The Worst Homebuying Advice I Ever Received

A home is one of the most expensive purchases you’ll make during your lifetime, so it’s natural to be somewhat nervous and little unsure about the process. You might talk to friends and family about their experiences. You’ll likely get lots of advice even if you don’t ask. Sometimes the advice will be helpful, but other times it could steer you in the wrong direction.

It’s safe to say those who followed unhelpful advice ended up having some major regrets. A recent NerdWallet homeownership survey found nearly 49% of homeowners said they would do something differently if they were to go through the homebuying process again. Another 42% said they found the homebuying process to be quite stressful.

The Cheat Sheet asked a few people to tell us about the worst homebuying advice they’ve ever received. Here’s what they had to say.

Worst advice: Don’t buy. Real estate will crash soon

surprised boy on a computer

Should you really wait to invest in real estate? | iStock.com/BrianAJackson

I took the advice not to purchase real estate. I did not buy, and prices kept going up and up.

Why this is bad advice

I would encourage homebuyers to buy as soon as possible. He who bought real estate never lost. The value of your money is going down every day due to inflation. If you wait around for real estate to crash, remember your dollar is getting weaker and weaker while you wait. So even if real estate prices go down slightly, during the time you waited the value of your money goes down, too, so there’s no point in waiting.

Jesse Harrison, founder, Zeus Legal Funding

Worst advice: I’m your mother (or father). Listen to me

mother and daughter on a laptop

Your parents don’t always know best. | iStock.com/bowdenimages

The worst advice I personally received was when my parent, who was assisting me with my first home purchase, kept telling me to low-ball offers. And I was losing homes I really loved, left and right. We were clearly in a sellers’ market, and I knew this as I had a real estate background.

Why this is bad advice

Out of respect of this parent, I kept quiet. I lost a home that was on 3 acres that I loved. It still stings. While real estate is a bit of a gamble with pricing, if you want a home, don’t let a few thousand dollars stand between you and the dream.

Denise (Deni) Supplee, property management specialist, real estate investment educator, operations director of SparkRental, and co-founder of SnapLandlord

Worst advice: Don’t use a buyer’s agent

Couple meeting with real estate agent

A buyer’s agent could make your transition to homeownership smoother. | iStock.com/gpointstudio

Some people will advise homebuyers not to use a buyer’s agent. They reason that the seller will save on the commission, and you’ll be able to get a lower price.

Why this is bad advice

The commission is negotiated by the seller and the listing agent before the buyer ever enters the picture. The seller has already agreed to pay the listing agent a specified commission — hypothetically (because it’s all negotiable) 6%. The seller will pay that whether the listing agent also finds the buyer or whether the buyer is represented by his or her own agent. (Agents love it when the buyer is unrepresented — they get the entire commission, rather than having to split it with a buyer’s agent.) So, there’s no savings to the seller and thus no savings to pass along to the unrepresented buyer.

Buyer’s agents can (and do) provide a lot of value to the buyer. He/she can run comps to determine the real value of the house. He/she can negotiate on behalf of the buyer and is likely a better real estate negotiator than the buyer. A buyer’s agent has a fiduciary duty to the buyer; a listing agent does not. Approaching a listing agent without representation deprives a buyer of all these tools and protections.

Don Tepper, managing partner, Solutions 3D LLC

Worst advice: Buy as much house as you can afford

human palms on all sides of a cut out house diagram

Buy a house that fits your lifestyle and budget. | iStock.com/danr13

The worst advice is also the most common, which makes it, in aggregate, the most impactful. Many people tell homebuyers to make their purchase based on how much house they can afford.

Why this is bad advice

The underlying assumption is we should allocate our spending on housing up to some limit determined by someone else based on what they thought was appropriate. Instead, I think people should ask, “What house works for your lifestyle and situation?”

I didn’t follow that advice. Instead, I bought a house that cost half of what I could afford. As a result, I’m on track to pay off my mortgage in under seven years and hit my retirement net worth target in my 30s. Advice I would give to buyers: If you buy too soon, you’re trying to shoehorn life’s uncertainty into a confined house cost and size.

My advice is to solve for the following first: C+M+K=House

  • C=Career. Do you see yourself in this job or field long term? Is the pay predictable? Do you have to move cities to be promoted at your firm?
  • M=Marriage. That bachelor pad might not work for a couple. Or your future spouse might have a lot of school or credit card debt that needs to be paid off first.
  • K=Kids. You might have triplets and need more rooms. Or you might not have kids at all but have three rooms you don’t need.

Each of these factors can instantly change your life equation. If you purchase before knowing at least a couple of the variables, then it’s like ordering pizzas for a party before you know how many people are showing up. If you wouldn’t do that for a party, why do it for the most expensive thing you’re probably ever going to buy?

Jay Tea, financial blogger

Worst advice: Real estate values will always increase if you renovate a home

Worker shows house design plans

Not all home renovations are profitable. | iStock.com/ALotOfPeople

I constantly hear clients recite advice their friends and family — who aren’t in the business — have drilled into their psyche. I am educating buyers on the real estate market more than I am selling a home. The No. 1 myth I hear is that real estate values will always increase if you “fix up” or renovate a home. This is not true.

