Top 10 Mistakes to Avoid as a First-time Home Buyer
Are you searching for a home with your kids? Do you find yourself falling for the staged furniture? Here’s what to watch out for when house hunting.
1. Getting captivated by staged homes
If you’re thinking about buying your first home, doing some research is a smart move. You might chat with friends, and coworkers, or read a few articles about the process. But since 80% of first-time buyers admit they wish they could have a second chance, it’s clear that you really can’t have too much information.
Here are the top 10 mistakes first-time homebuyers tend to make, along with practical advice on how to avoid them.
We’ve all heard this advice before, especially from those who confidently claim they can look past the outdated wallpaper and imagine the home’s true potential. But the reality often sets in when buyers compare beautifully staged homes to ones with their original décor.
Home staging is when sellers clean up and move furniture around to make their home look more appealing to buyers. Today, some sellers even empty out most of their stuff so a staging company can come in and redecorate the whole place. The result? Picture-perfect rooms, with spotless kitchens, relaxing bathrooms, and cozy bedrooms.
The issue is that there’s a big difference between the perfect-look staged homes show and how we really live. For example, stagers might remove essential appliances like coffee makers, microwaves, and blenders to make countertops look bigger. They might even remove doors to make older homes appear more open and airier. Plus, they often use smaller furniture to give the illusion of more space.
The key is not to get too attached to the staged look and instead picture where your own things would go. Check out each room, including any built-in storage, to see if it fits your lifestyle and furniture. Also, be aware of design features that would be costly to change. For instance, if the open-concept kitchen is at the front of the house but you’d rather it be by the backyard, keep in mind that moving it would be expensive.
Don’t forget to check the home’s important parts, like the foundation, plumbing, and heating and cooling systems. While it’s easy and cheap to change things like paint, furniture, and light, updating the electrical system and fixing a roof can be costly and not immediately obvious.
2. Shopping with distractions
I get it—it’s tough. With kids in tow, they can get restless as you look at one house after another, checking closets and sinks. Every parent going through the home-buying process knows that kids can make a challenging experience even more chaotic (it’s similar to when shopping for a car). I’ve had to rearrange home viewings or even go alone because parents had to take their fussy toddlers back home for a break.
Bringing kids along while house-hunting can make it easy to overlook details and may lead to settling for a home out of frustration rather than waiting for one that really meets your needs.
To avoid rushing into a decision, try working with an agent who can show the house to you one evening and your partner another. Alternatively, one parent could visit the home while the other keeps the kids busy outside. You might also consider hiring a babysitter or asking a family member to watch the kids for a few hours. A good agent will understand and even help out with the kids, especially if you’re a single parent. This way, you can focus on making the most important purchase of your life without feeling rushed.
3. Trusting the floor plan
Many of us, myself included, think that if a listing says a room is 12 feet by 10 feet, those are the exact measurements. But often, the dimensions are not quite right. It’s usually not that the agent or seller is trying to mislead you—mistakes can happen in various ways.
For instance, sometimes measurements are taken directly from building plans without adjusting for last-minute changes made during construction. I’ve also seen agents accidentally mix up imperial and metric units. As a result, the room might end up being much smaller or larger than you expected.
For example, you might come across a condo advertised as 700 square feet with one bedroom plus a den, only to discover it’s just 560 square feet. (Tip for first-time buyers: Bathrooms and outdoor spaces don’t count in the square footage.) In newer condos, sales staff might even include balconies or terraces in the total size. To avoid any surprises, it’s advisable to measure the rooms yourself.
4. Failure to check out the neighborhood
Imagine buying a beautiful home in a quiet neighborhood, only to find out you really miss the lively vibe of downtown. You might discover that, despite loving the house, the commute or lack of nearby amenities becomes a real hassle. This is a common experience for some buyers who end up regretting not thoroughly exploring the neighborhood before making their decision.
Many people who left the city for smaller towns during the pandemic might soon face a similar situation, with some even deciding to move back. Even before the pandemic, over a third of Canadians thought their commute was too long, according to a 2019 survey. As more people prefer driving over taking public transit, commutes could get even longer in the future. So, what happens next?
To avoid regrets, make sure to thoroughly explore the neighborhood before buying. Visit the local shops, chat with neighbors about schools and community centers, and stroll around to find nearby coffee shops, daycares, and your favorite take-out spots (because you’ll definitely need them). Look for signs of community life, like swing sets on lawns or kids’ toys if you have a family. The more you engage with the area, the more you’re likely to enjoy your new home.
5. Not asking for comparable
I can’t think of any real estate agent who wouldn’t provide a list of comparable homes—those that have recently sold in the neighborhood you’re interested in. But keep in mind, not all agents will always share all the details you might need.
