Buying a home can be a very emotional process, and if you are not open to a more rational perspective on the home buying process, it can leave
you making many mistakes you just might regret.
There are 8 common emotional mistakes people make when purchasing a home. To help you find the best place to call home, avoiding these following common mistakes will help.
Mistake 1: Falling in Love With a House You Can't Afford
Once you see a house you’ve fallen in love with, it’s difficult to like anything else that's out there on the market. Your imagination starts running and you immediately start planning out where you’ll put your furniture or what the back yard will look like. However, if you can’t afford the house or even qualify for the mortgage, you’re setting yourself up for failure and disappointment. To avoid the potential heartache, it’s best to stick with homes in your price range and not waiver.
It’s a great idea to begin your search at the low end of your price range and work from there. Remember that for every $10,000 worth of house, you aren’t just paying $10,000, you are paying that price PLUS interest. That in turn may double or more in time. Ask yourself if it’s worth it.
Mistake 2: Assuming There's Nothing Better Out There
It may seem that there is nothing better out there once you set your sites on what you want, but what you may not realize is that most neighbourhoods have similar homes available as many developers created similar, if not the same floor plans. Even if you can’t find the same house, you may find homes that have some of the same features. The odds are also in your favour if you are considering a condo or a townhouse.
Even with a long list of must-haves, chances are there are many homes that can suit and meet your needs. If you do find one and there are issues such as major repairs, inflexible asking prices or possession dates, consider keeping your options open to looking further. It could save you money.
Mistake 3: Being Desperate
When you’ve been looking for awhile and can’t seem to find the house you want, or the ones you do want are getting outbid on, it’s easy for desperation to set in. You can’t wait to get into a new house right away and will probably end up settling for something you could end up hating because you settled in the first place. Transaction costs could end up costly, you’ll pay for agents’ commission ( up to 5-6% of the sale price) not to mention closing costs for the mortgage, all on a house you rushed on, end up hating or have spent tons of money in altering the house to your liking or renovate. It’s OK to take your time and wait for that house you really want (and can afford), in fact it’s worth it.
Mistake 4: Overlooking Important Flaws
It’s important to pay attention to any flaws of a house. That may seem logical, but again when emotions are involved, some may think a few flaws are ok, until reality sets in and end up dealing with a cracked foundation, major renovations to take care of, or worse. Remember that new houses come on the market everyday. Remind yourself of that and it may save you in the long run.
Mistake 5: Overestimating Your Handyman Skills
Fixer-uppers may sound appealing but before you eagerly get out the tool belt, make sure you keep in mind the factors of time, money, ability and the cost of tools and labor. Don’t buy a fixer-upper if it’s realistically more than you can handle. Be sure to be honest with your abilities and your budget and if you have the time to do the work or have it ready by your move in date.
Mistake 6: Rushing to Put In an Offer
In a hot market, it may be necessary to make quick decisions to put in an offer on a house. If you have some time, be sure to be diligent in researching the neighbourhood and possible noise issues such as being near an airport or the night time nearby train that will rattle your dishes. Having the knowledge of the area will give you an idea of what the property is really worth and an appropriate offer price.
Mistake 7: Dragging Your Feet
Contrary to rushing an offer, sometimes dragging your feet on an offer can be just as detrimental. It’s important to be careful in your decision, but waiting too long gives time for another potential buyer to scoop up the opportunity, not to mention how time-consuming and routine-disrupting house shopping can be. If you are self –employed, the longer you shop the more you are disrupting your valuable time and money.
Mistake 8: Offering Too Much
In a situation where there are multiple offers on a listing, it’s easy to get sucked in to a bidding war, or try to pre-empt a bidding war by offering a high price in the first place. There are potentially a few problems with this. First, if the house doesn’t appraise at or above the price of your offer, the bank won’t loan you the money unless the seller reduces the price or you pay cash for the difference. If this occurs, the shortfall on your offer as opposed to your mortgage will have to be paid from your pocket. Secondly, when you decide to sell your house, if the market conditions worsen or are similar than when you first purchased, you may find yourself upside down on your mortgage and unable to sell. Be sure that the purchase price for the home you buy is reasonable for both the house and the location by comparing recent sales in the area and speaking to your real estate agent before making the offer.
Conclusion
It is perfectly natural for emotion to come into play when looking for a home. It’s exciting. Buying a house is a big decision and is exactly why there must be rational decisions made rather than getting caught up in the notion of a dream home. Take your time, overcome the emotions and ultimately make a home buying decision that‘s good for your finances, feelings and future.
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