In this wonderful world of real estate we often encounter a buyer or seller with misconceptions about how things work or the various steps needed to proceed with a sale or a purchase. We’ve taken the 10 most common buyer mistakes and outlined them in this post. If you’re looking to buy a home in Windsor or Essex County for the first time, or if you’ve purchased a home in the past, this list may still help answer some of your questions. So here we go! The 10 Biggest First Time Home Buyer Mistakes.
10. Not Getting a Mortgage Pre-Approval
There’s a little confusion over this step in the buying process. Many think it’s not necessary because they have great incomes. This couldn’t be further from the truth. A lender will need to look at many various things to properly pre-approve you for a mortgage. A credit check is one of the most important steps involved. If a lender has not checked your credit score they haven’t properly pre-approved you for a mortgage. We often even see this step missed with a few of the major banks as well, they won’t proceed with a credit check until an offer has been made to save on their costs.
Another important aspect of the pre-approval is verification of income. The lender will need copies of prior tax years Notice of Assessments along with copies of your latest pay stubs. As much as we’d like them to, the bank will not simply take our word when it comes to how much income is generated.
And last, the lender will want to know about any debts or loans you currently have. This information should usually be in a credit report. A buyer could have an amazing income but super high debt ratios…this would definitely affect the amount of home they could afford.
If you’re unsure as to where to start with the mortgage pre-approval process, contact your bank or your Realtor would likely be happy to give you some referrals.
9. Spending More Than You Can Afford
This is ALL too common with buyers. “Our pre-approval is for $500,000, let’s go shopping!!” Although we’d all love to live in million dollar homes, you need to remember that someone needs to pay that mortgage every month! And you need to make sure you’re comfortable spending that monthly income on a larger than necessary mortgage, along with the utilities and property taxes to go along with that large home. Make sure your mortgage representative takes a few minutes to go over your payment amounts. There are many mortgage calculators online that are also available. Remember, those online calculators don’t take everything into account. You should always try and gather as much information from an actual human being whether it’s your Realtor, Mortgage Specialist, Real Estate Lawyer or Home Inspector. That way you’ll know it’s accurate and catered to your specific situation.
8. Not Researching The Area
Often times, buyers get so excited about a home that they neglect to consider their surroundings. Is the home backing on to a railroad track? Is there a factory down the street? What is the neighbourhoods reputation? What about location of amenities? All important factors when looking for a home. It’s possible you won’t mind the train going by across the street, but you definitely don’t want to be surprised with something like that once you’ve moved in. If you have a buyer agent they should be the ones to point out these potential sticking points prior to making an offer. If you don’t have your own representation there’s definitely no guarantee that the home owner or their representation will be upfront with that information and it could effect you come time to sell in the future.
7. “I only want a bank sale or estate sale!”
As Realtors we hear that comment quite a bit. Buyers think they’ll get a steal with a bank sale or an estate sale. It surely is possible that you’ll find that diamond in the rough, fix it up and make some money, but for the most part, if the home is priced lower, it’s because it needs that much work. Make sure you’ve done your homework and understand what’s at stake when buying a bank sale or an estate sale. If you’re not a handy person, make sure to get quotes before putting in that offer. Buyers are sometimes disappointed by the actual cost of renovations. When they originally thought it was simply tearing down a wall…it turns out that wall was a main supporting wall and will need a new support beam.
6. Not Thinking About Resale Value
As home buyers, we always have the best of intentions. The plan is always to remain in that house as long as possible. “We plan on raising our kids and retiring here” but more often than not, a Realtor receives a phone call a few years later from that same buyer asking to come list the home so they can move closer to town or further out in the county. The average home owner now moves every 5 years!! Can you believe that?? Every 5 years on average! Home ownership is no longer what it was for our parents and grand parents. Today’s generations like to keep things fresh, they like change.
That being said, a buyer ALWAYS wants to keep resale value in mind. Does it make sense to spend $50,000 in renovations or will we only recoup $10,000-$15,000 on resale? Make sure to consult your Realtor before making any huge changes to a home. There’s nothing more heartbreaking when we evaluate a home and the seller has over improved it by thousands and thousands of dollars. Your home is often your biggest investment. Don’t be foolish with it! And one of the best tips – You never want to be the most expensive home on the street. The neighbouring homes will drag down your value. The opposite is also true…if you’re surrounded by higher end homes, they will help increase your smaller homes value!
