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Avoid First-Time Buyer Mistakes

Written by Carla Hill on Thursday, 03 May 2012 7:00 pm
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You've finally decided that now is the time for you to jump into the housing market! Perhaps you've done the math and want to take advantage of historically low interest rates and high levels of affordability. Maybe you have a new family that is quickly outgrowing your little rental. No matter the reason, buying real estate is a big responsibility.

There are several rookie mistakes that many first-time home buyers can make. Keep reading for how to avoid them!

First, first-timers underestimate the importance of finding the right real estate agent. Not all agents are equal. Not only do their experience levels and commission rates vary widely, but every agent has their own unique personality. You want to be sure you find an agent that you feel comfortable with and that you respect.

In order to find the best fit agent for your needs, set up several interviews with local agents. Ask them about their business. Do they have a cell number where you can reach them? Do they web conference on days you can't meet? How often do they send prospective homes to buyers? Be sure to ask for testimonials and references. Finally, just get a feel for how your two personalities will mesh. Does the agent seem to have your best interest at heart? Are they giving you the respect you deserve or treating you like a dunce?

Next, a common mistake for first-time agents is to consider what type of home you want. If you know ahead of time what you are looking for, the price range, as well as what you're willing to compromise on, you'll be much more likely to make a decision quickly about buying a specific home.

This is important for two reasons. You don't want to make an impulsive decision, but you also don't want to wait so long that someone else swoops in and buys the house before you can make an offer!

The third mistake is not considering that a home is an investment -- one where you don't want to lose your shirt down the line. Is this home priced right? Compare it to other similar homes. Is this home in a desirable location or is it next to a busy street, etc? Will is require a lot of work? When you go to resell this home, you want to make a profit or break even.

You'll need to consider that you'll probably pay an agent a commission and will be paying closing costs at selling time. This is extra money on top of what you need to make on the sale of the home to break even.

Most experts say you need to stay in a home for at least 3 to 5 years in order to break even. This time frame could be even longer if home values continue to fall. Remember, homeownership is a long-term investment

Next, ask your lender lots of questions and be proactive about finding the best deal. Different lenders will offer you different rates. Research your options. Would you be better served with a 15-year or 30-year note?

Ask lots of questions about the difference between adjustable and fixed rate mortgages. Learn about points. Find out how much interest you'll pay over the life of the loan. The lender is there to serve you, so don't be shy about getting the information you need.

Finally, don't be greedy or low-ball sellers. This may be a buyers market, but if you offer too little or ask too much in concessions you may turn the seller off. They don't have to sell their home to you!

Avoid these common first-time buyer mistakes and you're sure to have a fun and rewarding buying experience!

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