7 Costly Mistakes Homebuyers Make and How to Correct Them
7 Costly Mistakes Homebuyers Make and How to Correct Them
In the era of smart home technology, designer paint and HGTV, it’s easy for homebuyers to focus on the wrong things when shopping for a home. While it’s easy to be swayed by shiny gadgets and new kitchen countertops, hastily picking a home based on items that can easily be upgraded or changed later while ignoring the bigger issues can cost you more money (and hassle) in the long run.
Read on to find 7 costly mistakes homebuyers make and how to correct them.
There’s a reason “location, location, location” is repeated. Your home’s location is fixed (unless you’re buying an RV) and one of the few things you absolutely can’t change. Things like commute time and surrounding lots are important considerations and ignoring these factors can lead to long term frustration and increased costs.
How to correct: When considering a home’s location ask yourself questions like the following.
- How long will it take to get to and from work (considering rush hour limitations)?
- Are the surrounding properties residential, commercial or industrial (this can affect resale value)?
- Is the property on a busy street?
- Does the property have any shared structures with surrounding homeowners (i.e., driveways or fences) and if so, how is this handled in the deed?
Square footage and layout
Square footage is one of the most expensive things to change. As a Realtor® I’ve heard so many buyers say, “Well I saw this on HGTV, so I know I can do it myself.” Trust me, as someone who is married to a man who has made a living flipping and renting houses for 17 years, what you see on HGTV is not how it goes in real life. It costs more to move walls and change the layout in a kitchen or bathroom than it does to upgrade cabinets, countertops or appliances. While there may be a newly renovated bathroom, if you feel the home doesn’t have a layout that works, and you plan to make changes and additions in the future don’t ignore the costs that will be incurred.
Related, if the lot size doesn’t fit your needs then you might want to keep looking. While you can replace flowers you don’t like, unless you can buy an adjacent lot, your property isn’t going to get any bigger. If you already think the property is a little bigger than what you’re looking for then sit down and decide if you’ll really take care of the lot in the way it needs to be maintained.
How to correct: Make sure the home has the general layout and number of bedrooms and bathrooms that work for your family. If you’re buying a property with plans for renovation, factor this into your costs. During the inspection period if possible, talk with contractors and obtain quotes for the work you’d like to do. Alternatively, you can use the estimate from Homeadvisor.com as a guide, suggesting the average cost of adding a bathroom can range anywhere from $3,000 to convert existing space to $25,000 for a brand-new bathroom. Similarly, the average price per square foot of an addition (think adding a bedroom) is anywhere from $80 to $200 per square foot. According to the National Association of Homebuilders, the average size of a new bedroom is 481 square feet, so planning to add a new bedroom would cost between $38,480 and $96,200.
Questions to ask yourself when considering whether the layout works for you
- Do you or your spouse work from home? If so, is there existing space for the number of home offices that are needed? My husband and I both have a shared-space home office which frequently leads to spirited discussions about replacing the printer paper and who used the last of the ink.
- Is there enough space for a baby and kids? While you don’t want to buy more house than you need, you also don’t want to buy less than will accommodate a growing family.
- Similarly, if you have aging parents who will likely be living with you soon, is there comfortable space for them to live?
- Does the lot run next to an interstate or busy road? (this will not only affect you while you live there but could also affect your home’s resale value if you decide to sell).
Not Checking Out the Neighborhood at Night and on the Weekends
The neighborhood likely won’t change very much after you move there. During your Wednesday afternoon showing the neighborhood could be quite different than it is at night or on the weekend.
How to correct: Drive the neighborhood during a weeknight, weekend day and weekend night to make sure whatever is going on is conducive to the vibe you’re looking for. You can also check sites like Nextdoor to find more out about what’s happening in the neighborhood. Additionally, Realtor.com suggests typing in your soon-to-be new zip code into sites like Greatschools.org to search school ratings, and My Local Crime to check into local crimes.
Ignoring Homeowners Association (HOA) Restrictions
If you’re buying a home that’s part of a Homeowners Association (HOA) you’ll receive a copy of the bylaws (i.e., covenants and restrictions) before you close and ignoring these restrictions could create problems once you own the property. It’s important to review these carefully as they’re unlikely to change during the time you live there.
How to correct: Consider issues such as whether you own a boat or RV and any restrictions on where these can be housed. Many HOA’s don’t allow boats, RVs, oversized trucks and other similar items to be stored on the property which means you’ll have an additional monthly cost for storage. Other things like exterior paint colors will likely also be included, so make sure you’re OK with the current color of the home.
It’s the age of AirBnB and VRBO, but not all municipalities are on board with the comings and goings of short term rentals. If you’re counting on future rental income after you buy your home, it’s important to figure out city and county rules ahead of time.
Not factoring in Home Maintenance Costs
How to correct: If you’re buying a home with the intention of renting it out, make sure you’re in an area that allows short or long-term rentals. For example, city limits may allow for short term rentals, but home’s in the county may have a requirement for 30-days or longer. Similarly, if the property you’re buying is part of an HOA, check into the covenants for rental restrictions on the amount of time the homeowner must live there before it can be rented.
Many buyers frequently don’t consider what their home maintenance costs will be after they buy a home. Things like vaulted or high ceilings will raise monthly utility bills and large lawns will up your water expenses and need for landscaping equipment or a lawn service.
How to correct: Try to garner a general understanding of how much utilities, lawn maintenance, HOA fees, taxes and insurance will run. You or your real estate agent can ask the seller for these estimates or call providers during the closing process to get a general idea of what utility bills will be.
Ask yourself questions like the following.
- Are you planning to build a fence?
- Will you need to buy things like a lawn mower, upgrade to a riding lawnmower, or hire a landscaping or pool company?
- Does the lawn need to be watered frequently?
- Will you need a pool service or need to buy pool chemicals on a regular basis?
This might be the biggest and most costly of all 7 costly mistakes homebuyers make. Frequently in today’s market, homebuyers are swayed by Nest thermostats or fancy new light switches while ignoring the faulty or old wiring that’s behind the wall. According to HomeAdvisor, it only costs about $1,000 to automate your home, compared to upwards of $10,000 to re-wire a moderately sized home. Similarly, a $200 touchless kitchen faucet might look nice, but if the pipes connecting to the faucet are polybutylene then you’ll likely have a costly issue on your hands, and an insurance nightmare. Don’t like the paint colors? Hiring an interior paint specialist to repaint the inside of your house can run between $380 – $790 for a 10×12 space, but if the walls you’re painting aren’t structurally sound then you’re looking at much more major and costly repairs.
How to correct: Get a home inspection! I can’t stress this enough. If you’re trying to save money during the homebuying process, skipping the home inspection is not the place to save. You may think you’re saving yourself $300-$500, but this money is well spent if it helps identify deal-breaking issues that could be costly after you’ve purchased, or that could be negotiated during the inspection period. A licensed home inspector will be able to tell you things like the remaining life expectancy of the roof and whether the electrical panel is old and will need to be replaced. Don’t ignore these potentially big-ticket issues thinking you can replace them after you buy, especially if you’re using most or all your savings and cash reserves for the down payment and closing costs.
While homebuying may seem daunting, it doesn’t have to be. Armed with a good Realtor® and a basic understanding of what your current and future costs will be, you’ll be on the right path to finding the right home.
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