6 Mistakes Home Buyers Make (And How to Avoid Them!)
In this video, we discuss six common mistakes home buyers make when they purchase a home and how to avoid them!
Hey y’all, Zach McDonald, your real estate agent with Real Property Associates, and today we are going to discuss six common mistakes that home buyers make.
If you’re watching this video, you are most likely buying your first home, or maybe you’ve made some mistakes or have some regrets about your first home purchase, and you want to get a little bit more information about some of those common pitfalls that home buyers find themselves falling into. And as we discuss this, I wanna stress that there are other things that we could add to this list, but here are some of the ones that I think are the most important. And we’re gonna start number one, with considering the long term. Many first-time home buyers especially, don’t think about the long term well enough. I encourage every client that we ever have to think about the future. What’s the dream scenario, right? But also what’s your plan? What’s your three-year plan, your five-year plan, your ten-year plan? Many people buy a house that is too small, or they buy a house that’s on a busy road and then they have a pet or a kid and they don’t like it anymore, or they need to get a bigger house because they bought too small of a house, or they only plan to live here for a year or two years and their house isn’t worth as much as it was when they bought it, when they need to sell it.
So those are just a few of the scenarios, but I think thinking through what’s the long-term plan. It does make sense to buy a home for many, but it also doesn’t always make sense to buy a home. So that plan for the future will help inform what it is that you want to do. And of course, things change. We don’t know what the future holds, but many people have at least an idea or a plan for what they expect to happen. So if you operate under that and have that in view, it makes the home-buying process a lot better and helps you make a good decision whether that is to buy or not. The second common mistake that home buyers make is overextending themselves financially. Making a home purchase is one of the biggest financial decisions that most Americans make, and if you go into it without any idea of what your personal finances look like or a clear plan on how you’re going to pay for it, that’s a tough place to be.
So as far as knowing what you should spend on a house, everybody has a different situation. If you make $50,000 a year, you can spend 50, 60% of your income on a mortgage payment. It’s not as important to think about percentages here, but I think having a personal budget that’s dialed in where you know how much you make, how much you spend, what you have left over.. this will give a lot of clarity on a monthly basis on what you can afford. I think another piece of that is the job. How secure is your job? Do you like your job? Do you plan, stay in your job? Those are all factors in the financial piece because what happens is if you lose your job or you want to change jobs, or maybe you don’t have enough money left over, you get yourself in tough situations.
Maybe you can’t travel anymore because you bought a home. You hear the term house poor. Maybe that’s where that term comes from, where you’re strapped to your house and making your mortgage payment. So consider what your personal budget, your personal finances look like. And again, that’s where you can have some wisdom or make some good choices around what the financial situation looks like. Now, the bank will likely give you up to 45 to 50% of your gross income, not your take-home pay to go towards a mortgage or your debt obligations in general, but for some people that is completely ridiculous. You should never take that deal. So you need to exercise wisdom and look at your budget on a monthly basis and see what, what is actually wise for me to do. In other cases, like I mentioned earlier, maybe you make so much money, it doesn’t really matter and you can take advantage of that full amount.
But for each person, it’s going to look a little bit different. On the financial side, I would say number three on our list here of the common pitfalls is very similar to number two on our list. And that is to count the costs or consider all of the costs involved in a home purchase. Not only do you have the purchase price, which is subsidized for many by a mortgage, but you have the down payment, you also have closing costs. Buying a house or or selling a house are both expensive. You also have the maintenance costs of a home and taxes to pay, insurance to pay. There’s so many different variables that are not just your down payment. So you might have your down payment, but your monthly payment is going to for many with a loan factor in your property, taxes and insurance. So that should be factored into the calculations already.
But then you have your utilities, you have your maintenance costs on the other side of homeownership, and I think for some people they get excited, but they don’t start to add those things in. So those are also things you want to factor into your monthly budget. You are going to see an uptick most likely in some of those other expenses that you maybe have. If you are a renter right now, they’re going to change or increase a little bit. But as a homeowner, you’re now responsible. And I would say this is probably the biggest area of mistake for a home buyer, and that is all the maintenance that they have to do. Now, if the roof goes out, you have to replace it. If there’s an issue with the electrical in the house, you have to fix it. There’s a long list of things that could go wrong with your house as a homeowner.
