Real Estate Tips

Tips for Buying Your First
Home and Mistakes to Avoid

Hire an Agent

• An agent can send you listings directly from MLS that fit your parameters,
• An agent will save you time looking at active short contingent listings that are under contract.
• Agents often know of new listings coming up that are not yet on the market.
• You can waste the agent's gas and not your own when you tour homes.
• Some agents will preview homes for you.
• An agent can generally spot overpriced listings and advise you accordingly.

Find a Home to Buy

Buying a home can be an overwhelming process and emotionally draining. Finding the right home is not always an easy task. I advise buyers to schedule a maximum of 7 homes at a time because any more than that will make a buyer's head spin.

Most buyers conduct a lot of research online before ever stepping foot in a home. Buyers spend an average of 6 to 8 weeks, according to the National Association of REALTORS, trying to figure out where they want to live. But once the neighborhood is selected, most buyers end up buying a home after 2 or 3 home tours.

Get a Loan

It's not always necessary to have a mortgage broker or bank in your back pocket before buying a home, but it's smarter to get loan pre-approval in advance. This way you know for certain how much home to buy. Many sellers won't look at an offer if the seller doesn't have an assurance that the buyer can get a loan.

Popular first-time buyer loans are FHA loans because the minimum down payment requirement is much less than a conventional loan. However, if you are thinking about buying foreclosures, for example, conventional buyers tend to get priority with REO banks. You can ask your agent for a referral to a mortgage broker or check with your own bank/credit union. 

Negotiate the Offer

Buyers sometimes make the mistake of comparing the sales price of a home to other homes they have seen. It's a mistake to compare sales prices among homes for sale. That's because sellers can ask any price they want. It doesn't mean the home will sell at that price.

An agent can provide comparable sales and examine the pending sales. Comparable sales are similar type homes in the same condition and location that have sold within the past 3 months. Pending sales will become the comparable sales by the time your home closes.

You may need to pay over list price in a seller's market, especially if many buyers are vying for the same inventory. Your agent can give you a reasonable price range and help to manage your expectations. A good buyer's agent knows there is always more to an offer than its price, but the price is paramount.

Making one of these mistakes could cost you:

Getting too emotionally attached

You’re about to purchase what’s probably the most expensive item you’ve ever bought. So this advice from a real estate broker may be easier said than done: Relax and don’t get too attached, there will always be another house if you lose one. Try finding several homes you love so that you’re not too emotionally invested in one.

Finding the home yourself

We know you’re going to browse different websites to find homes for sale in your desired location. But don’t rely on just your brilliant research skills. Finding your own home is like “diagnosing yourself of an illness.

“Let your agent vet the homes for you. A good real estate agent might find you properties that aren’t yet on the market. And of the homes that are on the market, your agent should be able to tell you “what the home looks like, where it’s situated, and the price per square foot in the neighborhood.”

Going directly to the listing agent

If you’ve ever played Monopoly, there’s a card you might pick (a bad one) that says, “Do not pass go. Do not collect $200.” It means you did something wrong and now must pay the penalty.

The same applies if you go directly to a listing agent who is hired by and represents the seller, not you. “Unless [the listing agent] is someone you have worked with or know personally and know they are an amazing agent, this is a big no-no.

Assuming you have no rules to follow as a homeowner

One of the draws of homeownership is freedom: getting out from under someone else’s rules, whether those of your parents or your landlord. But some homes have deed restrictions that come with conditions.

Deed restrictions vary, depending on the community you’re buying in. Their purpose is typically to ensure the property holds its value, which is a good thing. But if you have plans that conflict with the restrictions, you won’t be a happy camper.

“Get copies of the restrictions, read them, and ‘look under the hood’ at the internal health of the condo or homeowners’ association. Look to see whether reserves are kept, the neighbors are paying their assessments, if there are pet restrictions, and whether you can run a business from the home.

Not getting pre-approved for a loan

You’ve run the numbers several times now and know just what you can afford. That’s great. But if you want your offer to be taken seriously by the seller, get proof of income and assets in the form of a pre-approval letter from a lender. “This process can take just a few days and simply means that the lender has looked through your financial situation and is comfortable with the idea of lending you a certain amount of money.

Paying private mortgage insurance (PMI)

If you don’t put down at least 20%, you’ll have to pay PMI, many first-time home buyers pay this. If you do have to pay PMI, make sure you notify your lender when you pay down your mortgage and owe just 80% of the home’s value. Your lender will automatically cancel your PMI when you owe 78%, but you don’t want to pay a month more of PMI than you have to.

Not getting a home inspection

All homes need inspections, even brand-new ones. But some homebuyers skip this step “because they get emotionally attached to the home and want it no matter what,”. If the home does have issues, you’ll want the seller to fix them or to lower the price.