Don't we wish we could all go back to a younger version of ourselves and either warn us or give ourselves some advice about the future? I once heard somebody say, "you can't make all the mistakes in the world, you have to learn by other peoples." But sometimes, it's those mistakes that we've made the help us to make better choices in the future. Learning from other people's mistakes, growing and being teachable is all part of learning to keep our heads above water and make smart decisions when it comes to our families and our finances.
If you're on the fence about buying a house, especially in today's competitive market, there are some things that you should be aware of before pulling the trigger. Here are five things I wish everybody knew before they bought a house.
#1. You actually don't have to buy.
Buying house when you're younger is an excellent idea because you can build equity and start a real estate portfolio while you're young however, you don't have to buy a house. There's nothing in the American rulebook that says you need to be a homeowner. There are millions of people that love renting for a variety of reasons but don't buy a house just because you think it's the "next thing to do" like getting married or having children. If you're ready to buy a home then take the next steps but don't do it just because everyone else is doing it or you think it's the right thing to do. It may not be the right thing for you at this time.
#2. If you buy a home, plan on owning it for several years.
Don't buy a home, as we mentioned before, just for the sake of buying a house but also you'll want to own it for several years. There's no point in owning a house only to sell it within the year. You'll lose money on the real estate commissions, closing costs and you may even lose equity. Plan on owning a home for at least 5 to 7 years, gaining equity and then selling for a profit to either move up, relocate or downsize.
#3. Buy only as much house as you need.
Banks will give you the absolute maximum price you can afford but it doesn't mean you need to max that price out. If you've been given a $500,000 prequalification letter, consider looking at homes in the $350,000-$450,000 range. It won't max out your monthly mortgage payment and you'll have a little bit of extra money to play with, renovate or set aside for emergencies. If you really don't need a 3000 ft.² home, consider a smaller home and build equity for something larger in the future if needed.
#4. Don't forget to negotiate with the seller.
Most homebuyers forget that you can negotiate on everything, even that fancy BBQ you might've seen in the backyard. The worst that the seller can do is say no or renegotiate for something else. You can negotiate for how much you put down as a deposit, commissions, time frames and inspection report requests. Don't be afraid of negotiating with the seller but there is a way to do it respectfully, so talk to your buyers agent about the best way to negotiate for items or terms you may want.
#5. Never be afraid to walk away.
This may be one of the hardest things for buyers to understand and really grab a hold of. Buying a home can be an extremely emotional experience but the more you set your emotions aside the better the process will go over all. One recent story of a couple in a interesting situation left a lot of emotions on the table. "After months of hopping from town to town doing open house tours, my husband and I finally found a place we would both by. We deposited a hefty, earnest money deposit and then launched into an eight month series of Murphy's Law problems (issues with former tenants, the village, title company, insurance company, and everyone else). But by that time we were so emotionally tied to this one house we already considered it our home." [LifeHacker]
I can't tell you how many times I've heard this from potential buyers and by the time they get to me there so exhausted that they almost want to give up. But, this is where giving up might be beneficial. Is it really worth going through all the struggle only to get into a house that may now have a bad stigma attached to it? Try not to get emotionally attached and trust your real estate agent to do the negotiating for you.
I am so honest with my buyers that I will literally tell them this house is too much work and you will be exhausted at the end of this, let's simply walk away and find a better house. Whether it's the house itself, the sellers, the listing agent, the neighborhood or the location, you have to be willing to walk away if the time is right.
I want you excited about your purchase not just during the purchase and sale transaction but long after the sale has closed. Finding the right house at the right time for the right price is my goal for all of my buyers.