A large portion of investors never make it past one or two property purchases – and it’s not because of their personal income, it’s because they made the following mistakes
1. Overbuying: Real estate experts cite this as the most common mistake for first-timers – buying more than they should or can afford. Make sure you have an excellent understanding of all the costs of homeownership involved, as well as a handle on your other expenses, from credit cards to personal expenses to car payments or any other commitments.
2. Emotion over reason: Buying your first home is an emotional moment and one you should be excited about, but you must keep your head. Don't let your “love” for a prospective home cause you to become overexcited and lose your common sense. You may end up buying the wrong house or paying too much for it.
3. Settling: Sort of the opposite of overbuying, don't “settle” for a house when there are likely better options available. Make sure you do your research on your finances, the neighbourhood, location and specifics of the home, so you know you're making an informed choice.
4. Not getting pre-approval for a mortgage: Getting pre-approved provides peace of mind in that you know what you can afford, which gives you confidence when it comes time to making an offer and negotiating.
5. Not knowing your mortgage options: While you may feel most comfortable going straight to your friendly neighbourhood bank for a mortgage, this may not be where you get your best deal. Finding the right mortgage can save – or cost – you thousands of dollars, so be sure to take the time to examine all options – from banks to brokers, and all the various products available.
6. Choosing the wrong location: Most first-time investors tend to stay close to their homes. In making your selection you need to think at least a little about the factors that affect resale – either positively or negatively. Research the neighbourhood and pay attention to marketable details of the house, such as proximity to transportation, shopping, schools, parks, planned developments and even local crime statistics.
7. Scrimping on the inspection process: The cost of a professional inspection is a small price to pay for the peace of mind of knowing your prospective property is free of major defects.
8. Not reviewing the purchase contract closely: Property purchase contracts are long and detailed, but it's necessary to review them carefully, both on your own and with your lawyer. Pay attention to all clauses, covering everything from inclusions in the sale to closing dates.
9. Using the wrong realtor: For first-time buyers especially, the services of a qualified and experienced real estate agent are invaluable. But not all realtors are created equal. In the hot markets over the last several years, more people entered the profession, trying to cash in on booming sales and commissions. But now, in a more challenging market, some of these newcomers are becoming part-timers or leaving the business entirely. In theory, at least, the best and most experienced realtors will be left standing. Be it through referrals or your own research, take the time to find a good agent – one who wants and truly deserves your business.
10. Making an offer prematurely: This often results from buyers getting too attached to a home too early, without looking at other options, letting their emotions get the best of them and wanting to snap it up before someone else does. Be sure you take the time to review the information on market value for similar homes in the neighbourhood to ensure you don't overpay.