Why this is bad advice

You have no idea what the market will look like when you sell. Interest rates can rise, which will decrease buyer demand and lower buyer’s borrowing potential — perhaps forcing certain buyers in your market to only seek out fixer-uppers because they have cash but no borrowing power, pushing your premium renovation out of their budget. Or the demand for houses might be so great that the fixer-uppers sell at the same price as the renovated homes due to low inventory. There’s also no guarantee that your future buyer shares your taste in style.

In addition, zoning changes, school ratings (which are static), retail, and myriad other factors change buyer’s demand for neighborhoods. Trends are transient. Your neighborhood might have been hot when you purchased your home but perhaps not when you go to sell. Perhaps the municipality approved new development that changed the personality of a neighborhood and now big box stores and chain restaurants have dissuaded buyers looking for a quaint village. It doesn’t matter what your new kitchen looks like if the neighborhood is on a down trend.

My advice:

  • Set a renovation budget, and get a good inspector to test the home’s systems and any deferred maintenance. Will what is required behind the walls eat up your entire budget? If so, you won’t even get to update those bathrooms. Make sure not to exceed your budget.
  • If you are going to renovate, make it your own. It would be fantastic to turn a profit in the future, but you can go broke putting your entire life savings into a home not knowing when you are going to sell, what the market will look like, what buyer trends will look like, or what interior design trends will be popular. Do not expect your renovation to be an HGTV experience. It’s not realistic.

Melissa Colabella, New York licensed real estate salesperson, Julia B. Fee Sotheby’s International Realty

Worst advice: Always give a lowball offer

woman sending a text

A low offer could cost you the house of your dreams. | iStock.com/nd3000

The worst advice is to give the seller a lowball offer. Buyers are always looking for a deal. They want the best property for the lowest price.

Why this is bad advice

Although it is perfectly reasonable to want to get the most for your money, making an offer that is downright insulting can oftentimes mean the end of the deal. Don’t put the deal in jeopardy by making a lowball offer. It could even lead to you paying more in the end.

Evan Harris, co-founder and CEO, SD Equity Partners

Worst advice: Waive the home inspection to save money

Foreman examining house

Don’t waive the home inspection. | iStock.com/DragonImages

One of the worst pieces of homebuyer advice I have ever heard is to waive the home inspection to help save money.

Why this is bad advice

Regardless of how perfect you think the house is, you should never be tempted to waive the home inspection. Without a licensed inspector viewing the property, the buyer will only be allowed to comment on issues that can be seen with the naked eye, whereas the costliest repairs often concern the foundation and groundwork of the property.

By forgoing this step, the buyer essentially loses their right to make any requests for additional repairs that aren’t agreed to at the time of signing the initial purchase contract. This often results in having to pay out of pocket if other issues are found in the future — leaving you in an unexpected financial bind.

The bottom line is to never cut corners, especially when it is regarding such a large, lifelong investment. The risk is just not worth the potential reward.

Sacha Ferrandi, founding Partner, Source Capital Funding, Inc.

Worst advice: Ignore signs of disrepair

worker fixing house

Don’t ignore signs that a home needs repair. | iStock.com/Feverpitched

I always advise caution when purchasing a home. The worst advice I’ve encountered is to overlook obvious signs that the property is in poor condition.

Why this is bad advice

Water located within a basement and cracks or other symptoms of dereliction are best evaluated by professionals.

Michael Kelczewski, Realtor, Brandywine Fine Properties, Sotheby’s International Realty

Worst advice: Don’t try to negotiate in a seller’s market

Handshake

Always negotiate for the best deal. | iStock.com/Saklakova

The worst advice I have received is you shouldn’t try to negotiate on a price in a seller’s market because it won’t do any good. I ignored the advice, and I still negotiated a better deal on the home.

Why this is bad advice

Even in a seller’s market, it never hurts to ask whether the seller will accept a lower price.

David Bakke, homebuying expert at Money Crashers

Worst advice: Base your offer on an algorithm

man sitting in cafe working on laptop

It takes more than an algorithm to come up with the best offer. | iStock.com/Halfpoint

Some buyers are told by others (such as friends and co-workers) to base their offer on either some computer algorithm — such as a Zestimate from Zillow — or by simply taking the listing price and reducing it by x%. Or they simply use the tax assessment.

Why this is bad advice

Zillow and other price estimators are notoriously inaccurate. Zillow itself publishes how close its estimates come to actual prices, and most cities/geographic areas are uncomfortably high or low. Some of the algorithms mix housing types, such as condos, townhouses, and single-family homes. Most mix style of house. They seldom take into consideration the condition of the property.

Taking the listing price and reducing it by x% is equally unwise. Different sellers and agents have different strategies for pricing homes. If a house is overpriced by, say, 7%, and the buyer simply applies a 5% reduction, he/she is still overpaying. On the other hand, some agents are quite accurate in pricing properties, while others will deliberately underprice a property in hopes of triggering a bidding war. In these cases, taking 5% off the price of an already attractively priced property often results in the buyer losing out on the house.

Finally, tax assessments are broad estimates designed by counties and cities to assess taxes. They’re not accurate to begin with. On top of that, assessments are usually done annually. If a property receives a new assessment Jan. 1 (based on October or November sales), and the buyer is looking for a property the next October, the calculation performed by the county is a year old. Even comps — which should start out as accurate — aren’t reliable a year later. A tax assessment certainly isn’t.

Don Tepper, managing partner, Solutions 3D LLC

Follow Sheiresa on Twitter @SheiresaNgo.

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