And the, I guess the big point here is you are now responsible for taking those things on. So as a homeowner, you need to have money set aside to take care of these things or the ability to pay for these things as they go. And if you’ve seen any neighborhood or any street, there are always a few houses where it looks like maybe they don’t take the best care of it. Sometimes they just choose to. Other times maybe they just can’t afford to and they find themselves in a position where they can’t do that maintenance that they should to keep their house in a great condition. So as a homeowner, you need to consider all the different things that go into it. And again, we’re not gonna cover all those here in this video, but I want you as a home buyer to consider the costs of becoming a homeowner.
Number four on our list here is the home inspection. And a common mistake home buyers make is just completely disregarding a home inspection. In Seattle, specifically where we’re at, there are, and there have been many situations where clients of mine have done various things around home inspections where maybe they have done a home inspection early, some have completely elected to forego the inspection. Some have done inspections afterward. It’s tricky when the market’s hot, when there’s competition, people start to do things maybe they wouldn’t do in a normal situation. Now what I personally buy a house without a home inspection, I would, but it would depend on the situation. Some people find themselves in a position where they have more disposable income and the risks of some repairs or updates maybe aren’t as big of a deal. Or maybe they’re planning to make a lot of updates anyway.
So, well the home inspector telling them that the faucet or the plumbing doesn’t work doesn’t really matter because they’re planning to put new plumbing into the house anyway. So I think the main idea here is operating with your knowledge base and within your situation. But as a general rule, you wanna have a home inspection, whether that’s a home inspection done before you make your offer or a home inspection done after, in a less competitive situation. What it does is it gives you information, it doesn’t give you all the information. Home inspections are not perfect, they’re not a hundred percent accurate. All home inspectors point out and pick out different things or have different specialties, but they’re generalists. They’re looking at clues and giving possible, um, issues and recommendations for repairs and or things to look more into. So what it does is it gives you the ability to analyze your risk factors with a little bit more objectivity and subject matter expertise.
As a real estate professional, I always try to point these things out to clients as we walk through houses. I’ve been in hundreds of inspections, right? And I’ve read hundreds of inspection reports, so I have a general idea for what they’re looking out for, but I’m also seeing this house without a fine tooth comb and we’re in there for a short amount of time. And plus we’re doing a lot of other things besides just looking at everything with a magnifying glass. That’s a joke. Um, but I think for a home buyer, general rule, home inspection helps you understand what you’re getting yourself into and decide, do I wanna get myself into this? Versus just getting yourself into it. And then it also gives you the opportunity to maybe negotiate with a homeowner before you make that purchase, um, and have them make some of those repairs or improvements.
I’ve made a completely different video on this subject if you want to check that out. And it’s the how to negotiate, uh, home inspection for buyers. If you are in a position where you have to choose between doing a home inspection and getting a house, I appreciate that. That’s a tough decision and I can’t speak for everybody. I would say in general, it’s not a great decision for most people. Some people, they get away with it, they luck out newer houses, maybe a little bit less risk. Older houses, probably more risky, right? Condos may be less risky than a single-family house for some other reasons that we won’t chat about here today. But I think in general, a home inspection is a great way to know and help count those costs, uh, before you get yourself committed to them. Number five on our list here of the common mistakes is the location.
I think buyers sometimes compromise too much on the location. They wanna buy a house so badly, but they sacrifice where they want to be, their lifestyle, their commute, their community, the people that they care about just to buy a house. And for some people, the house itself is more important than the location. So you always weigh those different things, and I have everybody consider that question in any buyer meeting, what’s more important to you? This is the house or the location. For me personally, the location’s very important. So I would not move 30 minutes to an hour away just to have a certain type of house. I would choose to stay in my location, maybe have a different type of house. So there are multiple layers to this conversation, but I think what I wanna say about location is that you wanna think through some of the factors that you can’t change.
