There are a lot of misconceptions about buying a house that have deceived homebuyers for ages and first-timers have always been the ones to pay the piper… usually a lot of money.
Do you still believe that a house is the best investment you can make? If you do, then you ought to read on because despite this being an old belief, it may actually be wrong.
Peter Mallauk, a certified wealth planner and President of Creative Planning said that buying a house is usually a terrible investment given the costs involved.
To tell you the truth, that’s only the tip of the iceberg.
There are a lot more things to consider and a lot more to accomplish before you can turn a newly-purchased house into a good investment.
Falling in love with a house, at first sight, is not included in the to-do list but it can be the biggest mistake you can make when buying a new home.
Smart home buyers look at houses like murder culprits with a hundred things to hide. This is because sometimes sellers will try to hide these flaws by masking their homes with stunning decor and lovely scents just to have them sold at their desired prices.
Buying a house for the first time is an accomplishment, but it can easily turn out to be a burden. To avoid buyer’s remorse, make sure you look for these things when buying a house:
Affordability
It’s quite exciting to think about all the features your new home can have, the activities you can do in it with your family and the whole idea of buying your very own home. However, as a homebuyer, you should not let your excitement get in the way of logic and rational decision making.
The first question you should ask yourself before deciding to buy a home is if you can actually afford it. Better yet, ask this question to yourself a numerous number of times before going around town to look for prospects.
Don’t trust your own estimate. You’ll likely exaggerate or miss a few numbers. The more you want a house, the more you may seem to afford it. Truly, love is blind and when you fall in love with a house, you tend to mask all the deal-breakers.
Consult your family and your closest friends. It’s best to get the opinion of people who are not emotionally attached to the dreamy idea of buying a new home.
Better yet, ask someone who has been through the whole process – someone who has bought a house before. Seek the advice of those who have experienced problems when buying a house. Learn from their mistakes.
“Oftentimes, homeowners make the largest financial decision of their lives — buying a home — with their heart, not their head. They get emotionally involved with the property,” said the former vice president of public relations of the National Foundation for Credit Counseling, Gail Cunningham, the largest and longest-serving nonprofit financial counseling organization in the U.S.
Hidden Costs
The price tag attached to your dream home is not the only price you should be worried about.
Buying a house entails a lot of costs including, first of all, deposit money. Deposit money is the initial money that will secure the home. Sellers have to know that you’re serious about buying their house and that you’re not wasting their time.
Most of the time the deposit money will amount to 0.2 percent of the price of the house.
The most neglected cost overall when buying a house are the closing costs.
Once the deal has been closed and the key to the house is yours, surely, you would want to enjoy your new home right then and there. But, to your surprise, more paperwork and more expenses will come your way. Surely, you wouldn’t want to face your agent and seller with your pockets drained to the cent.
Closing costs include title insurance, recording fees, surveys, notary fees, and more.
The Ideal Backyard
When tuberculosis hit the world in the late 1800s, killing one out of seven people in the United States and Europe, it wasn’t only the physical and mental health of the people that were affected and had to adapt rapidly. Architecture was also on the line. Architects like Hugo Alvar Henrik Aalto and Le Corbusier were two of the first responders to the problem.
They introduced structures wherein sunlight was prioritized to decrease the presence and growth of bacteria. Windows were built as large as walls and terraces became a part of every structure. Then and there, modernist architecture was born.
The COVID-19 pandemic did not only affect the way we interact with each other, the healthcare system or our increasing activity on social media. The pandemic has also affected the ways in which houses are supposed to be built and how much time we spend in them.
Today, entertainment within our homes has become important along with the presence of nature inside, physically or visibly.
The pandemic and the need to stay at home during such a terrible time in history has proven the importance of allotting space for entertainment, exercise and nature in our homes.
We can’t depend solely on public recreational places for our emotional, mental and physical well-being. Not anymore. The world has been plagued by several pandemics and surely, the COVID-19 pandemic is not the last.
