Buying a Waterloo Region home is a very emotional process. If you allow those emotions to get the best of you, you may fall prey to a number of common homebuyer mistakes. The same is true of going into the homebuying process uninformed.
Unfortunately, a lot of people make decisions that prevent them from realizing their dream of owning a home they love at a price they can afford. Let's take a look at some of the most common mistakes people make when house hunting and how to avoid them in 2023, 2024, and beyond.
Not Knowing What You Can Afford
Once you’ve fallen in love with a particular place, it’s hard to go back. You begin to daydream about how great your life would be if you had all the wonderful things it offered, such as the lovely tree-lined streets, the roomy kitchen with high-end appliances, etc.
But if you can't or won't be able to afford that home, picturing yourself there will only make you feel worse. Therefore, it's best to limit your house hunting to homes in your financial neighbourhood in order to avoid temptation.
You'll find yourself lusting after things you can't afford if you end up looking at homes for sale that are too expensive. This could put you in the risky position of trying to spend more money than you have available to you or make you unhappy with what you can actually afford.
Skipping Mortgage Pre-Approval
What the bank says you can afford versus what you know you can afford (or are comfortable paying) are not necessarily the same.
Conversely, what you think you can afford and what the bank is willing to lend you may not match up, especially if you have newer credit or an unstable income.
Before making an offer on a house, or even before you start looking at houses seriously, make sure you are pre-approved for a loan. If you don't, you'll waste everyone's time—the seller's time, the seller's agent's time, and your time—if you sign a contract only to find out later that the bank won't give you the loan you need or will only give it to you on terms you find unacceptable.
For your Waterloo Region house-hunting excursions, the pre-approval procedure can also assist you in finding the aforementioned financial neighbourhood.
Be aware that if you take any actions that could lower your credit score, such as financing a car purchase, even if you have been pre-approved for a mortgage, your loan could be canceled at the last minute. You might be required to forfeit any deposits or earnest money you made when you signed the contract if your actions cause the deal to fall through.
Not Shopping Around
While you should be realistic in your home search, and willing to compromise to some degree, don’t cave on important things.
For example, don’t get a two-bedroom home when you know you’re planning to have kids and will want three bedrooms. By the same token, don’t buy a condo just because it’s cheaper than a house if one of the main reasons you’re over apartment life is that you hate sharing walls with neighbours.
It’s true that you’ll probably have to make some compromises to be able to afford your first home, but don’t make a compromise that will be a major strain.
Not Using an Agent
Once you’re seriously shopping for a home, don’t do it without having a real estate agent or broker. Agents are held to the ethical rule that they must act in both the seller and the buyer’s best interests. But you can see how it might not put you in the best bargaining position if you start dealing with a seller’s agent before contacting one of your own.
Lacking Vision
Sometimes a homebuyer can feel like Goldilocks in the three bears’ house: This is too big, this is too small. Distinguishing between what’s fixable and what’s not is a key part of house-hunting.
Even if you can’t afford to replace that hideous wallpaper in the bathroom right now, it might be worth it to live with the ugliness for a little while in exchange for getting into a house you can afford.
If the home otherwise meets your needs in terms of the big things that are difficult to change, such as location and size, don’t let smaller physical imperfections turn you away.
Overlooking Important Flaws
It’s OK to look for homes whose full potential has yet to be realized, especially if you’re on a strict budget. The bump in equity from your upgrades will help you to move up the property ladder.
That being said, if you’re going to buy a house that needs work, don’t buy a fixer-upper that’s more than you can handle in terms of time, money, or your own ability. For example, if you think you can do the work yourself but then realize you can’t once you get started, any repairs or upgrades you were planning to make will probably cost twice as much once you factor in the labor—and that may not be in your budget.
Not to mention the costs involved to fix anything you may have started and can't finish, including replacing materials you wasted. Honestly evaluate your DIY abilities, your budget, and how soon you need to move before purchasing a property that isn’t move-in ready.