You cannot change the location of the house. It’s there unless you have a mobile home or RV. But that’s not what we’re talking about. So if you’re buying a single-family house or a condo that’s built on the lot, you’re not gonna be able to change that. You can sometimes change things about the lot. Maybe you remove some trees or level things out or re-landscape that can happen. But you can’t change your neighbors, you can’t change. Well, I mean, they can change themselves, but you can’t change your neighbors. You can’t change the fact that your driveway looks like this into your garage or that your house is on a hill like this. You can’t change if there’s a busy road right out front of your house.
I don’t wanna list off all the things. Let’s be real. There’s a lot of different things, but I would say in caution that you want to think through those things for yourself. What, what’s this gonna look like living here? Am I going to be happy here again, for the long haul, right? We’re thinking through this ahead of time, but also what are other people thinking about? What are other people looking at? When I’m looking at a house and giving advice, people ask for advice on houses as they’re considering a purchase. You want to think through what’s important to other people too. So maybe you don’t care about X, but if 87% of the population does, that means there’s a whole bunch of people that would never buy your house in the future. Whereas if you bought a house where most people would like it, the lot, they would like the location, they would like the house, you’re going to increase your chances of success in the future for selling it too.
So if you’re buying a house that’s not selling in a hot market, or it’s sitting forever in a slow market, you just need to think about the fact that you’re gonna be in that same situation in the future when you go to sell it. Unless you can change something and you can change the inside of a house in a lot of ways. The house itself, you can make some adjustments to improvements, to alterations, but you can’t change the location. So the location is a big part that you need to consider as a buyer. And I would say number six on the list here is some buyers, I wouldn’t say all buyers, but some buyers go about the home-buying process by themselves. Historically speaking, this would be a buyer walking into an open house or walking into, um, you know, calling a sign and saying, Hey, I’m interested in this house.
I wanna make an offer. This is what I want to do. But in those situations, you, you don’t get the guidance that you need, right? You were even, you’re getting more guidance in this video than you might get in some of those conversations if you walk in and you don’t have the experience. Now, yeah, maybe some, some of you do. If I bought a house by myself, it’s a little different than if somebody who’s never bought a house before or maybe you’ve bought one house going into that situation. But generally speaking, going about things yourself that you don’t know how to do, especially when they have big financial ramifications, isn’t always the best decision. And the traditional way people go about doing things themselves in the house world is not really in their best interest financially. Some people think they’re gonna save some money, maybe going and calling a sign or working with the seller’s agent directly, but I’ll let you in on a secret.
The seller’s agent’s gonna get paid twice as much to help you make the purchase. So sometimes there’s some legal room there, you get a little kickback or something like that. But is a $5,000 kickback maybe worth all these things we’ve been talking about? Mm, maybe not. But I think the other thing that happens more commonly now is the online real estate companies. So you, you know, you click, Hey, I want to see this house online. Some random person that you don’t know, you don’t know if they’re any good, you don’t know if they have any experience, shows up to show you a house. And then you say, I wanna make an offer. And they’re like, sweet, that sounds good. Let’s go ahead and write up the paperwork. There’s no education. You don’t know what you’re doing. You don’t understand the negotiation process. They don’t really either cuz they’re new.
Unfortunately, there’s a lot of really new real estate agents and that’s the general thing. A lot of new agents most don’t last. So the experience level in general is fairly low. And there are also some really great agents. But I would caution you about number one, going about it alone. But the side part of that, or maybe a tangent, is working with somebody that doesn’t have a lot of experience trying to navigate all of these things and give you advice on them. So I would say that wraps up our video here. We’ve talked through some of the common pitfalls or the mistakes that home buyers make. We talked about thinking ahead. We talked about making a budget, not overextending yourself financially. We talked about considering and counting the costs. We talked about doing a home inspection. We talked about paying attention to the location and some of the location factors that you should be looking out for, but also that most people look out for and also not going at it alone. Thanks so much for watching this video as we talk through some of the common mistakes that home buyers make, especially first-time home buyers. I hope that you got some value out of this video. If you want to connect, please feel free to reach out. If you’re in the Seattle area, I’m happy to talk more about your individual situation. If you wanna see more videos like this, please consider subscribing to the channel. And if you know somebody who could benefit from this video, please share it with them.