Energy Efficient
We’re now approaching an era where energy must be conserved and sourced from renewable and eco-friendly sources. Otherwise, we’ll be adding to the burden that nature is enduring right now caused by the toxic amount of pollution present in its air, land and waters.
Now that the masses are becoming more aware of the current situation that nature is in and as the environmental problems of the world are becoming more discernible, greenhouses are becoming more in demand.
Millennials, Generation X and Y, the homebuyers of the future have spoken. According to a survey carried out by The Guardian, two-thirds of millennials “buy as many eco-friendly products as they can.” And, in another survey, 66 percent of global respondents said that they support products and services that aim to make a positive environmental impact.
The point is, buying an energy-efficient or an eco-friendly home today will not only allow you to contribute to the reduction of harmful gasses present in the environment, but you’re also guaranteed a property that will still be in demand 50 years from now.
Right Neighborhood
At last, you’ve found your glamorous blue front door matching the modern architectural details of your two-storey, 4-bedroom, 2-bath home. Unfortunately, it sits right in the middle of a budding global city – construction, noise, smoke, dust and everything that’s not nice.
Whether you are in Noble Park or Melbourne. Make sure that when you spot your dream home, you visit it during the day, during the night, weekdays and weekends. Or at least, ask what happens during those times.
Look around. Are there bars nearby? Karaoke? Construction? Are there any major plans for the neighbourhood in the next months to come that may disrupt your sleep schedule or your work from home?
There are some complexes that do not allow pets, outdoor activities, certain levels of noise and the like. This information will always be available at the front desk, the neighbourhood’s office, the town hall or even online.
Mortgage Options
First of all, what’s a mortgage? And what are your options?
A mortgage is simply a type of loan you get from a bank or an individual lender to finance your home. And, there are many types of mortgages which vary in length and interest rates.
Each option suits different needs and criteria. For example, for homebuyers that can pay a steady fee monthly and are more comfortable budgeting monthly, fixed-rate mortgage is for them. For those that like a little bit of freedom, Standard Variable Rate (SVR) is for them. SVR allows you to overpay monthly or abandon the mortgage at any time.
It’s best to consult a mortgage broker. They are professionals who can help you sort out finances when buying a house and they will save you a fortune in choosing the right mortgage options suitable for you. These professionals look deep into your economic status, your income, expenses and other conditions before they calculate which payment path to take.
Mortgage Pre-Approval
Don’t get too excited about buying that house without getting a mortgage pre-approval. Also don’t make any offers without a pre-approval or having spoken to a mortgage broker prior. Don’t negotiate anything with a seller without a pre-approval.
Almost all the time, the bank’s estimate versus your estimate of what house you can afford will have a large difference, and making a move on a listed property without a pre-approval can only end up in disappointment.
Before making any bids, make sure you have the bank’s approval or you’ll be wasting your agent’s and seller’s time if you don’t get that loan you thought you had.
A Competitive Real Estate Agent
There will always be an abundance of houses for sale and combing through the myriad of choices alone as a homebuyer is not practical.
House hunting is a time-consuming and exhausting endeavour that no homebuyer should do alone. As a homebuyer, you have a lot of responsibilities that are more important. This is why it is more practical to seek the assistance of a competitive local agent who can take such heavy load off your shoulders.
A common misconception about real estate agents is that they only exist to milk you cash-dry, but that’s totally wrong. In fact, it’s the complete opposite.
It is the real estate agent’s responsibility to give you the best deal and to make the most out of your budget. One of their jobs it to compare prices of properties listed on the market and help with finding the most viable option depending on your budget and needs. Real estate agents get paid by commission or a percentage of the sold property’s price by the seller.
Always Look for a Better Deal
It’s pretty obvious that you need to look for “the good” deal, but that’s the thing, although obvious, most homebuyers miss the right opportunities and the best deals.
Buying a house may only come once in a lifetime. There’s no need to rush. Take your time. List all your choices down and pick the best choice.
Keep in mind that you can only find the best deal if you know how to let go of the good deals you find. When buying a house, you don’t need to rush. You don’t need to buy the first piece of property that meets your needs. Because, most of the time, there’s going to be a better deal that’s waiting for you to discover.