5. Costs Involved With Home Ownership
As a home owner, you need to consider not only the cost of purchasing a home, home inspections, legal costs, but also the general cost of home ownership. Have you thought about furniture? Appliances? What about home insurance, and utilities? You’ll need a lawnmower and gardening equipment to tend to the yard. Will you need to take over a hot water tank rental? Do you need a maintenance package on your heating and cooling equipment? These are all things to consider. If properly budgeted home ownership can be a very affordable option. Let us not forget that real estate in Windsor and Essex County is the most affordable real estate in all of Canada!
4. Getting Too Excited About a Home Before Seeing It In Person
Now a days, over 85% of home buyers start their searching online. Whether it be on the public MLS or Realtor.ca or on their Realtors website. With that explosion in online information, buyers often see a home online and immediately fall in love with it! We rush out to see it in person and the buyer is completely disappointed with it. A home never appears in person exactly how it does in photos or video tours. It’s extremely important to keep that in mind when searching for properties. It may even be a good idea to do a simple drive by prior to booking a viewing on a home. The neighbours may not keep their yards tidy. The home may be on a very busy stretch of the street….at a 4 way stop where cars often slow down and rev up. These are just some of the things that can’t be spotted on photos or video tours.
3. Letting That Perfect Home Go…..
How often do we find that perfect home, but think to ourselves “There’s gotta be an even better one out there!”. It’s happened to all of us at some point or another. But there comes a point where you will risk losing that perfect home and something better doesn’t come along. Or if it does, it’s not in your price range or preferred location. As the saying goes, the grass is always greener on the other side! Something better will eventually pop up at some time or another, but how many perfect homes will you pass by to take that chance. If you’re Realtor has taken the time to properly educate you on the market. If your Realtor has taken you to 10+ homes in your price range. You should have a good idea of value for dollar in your market place. Homes for sale in LaSalle won’t have the same value as homes for sale in Amherstburg. Just the same as homes for sale in Windsor won’t have the same value as homes for sale in Lakeshore. Do your homework and let your Realtor guide you along the way.
2. Skipping The Home Inspection
If I had a dime every time a client told me they were going to skip an inspection because their dad was handy or they were going to have their uncle or best friend come look at the home and “inspect” it i’d be retired! Does your dad or uncle have Liability or Errors and Omissions Insurance? Do they have a thermo camera to see moisture through the walls or ceilings? There’s no doubt there are some horrible inspectors out there. Every industry has bad apples. But if you hire a professional insured home inspector it could potentially save you thousand and thousands of dollars. We see and hear about it every day. The buyer who went against our advice and skipped the inspection or brought in someone they knew to save a few bucks…after moving in they find something that was missed and it puts them back hundreds or more often thousands of dollars. You get what you pay for. A home inspection is not something you should be skipping or trying to find the better deal on. Make sure you ask your friends, family and Realtor for any recommendations. It could save you money and heartache in the future.
1. Not Having Proper Buyer Representation
This is by far the biggest mistake we see buyers making in today’s market. Buyers often think they have access to everything online, all the listings, details, mortgage info etc.. etc… that couldn’t be further from the truth. Most buyers don’t realize the public MLS and Realtor.ca could be up to 2 weeks behind. That home you’ve fallen in love with could have potentially sold last week. Your Realtor will get you current access and make sure you have all new listings the second they have access to them. They may even alert you to up and coming listings that haven’t even hit the market yet!
Making sure you are properly protected should be your most important concern as a buyer. A home purchase is likely going to be your largest investment. You don’t want to be like some and think you know it all only to find out you overpaid 10,20 or $30,000 on a home when you go to sell it down the line. We see it every day, and it can ruin lives and marriages. Hiring a buyers agent in Windsor and Essex County is absolutely free. The agent is paid by the listing brokerage. Let them work on your behalf, protect your best interests, and use their skills to get you the best deal and make sure you’re not overpaying for your dream home. Make sure you ask your friends and family for their Realtor referrals. Just like any other industry some are better than others. Make sure you’re Realtor sells real estate full time and find out how many homes they’ve sold on a yearly basis. Real Estate Teams have many advantages over single Realtors. So do your homework!