If you're looking to buy a new home for the first time, you're not alone. There are thousands of first-time homebuyers in the same position right now, even with the steep market we have today.
You may have heard some challenges that these buyers are facing these days, but don't let those stories deter you. If you know what you're facing, you can plan ahead and have a smooth home buying experience. Let's talk about some of the most common unexpected challenges that new homeowners are facing today!
1. Touring Restrictions
Since the Covid-19 pandemic began, the process of touring homes has changed in more ways than one, and some homes won't even offer in-person tours. This could be because of existing tenants, Covid-19 policies, or so many other reasons.
Also, if you live in a different state and you don't want to drive or fly away for one tour without knowing how well it will go, then you'll need to plan for that. If you use the right service, you can have 3D or VR touring, giving you a remote, immersive experience in the house. This will help you make an informed decision without the risk.
2. Things Breaking After Purchase
Expensive repairs don't hold themselves off until you're financially stable. They can come at any time.
Imagine spending all of the money you saved on a down payment only to move in and have the roof collapse in a couple of months. That's an extreme and highly unlikely scenario, so don't worry. If it was caused by a natural disaster or something similar, then insurance should cover it.
Let's apply the same principle to more likely scenarios. We've all had a car that breaks down or runs into problems at some point. Well, your house has just as many, if not more, moving parts and components as your car.
Your water heater, furnace, or other appliances could die out, or there could be a leaky pipe that ruins some drywall. Even common replacements like these could cost thousands of dollars, which could hurt you after spending your savings on your down payment and closing costs.
Of course, there is a way to prepare for this and it's with a thorough inspection. If you're going to spend $300,000 on a house, a $400 inspection is a mere drop in the bucket.
However, even the best inspectors are still human, which means they aren't perfect! If at all possible, try to save enough money to get you through these unwanted expenses in case they arise. If you need $45,000 at closing, having an additional $5,000 to $10,000 could really save you!
3. Outbidding and Still Losing the Home
Imagine outbidding all of the other potential buyers and still not getting the home. Doesn't sound likely, does it? Well, with an undeniable seller's market, these instances are becoming not common but more common.
Some sellers will choose a listing price hoping to drive a bidding war and to sell above their asking price. For that reason, if they aren't motivated to sell right away, they may reject an offer, even if it was the highest one. While this isn't likely, it is something to be aware of, especially in today's market.
The best way to set yourself up for success is to have a skilled real estate agent on your side who is prepared to negotiate on your behalf and find you other homes you may be interested in if all else fails.
In some cases, you may be recommended to waive all contingencies to purchase the home, which may put you at risk of serious costs. If that's the only way for your bid to go through, then ensure that you have a thorough inspection and you've consulted with your agent before making a decision. Otherwise, you could find yourself facing a lot of additional costs.
4. Hidden Costs
This is especially concerning if you're buying homes in one of the booming markets around the country like Massachusetts, Colorado, New York, or California. Regardless, prices all around the country are on the rise, and they aren't the only costs to consider when buying a home. We strongly recommend adding more to your budget for these unexpected expenses.
At the very least, you should factor in realtor fees, closing costs, inspection fees, moving costs, and any renovations or repairs you intend to put in. These are the bare essentials, but other costs could arise before you know it, such as:
- Trash removal
- Hidden moving fees
- Gas for moving
- Property tax
- Homeowner's insurance
- Homeowner's association fees
- New-state expenses (car registration, licensing, etc.)
- Pest control
- Leaf/snow removal
The list goes on, so try to have as much cash on hand as possible for these unexpected expenses. Not all of them are "unlikely" costs, especially in certain areas.
Going back to our first point, this correlates with one of the most common mistakes for first-time home buyers: not saving enough. Check out our top tips for millennial homebuyers for more information.
5. Taking Too Long
Moving is one of the most stressful things we do in our lives, and when you add all of the challenges of home buying, it can be even more stressful. This is especially true when the process drags on for too long. Often, we start our journeys motivated to get everything done, but sellers may drag their feet, banks may take too long to approve you, or there may not be any homes for sale that meet your needs!
The process between shopping and closing can take anywhere from 60 days to a year, and then you still have the move to worry about. Start with realistic expectations about the timeline and plan for the worst just in case. Also, take a look at the available houses in the area and see how quickly they're selling.
Your real estate agent will be able to help you with more relevant information regarding timelines, but you should still prepare for a wait, just in case.
Also, not only does the process take a long time, but you will have to be fairly involved, so keep that in mind. There may be a lot of phone calls, tours, paperwork, and more for you to do, which can take some time. However, with the right help, you can take a lot of work off of your plate.
Other Unexpected Challenges
Chances are that you've run into a home buyer horror story or two along your journey to shop for a home. There are just too many to choose from.
However, there are plenty of others that weren't mentioned above, but don't worry. You can't plan for everything, so don't try to! Focus on what you can control, but be aware of potential challenges you may face, however unlikely.
For a better idea within your specific area, take the time to knock on doors in the neighborhood and ask. Your neighbors will have the most relevant information about unexpected expenses, tips, and what it's like living in that area!
Also, there's plenty of information online, but nothing beats talking to the experts. Always use local real estate agents familiar with the area and ask questions about anything you want to know. They'll likely have plenty of horror and success stories to share with you!
Setting Yourself Up for First-Time Success
Fortunately, it isn't all "doom and gloom". If you have the right agent, you're looking in the right area, and you plan ahead, you can buy the home of your dreams in no time.
Don't let home-buyer horror stories get to you. Most of us go through this process at some point in our lives and it's often one of the most rewarding decisions we make. However, you still don't want to take it lightly.
Knowing some of these unexpected challenges puts you ahead of the competition, especially if you prepare for them ahead of time. Talk to your agent about any of your concerns, save up ahead of time, and choose wisely!
Get It Right the First Time
Now that you know some of the unexpected challenges with first-time home purchases, you're in a good position to make an informed decision on your next home. Buying a house for the first time is scary, but with the right planning, you can get it right the first time!
Stay up to date with our latest homebuying news and feel free to contact us with any questions or for help with your search!