All you need to do is take your time and keep searching even when you have found a good choice. It is better to have a lot to choose from than being limited to a few options.
A Sturdy Foundation
The foundation of your home is its most important structural element. It supports the whole weight of the home and prevents it from sinking or settling in the soil beneath. A properly constructed foundation also serves as a water barrier that protects your home from the obtrusive properties of water.
Although hidden, the foundation can be checked for damages by looking at signs that may be present above ground. For example, doors and windows that are not opening properly can be a sign of a deteriorating foundation. Cracks and buckling walls are some of the most obvious indications of a failing foundation.
Consulting a structural or a civil engineer would be the best way to approach this problem.
Properly Maintained Home
You can definitely judge a home by its cover. There’s no denying that.
If you’re greeted by peeling paint and towering overgrowth, get ready for a gruesome fixer upper.
Obvious signs of aging and deterioration should be enough to indicate the presence of other hidden issues. If this is the case, don’t hesitate to ask the seller if the foundation is still intact or if mould has settled in the home. Most of the time, the answer is yes.
When looking for a house that will require little to no renovations and minimal problems in the future, look for a property that is well-maintained and in the hands of meticulous owners unless you are a handyman and know how to fix the odd bits and bobs around the home.
Proper Ventilation
During open houses, there are a lot of things you can inspect in your future home like architectural details, furniture, appliances, the ambience and basically everything that’s visible. One thing that is hard to see in open houses beside the foundation is proper ventilation.
Especially in a fixed-up home, the effects of improper ventilation won’t be as obvious because it takes time before these effects can be seen. In most cases, ventilation problems will only come up months after you’ve bought the home.
The effects of improper ventilation include mildew, molds and mites. In worst cases, excess humidity in a house can cause structural problems. If you are looking for a cleaning team to do a tidy up before settlement Calibre Cleaning has been our go-to.
Buying a House That Will Increase Your Quality of Life
Look for a home that will improve your quality of life. Don’t just settle for a dandy interior, a large house or a 3-story modern colonial home with concrete spiral staircases because you’ve always dreamt of it.
Imagine yourself living in that house for the next 70 years.
A home that can increase your quality of life is a home that lets you do the things that make you happy. It is not a home that bombards you with unwanted DIY projects or large maintenance costs.
Hidden Issues
It’s okay to not trust what sellers advertise as a home in very good condition. It may not be their intention to hide issues, but sometimes even homeowners don’t know about these problems that are hiding in plain sight. For example, homeowners may not know about a foundation issue that has gone unchecked for several years and this may become a problem for you if you continue buying the property without a solution to the issue.
It’s important to look for these hidden issues not only for safety, but to save money on repairs. If hidden issues are found, you can negotiate a lower price with the owner or you can request that the owner pay for the repair.
Freebies
Torn apart between two deals that are equally great? Choose the one with the most freebies. Yes, even houses come with freebies.
There are a lot of costs when buying a house, most of the time not involving the house itself, but a bunch of paperwork and legal services. If you’re lucky, you can find a seller that has his own legal counsel that can take care of these things for you at a cheaper price or even for free. All you have to do is ask.
There are instances when parking bays are included in house deals especially when buying a property in a subdivision with its own parking lot or a condominium. Acquiring a parking bay may not sound too good of a freebie, but you can maximize this opportunity by renting it out. That’s an easy extra passive income in the future and may even help out with the mortgage.
If you’re torn apart between two houses that equally have excellent locations, qualities and prices, try comparing the appliances and furniture that come with them side-by-side. Are you better off with the house with two electric Bosch ovens or the one with two sets of LG Turbowash Washer and Dryer? Something like that.
Be a Smart Homebuyer….
Buying a house for the first time can be an uphill battle and can result either in a very fulfilling moment or instant regret. To avoid the latter, it’s important to accept that you’re not knowledgeable enough to go through all the processes of purchasing a home as a lone ranger. Always seek the help of professionals and be open to the opinions of friends and loved ones.
