The Biggest Do’s and Don’ts When Buying a Home
You’re getting ready to start shopping for a new home, and you want to do it right. Whether you’re a first-time homebuyer or an established homeowner, you want to be as informed as possible going into the process.
This is a wise move, considering 2021 data from the National Association of Realtors revealed tenure in a home dropped from 10 to eight years — the largest year-over-year decline in the history of the data set. Additionally, 34% of homes sold to first-time buyers — the most significant increase since 2017.
Whether you’re preparing to buy your first home, searching for a larger property or downsizing, there’s a lot to consider. Therefore, the more you know, the better equipped you’ll be to make the best possible choice for your unique situation.
GOBankingRates asked several real estate agents to weigh in on their biggest do’s and don’ts when buying a home. Here’s what they said.
Do: Get Preapproved
If you’re planning to obtain financing, obtaining a solid pre-approval is a must, said Jason Gelios, a Realtor in Southeast Michigan.
“It’s important for the buyer to sit down with a lender and run the numbers to see where their budget is and establish that price range they feel comfortable with,” he said. “Many times homebuyers skip over getting pre-approved because of the excitement of looking at homes, when getting pre-approved should be the first step they take.”
Don’t: Fall Victim to Wire Fraud
It’s not often explicitly communicated during the escrow process, but Bill Samuel, a residential real estate developer and owner of Chicago-based homebuying company Blue Ladder Development, said it’s important to know how to protect yourself from wire fraud.
“For several years now, hackers have impersonated real estate title companies with fake email and wire instructions,” he said. “If you send a wire to the wrong place it is nearly impossible to recover the funds sent, so extreme precautions should be taken before sending any wire.”
He recommended performing an online search of the name of the title company you’re working with and using this to find their phone number, instead of relying solely on the wire instructions.
Do: Research Your Surroundings
There’s often more to a neighborhood than what meets the eye, so Bill Gassett, a Realtor with Maximum Exposure Real Estate, based in Hopkinton, Massachusetts, emphasized the importance of performing due diligence on the area.
“Many buyers don’t take enough time property researching a property and later discover something they don’t like,” he said. “The surroundings are just as vital as the home itself.”
He said to make sure there isn’t anything in the area you’re not comfortable with, such as sex offenders living near the home. “These are the kind of examples that often fall through the cracks,” he said. “Once a buyer finds out about them it’s often too late and they are thoroughly disappointed.”
Don’t: Make Another Major Purchase During Escrow
Purchasing a home is a major life change, but it’s possible that’s not the only big-ticket item on your agenda. Gassett said it’s not uncommon for buyers to unwittingly make a large purchase — such as buying a car — while in escrow.
“Banks and mortgage companies use your debt to income (DTI) as part of the process of making lending decisions,” he said. “When your debt ratio becomes too high they are less likely to make a loan.”
He said a purchase as large as a vehicle can throw your DTI off, so wait until after closing to make any other big money moves.
Do: Start With Non-Negotiables
Since the homebuying process can be overwhelming, Chase Michels, a licensed real estate broker with The Michels Group, based in Downers Grove, Illinois, said he always advises clients to make a list of must-have features for their new home and rank them in order of importance.
“We then review the list and I typically find that many times they rank items that can be changed as high or higher than those which cannot be,” he said.
A few items that cannot be changed include low crime rate, access to public transportation, proximity to public schools and home size, he said. On the other hand, features like kitchen cabinetry, appliances and landscaping can be relatively easy to fix.
Don’t: Overspend
When searching for a new home, it’s easy to let anxiousness, excitement or even fear of losing a deal persuade you to go over budget — especially in the current market. However, Michels said price is a key component in being happy and comfortable with your purchase.
“I have seen clients compromise on their initial price to buy a home that they believe will suit them better, only to come back to me later saying it is too much house or that they donot even use all the features that they stretched their budget to have,” he said. “Buying a home should not put your family into a position that will add stress to daily life.”
Do: Consider Upcoming Major Expenses
Buying a home is expensive, but so is ongoing property maintenance. Amy Kite, a real estate agent and owner of The Kite Real Estate Team based in the Chicago area, said it’s important to consider any expensive issues that will need to be addressed in the next couple of years — i.e., the roof, HVAC or a kitchen remodel.
“Many homebuyers financially and emotionally struggle with major expenses in the first couple of years, as things break or need to be replaced,” she said. “Don’t get caught up in how pretty something is, [because] this is a long-term investment that you want to be in for years to come.”
Don’t: Settle on Location
When searching for a home, location is key, said John Gluch, a real estate agent and owner of Gluch Group, based in Phoenix.
“Homes can be renovated and enhanced to fit your lifestyle, but location cannot be changed and it can be a major issue after someone purchases a home in a new location,” he said. When choosing an area, he said it’s important to consider both your lifestyle and the desirability of the neighborhood itself, to ensure you literally end up in the right place.
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