Imagine buying a resale condo and basing your offer on a list of comparable homes your realtor gives you. Then, just a day after finalizing the deal, you receive a more complete list with additional sales of similar units. With this new information, you might discover you overpaid by a few thousand dollars. While it may not be a huge amount, it can still leave you feeling uneasy about the purchase.
To avoid this issue, be specific about what you want to see. If you’re looking for a three-bedroom home with two bathrooms, ask for a list of sold homes that match these details. Then broaden your search to get a better sense of the property and neighborhood. A good realtor will gladly provide this information and explain why prices differ. This way, you’ll be sure you’re making fair comparisons.
6. Not getting a pre-approved mortgage
It’s easy to do and you can even compare rates online. Yet, many home buyers skip getting pre-approved for a mortgage before they start looking. Often, they want to explore the market first. But imagine finding your dream home and then losing it because you don’t have your financing ready. It’s a real risk.
The best way to avoid any trouble is to get pre-approved for a mortgage. It’s quick and usually takes just 30 minutes if you have all your documents ready.
7. Using your entire savings for the down payment
One major part of buying a home is the down payment, which is the amount you pay upfront. This amount depends on factors like the home’s price and the mortgage you’re approved for. However, no matter the numbers, it’s important not to use all your savings for the down payment.
Using all your savings to boost your down payment can leave you short for closing costs, which can be quite high, often thousands of dollars. It also puts you at risk of financial trouble later. For example, if you lose your job temporarily, having emergency savings can help you get by. Without savings, you might have to make drastic choices, like selling your assets or even your home.
Instead, focus on building an emergency fund that covers three to six months of expenses, along with saving for your down payment and closing costs.
Choosing to save more rather than maxing out your down payment might result in additional mortgage insurance fees if your down payment is under 20%. While extra fees are never welcome, having a financial buffer is much better than being forced into tough situations like borrowing more or selling your home. Many lenders offer their best rates to those with less than 20% down because the insurance makes the loan less risky for them. Remember, buying a home is a major investment—ensure it’s a wise one by keeping some savings on hand.
8. Getting ambushed by closing costs
When you finalize a purchase and sale agreement, remember that the down payment and purchase price aren’t the only costs you need to think about.
As a buyer, you’ll need to account for additional closing costs. Here are a few key ones to keep in mind:
- Land transfer tax depends on where you live and can change depending on the city or province. It may also go up or down based on the price of the home you’re buying.
- When setting up a mortgage, you might need to cover some extra costs, like getting a home appraisal. If your down payment is less than 20%, you’ll also have to pay for mortgage default insurance.
- When setting up a mortgage, you might need to cover costs like a home appraisal. If your down payment is less than 20%, you may also have to pay for mortgage default insurance.
- Property taxes and adjusted utility costs.
- Title insurance
- Legal costs
To keep an eye on your closing costs, try using checklists and online tools. There are many simple and handy resources available, like guides for understanding closing fees and calculators that can estimate things like land transfer taxes and mortgage insurance.
If you’ve covered all the costs of buying a home, you’re probably good to go. But if there are still expenses left or things to figure out, don’t stress. You can keep saving and take your time—there’s no need to hurry into a big decision.
9. Skipping the home inspection
There was a time when skipping a home inspection was seen as a big mistake. But in today’s competitive market, asking for one could be the reason you lose out on a bidding war and have to keep searching for a home.
In a buyers’ market, where sellers are eager to attract buyers, always add an inspection condition to your offer. Spending $300 to $800 is a smart investment, as inspectors often discover maintenance issues that could turn into bigger problems later.
In a sellers’ market, think about arranging a home inspection during your buyer viewing. Just ask your realtor to set up a two-hour viewing, and schedule the inspection for that same time. This way, when it’s time to bid, you’ll already know what issues the home might have.
If you suspect the seller is preparing for a bidding war, ask your realtor to request a pre-sale home inspection. Many sellers will invest in this to attract buyers, allowing you to make an offer without any conditions.
10. Forgetting that everything is negotiable
If you’re a first-time homebuyer with substantial equity, you might wonder why it’s worth negotiating when the seller and buyer seem so far apart. The key takeaway is this: always remember that everything is negotiable!
While the price often takes the spotlight in real estate deals, don’t overlook the importance of other terms. Details like the closing date, what’s included or excluded (like appliances and fixtures), and any repairs that need to be done before you move in can all be negotiated. Even the realtor’s commission is on the table—just make sure to settle that before you start your house hunt!
If you’re feeling stuck on a specific term, take a closer look at your purchase contract. Is there another condition you can be more flexible about? If so, consider letting it go. The best deals often happen when both sides leave feeling like they negotiated successfully, rather than one side feeling like a winner.
