Buying a house is one of the biggest purchases a person can make. It’s also one of the main expenses in a monthly budget. Several financial experts, like Megan Leonhardt from CNBC, state that up to 28% to 30% of a person’s gross income (before taxes) can go toward housing payments. So, it’s important to be prepared before you start your house hunt for your dream home. These tips will help you avoid five common pitfalls when buying a home: 

1. Going over budget

2. Overbidding for a house

3. Choosing the wrong location

4. Buying too large of a fixer-upper

5. Buying a house that doesn’t feel right

Pitfall 1 – Going over budget: Know your maximum price and steer under it 

A CNBC news article from May 2021 reported that 68% of millennials have regrets about buying their current home. One of the main reasons for this regret was that maintenance and other costs were too high. If you want to be happy in your dream home, it needs to be one that you can comfortably afford. Living under the constant stress of having a tight budget will impact your happiness and your financial freedom.

Owning a house is also unpredictable, you may face unexpected costs from surprises like broken appliances, plumbing issues, or heating costs. Another consideration is the stability of the job market. Having extra savings can cushion the temporary loss of your salary so that you can still afford to make your mortgage payments. 

Talk to your bank, financial advisor, or mortgage broker to figure out what you can comfortably afford, meaning that you have money set aside for unexpected expenses like a new furnace or job loss. Make sure to also factor in the costs of moving, property taxes, and closing costs (like lawyer’s fees), along with a deposit and a down payment.  

Next, it’s time to analyze how your budget matches up with what you can afford. If your dream home is out of reach, it might be wise to wait longer and save more, or to buy a starter property that will get you into the market so that in several years you can sell up and buy your dream home. 

Pitfall 2 – Getting too emotionally attached in a bidding war: Be prepared to walk away 

Overbidding is another pitfall to avoid. In tight markets where there are multiple bids on houses, getting too emotionally attached to a house could cost you a lot. Overbidding to buy a home can cause you to regret your decision down the road.  

At the time, it might seem that no other house will be as perfect as the one you fall in love with, but there are always new properties coming up for sale. If you prepare yourself to hold back when the bidding gets too high or to walk away, you’ll likely make a better investment in the long run. Talk with your real estate agent and decide how far you’ll bid before the process starts. Get their advice on what is a reasonable price for the property. 

Pitfall 3 – Choosing the wrong location: Be sure about the area you buy in 

The right house in the wrong location is still the wrong house. Take the time to do research into the location you are targeting. Make sure you consider several aspects like your commute, access to amenities, views, and which neighborhood’s hold better property values. The location you chose will impact your daily living as well as your investment, so spending time envisioning yourself living in a neighborhood is worthwhile. Some of the ways to get a better sense of your desired neighborhood are to: 

•   Try out your potential commute by driving or transit

•   Visit the neighborhood at different times of the day

•   Visit gyms, daycares, shops, or other businesses in the area that are important to you

•   Read up on news about the area to find out about potential construction, future development plans, is the home in a flood zone, are there CDD fees, etc…

Pitfall 4 – Being overly optimistic about a fixer-upper: Think twice before going this route 

Fixer-uppers are not for everyone. First, you might have to wait to move into the home if you want to have the renovation work done before you live in the space. This could cost you money to rent in the meantime. You’ll need to calculate whether you can afford rent and mortgage payments at the same time as renovation costs. 

Second, most renovation projects cost more money and take longer than estimated; it’s not as simple as you see on home shows on TV. You’ll need to be realistic about what you can afford with a fixer-upper, because you may have unexpected expenses in the form of smaller costs, like a new support beam, or daunting costs, like new electrical or plumbing. If you can handle this risk, understand what you are getting into by getting a good home inspection and doing a walk-through with a reliable contractor. 

Third, a large renovation project needs to be managed by a qualified contractor. It’s not the type of work the average person can step into. If you’re doing cosmetic fix-ups like painting and switching fixtures, it can be manageable if you’re handy, but larger projects like tearing walls down require permits and expertise. You don’t want to be stuck having to sell a partially finished house because the project was too large to handle. 

Pitfall 5 – Buying a house that doesn’t feel right and hoping you’ll grow to love it 

It’s easy to get caught up in a buying frenzy, especially in tight markets where you may have already lost out on bidding wars. The anxiety to “just buy something” can cause people to buy a house that doesn’t really feel right with the hope that they’ll fall in love with it. Chances are if the house doesn’t feel right at the beginning, it’s not going to be later either. Having the patience to wait out the market can be tough, but it can also save you from buying a home that you’re not entirely happy with. Most homes have a few things that bother us, even our dream homes. While small things can be overlooked, if there’s just something that doesn’t sit right with you about the property, it’s probably not the house for you. 

Remember that buying a home is as much a financial decision as an emotional one 

If you prepare your finances and get your budget squared away, you’ll have a much better chance of avoiding major pitfalls while finding your dream home. With your budget to guide you, acknowledging the emotional side of buying will also help you make more informed decisions about the buying process and your list of potential dream homes.

Why Chooses Summer House Realty?

Summer House Realty is an experienced real estate agency servicing Amelia Island, FL, and Augusta, GA. We specialize in helping our clients find and purchase their dream homes. In the current seller’s market, we are experiencing, it is important to make sure you hire an agent that understands the market, the area, future developments, schools, amenities, and everything in between. At Summer House Realty our agents are some of the most experienced and knowledgeable in the industry. If you would like to speak with one of our agents or are interested in viewing a home, call us today to schedule your appointment at 904.557-3020 (Amelia Island) or 706.955.6436 (Augusta).