First Step: Decide What You Want In A Home
Below is a list of things to think about before you start shopping for your first home. Make sure you rank each one in order of importance. Keep in mind that it is extremely difficult to find the perfect house to meet all your wants. Needs are a more conservative way to shop- especially when price is involved in your decision. A first home buy is an extremely emotional one. Doing this step first will help give you a clear direction to follow.
Location - What kind of neighborhood are you looking for? If you have children, or expect to down the road, a family oriented neighborhood would be best. If you are retiring, you may not want screaming kids on your block. Do you want to live in a big city or a quiet rural area? Above all, you want to make sure that your neighborhood is a safe one.
School District - This is extremely important for a young couple that has kids, or is planning to have them soon. You want to check out the school district and see if you approve of their curriculum. Find out which schools your child will have to attend in the neighborhood. You may find the perfect home for you, but if the public school nearby has a bad reputation you may want to either reconsider the property or think about private school.
Distance from Work - This depends on what you do for a living and how bad the traffic is to get there. Sometimes the perfect home is worth a 40 minute drive, but if you are stuck in traffic for 35 of those 40 minutes it may not be. If you are really set on the house but work quite a bit away, try making the drive at your regular departure time during the week to determine if you can deal with it everyday.
Appearance - Are you looking for a new house or a used one? What outside features do you look for? Brick or Wood? One story or two story? If you are good at fixing things up you may want to look past the exterior and see the possibilities. Many people can find a house for a good price if they are willing to put in some work after they purchase it.
Size - How many rooms do you need? How many bathrooms? Are you looking for a lot of square footage? What about the individual rooms. Do you need a big kitchen, formal dining room or extra office/den? How many car garage do you need?
Amenities - What kitchen appliances do you need? Is the layout important? How about closets, fireplaces, and the existing decor, etc. Does it have a pool & jacuzzi in the backyard? Is it spacious?
Common First Buyer Mistakes:
Shop...Shop...Settle? The most common mistake that first timers (and experienced buyers as well) make is that they don't look at enough houses before they close on a house. Don't worry about wasting your real estate agent's time - that is what they are getting paid for. The more houses you look at the more you discover what you do and don't want in your first home. So get your needs and wants list together and shop until you drop (or until you find exactly what you want.) If an agent tries to close on a house you don't want then get rid of him/her. There are plenty of agents that will take the time to show you as many houses as you need to see before you make a decision.
Making an Initial Offer Close to the Asking Price - When your initial offer is close to the asking price then you have left yourself no room to negotiate. Unless you think the house was priced extremely fair compared to your market research on the area, you should only ask for what you think the house is worth. There is nothing lost in the asking. If the price you offer is too low the seller will let you know and most likely bring down their initial asking price...let the negotiations begin!
Not Having the Correct Price Comparison - Many people asses the value of the house based on the asking price without doing any market research. Your agent should be able to do this comparison for you using "CMA" - Comparative Market Analysis reports. This will tell you what similar houses in the area recently sold for.
Underestimating Total Costs - Hidden costs can sometimes pop out at you and cause a lot of stress and pressure. To help alleviate this anxiety try to set aside at least 10% of the homes total cost as a safety net. If you are worried about hidden costs, contact either your agent or your loan broker to help you calculate your price range. This is information that they will need to gather for their own records anyway.
Emotional Pitfall As much as we try to avoid it, it is almost impossible not to fall in love with a house that we really like. However, try to stay focused - many people want the house so bad that they lose all reason. Keep in mind that there are many houses available on the market every day. If it doesn't work out, there is always something just as good (if not better) around the corner.
Not Being Able to See Past Bad Decorating Remember, when the house is yours you can do with it what you may. The previous owners will take their furniture and walls can always be repainted. Many people have a hard time seeing beyond the decor of the house to the things that really counts like layout, space, cleanliness, etc.