7 Foolish Mistakes That People Make When House Hunting
If you’re thinking about purchasing your first home, it’s tempting to dive right in and start looking at houses. But before you dedicate your Saturday to visiting every open house in the city, you need to know what you’re looking for. Otherwise, the process of shopping for a home is likely to be long and frustrating. Ill-prepared and uninformed buyers will find it more difficult to discover the home that’s right for them, much less get to the stage where they’re ready to make an offer on a property.
Here are seven big mistakes first-time house hunters often make when shopping for their dream home. Avoid these errors and you should find it easier to find the home that’s right for you.
1. Not getting pre-approved for a mortgage
Shopping for a home before you know how much you’ll be able to borrow is setting yourself up for disappointment. Before you head to a single open house, you should get a mortgage pre-approval, so you know how much your lender will actually let you borrow. Otherwise, you run the risk of falling in love with a home you can’t afford.
“You get preapproved, and then you find a home,” Steve Anderson, a broker and owner at Re/Max Benchmark Realty in Las Vegas, told Bankrate. “That way you’ll make a financial decision versus an emotional decision.”
2. Confusing a pre-qualification with a pre-approval
Mortgage pre-approval and pre-qualification sound like pretty much the same thing. But there’s a crucial difference between the two, and first-time buyers who don’t understand the distinction can find themselves frustrated later on.
A pre-qualification is the first step in the mortgage application process. It involves providing some basic financial information to your lender, who will then give you a rough idea of what kind of mortgage you might qualify for. Pre-approval is a more rigorous process where your lender looks closely at your financials and then tells you exactly how much you’ll be able to borrow and at what cost.
Rely on a pre-qualification when shopping for your home rather than a pre-approval and you could be in for a nasty shock if you aren’t actually approved for the mortgage you expect.
3. Getting distracted by the staging
Savvy sellers do all they can to make their home appealing to potential buyers. At a minimum that means making sure a property clean and clutter-free. But some sellers take it to the next level, adding details, from attractive drapes to a dining table with stylish place settings, that are designed to appeal to your gut, rather than your head. Sometimes, stagers will even use smaller furniture to make a room look bigger than it really is cover up floor damage with rugs or furniture, according to a report by the National Association of Exclusive Buyer’s Agents (NAEBA).
Good home staging can make it easier for you to envision yourself in a home. But make sure you’re falling in love with the house itself, and not the surface details added by the stager.
“The point of staging is to draw attention to the decorating and away from the actual structure,” said one agent quoted in the NAEBA report. “I’ve seen many buyers walk into a staged house and say ‘I love this’ and then get angry when the [agent] starts pointing out those defects that the staging has hidden.”
4. Not figuring out how much you can really afford
The amount you’re approved to borrow and the amount you can afford to spend on a house aren’t always one and the same. Your bank may be offering to lend you $400,000, but they aren’t thinking about your other financial goals, like saving for retirement or putting away cash for your kid’s college fund. Take on a huge mortgage, and you could find yourself financially stretched.
Plus, there’s the fact that home ownership comes with additional expenses that renting usually does not. These can include everything from higher utility bills to increased landscaping costs, as well as needing to have cash on hand for unexpected repairs. Before you even start looking at houses, you need to have a clear idea of what you can really afford so that you don’t get in over your head.
5. Fixating on just one neighborhood
Location is everything when it comes to real estate. But if you’re only interested in buying a home in one or two select neighborhoods, you could find your search more difficult. You’ll probably have fewer homes to choose from, especially if your budget is tight and the area is attractive to a lot of other buyers.
A better approach might be to focus on what kind of neighborhood or community you want to live in, and then looking for homes in areas that fit your criteria. That might mean looking at homes in neighborhoods you’re less familiar with but that still fit your needs, which could make it easier to find your dream property.
“Brainstorm some of the things that are important to you,” realtor Naomi Hattaway told Trulia. “Do you want to live near a store that carries international foods? Drive around the neighborhoods closest to those stores.” While you don’t want to overlook factors like safety or good schools, a more open-minded approach could lead to a world of unexpected opportunities.
6. Focusing on cosmetic issues
Picky buyers may turn up their noses at less attractive homes, which may cause them to overlook a diamond in the rough. So-called problems you should ignore when house-hunting, according to home and lifestyle website Apartment Therapy, include an ugly paint color (either on the exterior or interior of the home), dated furniture or style (unless you’re buying the home furnished, you’ll be decorating it to your own taste), and even certain easily altered architectural details, like a lack of crown moldings.
While minor cosmetic issues shouldn’t cause you to automatically say no to a home, be wary if superficial problems are also paired with signs of neglect, like a lawn that hasn’t been cared for, unusual odors, or mold.
7. Thinking every problem is an easy fix
Watch an episode or two of “House Hunters” and you may get the idea that even the most dilapidated or dated property can be rehabbed into your dream home. But before you start mentally tearing down walls or rearranging the kitchen layout, consider that serious problems with a home’s flow or design could be a red flag, as well as a potential money pit.
Removing walls to create an open layout can be an expensive proposition. Taking out a non-load-bearing wall may cost just a few thousand dollars, according to home remodeling and design website Houzz, but tearing out a load-bearing wall in a two-story home may cost up to $30,000. Likewise, moving electrical and plumbing in your kitchen can cost far more than simply upgrading to new appliances and counter tops. If you envision making big changes to a home, talk to a contractor about how much such work will cost before you agree to purchase the house.