7 Real Estate Mistakes to Avoid When Buying a New Home
Whether you’re buying your first home, selling and moving to a new home, or thinking of investing in real estate, there’s a lot to know and a lot that can go wrong. Being prepared and knowing what not to do can save you a lot of stress, disappointment, and money. Here are the top seven real estate mistakes to avoid if you’re in the market to purchase a new home.
Not Researching the Property Thoroughly
It’s always wise to do your research before making any big purchase. But It’s even more important when it comes to buying a home or investment property. Real estate is one of the biggest purchases most people make and buying a home that isn’t structurally sound or hasn’t been maintained properly can be disastrous.
You should look into the property’s history as well as its current state. Always verify if any major repairs or renovations were completed correctly and with the proper permits. And have a lawyer confirm that there aren’t any outstanding easements, liens, or back taxes owed. Before making an offer on a home or property be sure you know what you’re getting!
Skipping a Home Inspection
Don’t just trust that everything is in good working order. Ensure you have a chance to thoroughly inspect the property by adding a second walk-through and home inspection conditions of the sale. Then take the time to open and close windows and doors, turn on faucets, and keep an eye out for signs of mold or water damage. You should also always hire a professional home inspector to check for safety and structural issues and that the plumbing, electrical and HVAC systems are up to code before buying any home.
Overpaying for a Property
When you find that perfect home that meets all your criteria, it can be easy to get caught up in the excitement and pay more than it’s actually worth. If you overpay for a property, you will have a hard time making your money back if you ever want to sell. Another risk is that when the bank completes their appraisal, they may only give you a mortgage for the amount they estimate the home is worth. To avoid overpaying, be sure to compare what similar properties in the area are selling for. Your real estate agent will also be able to tell you what the property sold for last and guide you on fair and accurate pricing.
Borrowing More Than You Can Afford
One of the biggest real estate mistakes you can make is overextending yourself financially when buying a home. When determining how much mortgage you can afford, be conservative. Lenders will often approve you for more than you can pay comfortably. It’s up to you to make sure you don’t allow your mortgage payments to be higher than your budget allows. Your monthly housing costs, including mortgage, property taxes, insurance, and condo or maintenance fees should be approximately 30% of your income.
Buying in a Bad Neighbourhood
In order to get more home for your money, you may be tempted to purchase property in a less-than-desireable neighbourhood. But buying in a bad neighbourhood is a big real estate mistake to avoid. Even if you improve the home, you may never be able to recoup your investment and you could have difficulty selling at a later date.
Take the time to look at the neighborhood crime statistics, school ratings, and home sales. If there are a lot of homes for sale in the same area for less than average prices, it can be a sign of people wanting to leave the neighbourhood. Visit the area at different times of day to see how busy it is and take note of what kind of activity occurs during the day and at night. Is it a family neighbourhood? Are there a lot of people out or are the streets empty? Are homes being improved or is there a lot of run-down properties?
Not Budgeting for Additional Costs
One of the most common real estate mistakes we see is not realizing how many additional costs come with buying a home. While the mortgage is definitely the biggest expense, it’s only part of the cost of buying and owning a home. Closing costs include expenses such as home inspections, insurance, taxes, and legal fees. These costs can add up quickly and often come as a surprise to many new homebuyers.
Property taxes, utilities, maintenance and repairs are unavoidable, and they can all add up to a substantial amount each year. Plan to budget at least 1-3% of the home’s value for regular maintenance and repairs. Property taxes vary by area and size of the lot, but they are disclosed in the real estate listing, so you shouldn’t be surprised by this annual expense. You can also talk to the previous owners to get an idea of what they pay for utilities so you can budget for these bills as well.
Not Having A Good Team
Not having a qualified team to help you through the process is a definite real estate mistake to avoid. There’s so much more to buying a home than just finding the perfect property. You also have to handle legal matters, financing, and fill out a lot of paperwork. The best way to protect yourself and ensure everything goes smoothly is to put together a great team of professionals to help. An experienced Ottawa Real Estate Agent is your best asset when it comes to avoiding costly and stressful real estate mistakes. Your Realtor® can also put you in touch with all the right people to make up your team.
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