Ignoring the Neighbourhood
Don’t just focus on the house—look at the surrounding area. Of course, it’s impossible to perfectly predict the future of your chosen neighbourhood, of course, but inquiring about or researching its prospects now can help you avoid unpleasant surprises down the road.
Some questions you should ask include:
What kind of development plans are in the works for the neighbourhood?
Is the street likely to become a major street or a popular rush-hour shortcut?
Is there talk of a bridge or a highway to be built very nearby in five years? What are the zoning laws in the area?
Is there a lot of undeveloped land around?
What is likely to get built there?
Have home values in the neighbourhood been declining or rising?
If you’re happy with the answers to these questions, then your potential house’s location can keep its rose-coloured luster.
Rushing to Put in an Offer
In an active real estate market, it may be necessary to make an offer fast if you find a home you like. However, you have to balance the need to make a quick decision with the need to make sure the home will be right for you.
Don’t neglect important steps, such as making sure the neighbourhood feels safe at night as well by day (try to visit at different times), and investigating possible noise issues like a nearby busy highway.
Ideally, you’ll be able to take at least a night to sleep on the decision. How well you sleep that night and how you feel about the home in the morning will tell you a lot about whether the decision you’re about to make is the right one. Taking the time to consider the decision also gives you a chance to research how much the property is really worth and offer an appropriate price.
Dragging Your Feet
It’s a tough balancing act to make sure you make a careful decision, but don’t take too long to make it. Losing out on a property that you were almost ready to make an offer on because someone beat you to it can be heartbreaking. It can also have economic consequences.
Let’s say you are self-employed. Perhaps for you, more than others, time is money. The more time and energy you have to take out of your normal activities to search for a house, the less time and energy you have available to work. Not dragging out the home-buying process unnecessarily may be the best thing for your business, and the continued success of your business will be essential to paying the mortgage.
If you don’t pull the trigger quickly, someone else might, and you’ll have to keep looking. Don’t underestimate how time-consuming and routine-disrupting house shopping can be.
Neglecting to Inspect
You found the perfect place, your offer was accepted, and you’re in contract. It’s tempting to think that you’re a homeowner the moment you go into escrow, but hold on. Before you close on the sale, you need to know what kind of shape the house is in. You don’t want to get stuck with a money pit or with the headache of performing a lot of unexpected (and potentially expensive) repairs.
That’s why you need a thorough inspection of the property—in fact, your mortgage lender might demand it. Keeping your feelings in check until you have a full picture of the house’s physical condition and the soundness of your potential investment will help you avoid making a serious financial mistake.
Getting Desperate
When you’ve been looking for a while and do not see anything you like—or worse, you’re getting outbid on the houses you do want—it’s easy to get desperate to find your new house RIGHT NOW.
However, if you move into a home you end up hating, the transaction costs to get rid of it will be costly. You’ll have to pay an agent’s commission (up to 5% to 6% of the sale price), and you’ll have to pay closing costs for the mortgage on your new house. You’ll also have to deal with the hassle and expense of moving yet again.
If you have time on your side, it’s okay to wait until something that suits you comes along. As long as your demands are realistic for your budget, you are bound to find something you can live with.
The Bottom Line
Buying a house is a big decision, but it does not have to be difficult. However, since it’s so natural for emotions to come into play, you need to ensure you are making rational choices rather than getting wrapped up in the notion of a dream home—or, conversely, of yourself as a master builder or renovator. If you’re aware of the issues ahead of time, you can protect yourself from costly mistakes and shop with confidence.
In short, when it comes to buying a new home, be realistic, take your time, don’t act on impulse, and, ultimately, make a home-purchase decision that’s good for both your feelings and your finances.
Don't miss out on your dream home or settle for anything less than the best! Reach out to Team Pinto today, and let us guide you through the process of finding the perfect property that matches your needs, lifestyle, and budget.
With our unparalleled market knowledge, negotiation skills, and dedication to your satisfaction, you can confidently make one of the most important decisions of your life. Take the first step towards a seamless and stress-free home buying experience by contacting us now. Let us be your trusted partner in turning your dream home into a reality!