’t let the seller’s agent in on it. Otherwise, he will gain the upper hand in negotiations.

4. Failing to find a good buyer’s agent.   Landing a mortgage is tough these days. So buyers should rely heavily on knowledgeable agents to help them get their finances in order. After all, buyer’s agents have a fiduciary responsibility to the buyer exclusively and should be looking out for his best interests.

5. Underestimating the costs of owning a home.  Whether it’s a rusty pipe or a leaky roof, things go wrong and need to be fixed. Many home buyers don’t anticipate the additional costs for repair and maintenance, or for an increase in utility costs. Be prepared to set aside a small percentage (1% at most) of the home’s purchase price annually for repairs and upkeep.

6. Failing to budget for property taxes.  Property taxes, and the likelihood that they’ll climb over the course of your time in the house, should be factored into any home buying budget. To get an idea of how much you’ll be paying, call the local assessor’s office or talk to people in the neighborhood.

7. Assuming your first offer will get accepted.  As home prices get even more affordable, competition is bound to heat up. You can’t assume you’ll walk in there, make the offer and get it. Try not to get discouraged, if you lose out on the first, second or third offer on a home you make an offer on.

8. Skipping the inspection.  Before signing anything, hire a professional inspector. The seller isn’t likely to tell you there’s mold in the basement or the walls are poorly insulated.

9. Doing too much too fast.  Some buyers want to make the house their own right away. They overextend themselves on credit to do so, and assume that the improvement will pay for itself by increasing the home’s value. But that’s not always the case, especially in today’s market. Instead, buyers need to exhibit patience and make the changes over time.

10. Failing to include a contingency clause in the contract.  A mortgage contingency clause protects you if, say, you lose your job and the loan falls through or the appraisal prices come in over the purchase price. Should one of these events occur, the buyer gets back the money he used to secure the property (aka: good faith or earnest money deposit).  Without the clause, the buyer can lose that money and still be obligated to buy the house.

For more detailed information, please contact me or go onto my website: www.simiishome.com