It happens every time. You mention to a friend, family member, or coworker that you’re looking into buying a house, and they immediately bombard you with their advice, tips, and horror stories. It’s all well and good to want to share insider advice when you’ve been through the process, but sometimes it can do more harm than good. There’s inevitably some piece of information they get completely wrong, or some tip that only works every once in a blue moon. Some people will have great advice that will definitely help you in your home buying journey, but there are some tips you should absolutely ignore.
Foreclosures and short sales are the way to go.
Foreclosures and short sales aren’t always the great deal they’re cracked up to be. When you’re dealing with buying a bank-owned property, there’s no room for negotiation. You might be getting a good price on the home, but that doesn’t mean you’re getting a great deal. Sometimes you’re buying the property as is, and sometimes you can’t even go inside the home before buying it, especially if you’re buying a foreclosure at auction. As for short sales, people in the real estate business love to tell you there’s nothing short about a short sale. The word short in the term short sale just means that the bank is willing to accept a certain dollar amount less than what the owners still owe on the property. The whole process is usually pretty long and drawn out.
Buy a fixer-upper and save tons of money.
Don’t let HGTV and DIY Network fool you. Fixing up an old or run-down house is not as easy as they make it look on television. Getting the most out of a fixer-upper requires extra time, money, and patience. It helps if you’re handy and willing to do a lot of the work yourself, but not many people have the time and the know-how required to make a fixer-upper worth the money you might initially save upon purchase. Before you decide to buy a fixer, we highly suggest having an inspection done and getting some estimates from a contractor or two.
You don’t need a real estate agent.
Yes, you do. You always, always need a real estate agent. Don’t let anyone try to tell you that working without an agent will save you money. Your agent is there to help you get the best deal possible. They are expert negotiators. They know when the law is on your side. They have far better resources when it comes to finding a home, getting a mortgage, and having inspections and repairs done. Some sellers might try to avoid paying commission by telling you you’ll get a better deal if you don’t use a real estate agent, but this couldn’t be further from the truth. You need someone on your side who knows the ins, outs, ups, and downs of real estate. Hiring an agent is the absolute best way to know you’re getting the best deal possible and steer clear of any possible legal issues.
The cost per square foot matters more than the price.
The price per square foot of a home is a general metric for measuring whether or not the asking price is reasonable. But it shouldn’t be the reason you decide whether or not to buy a home. A home’s price per square foot doesn’t take a lot of factors into consideration. It doesn’t include things like lot size; non-heated space that don’t officially count as square footage (such as garages, basements, and outbuildings); the number of bedrooms and bathrooms; and certain premium features you might be looking for, like granite counter tops or a swimming pool. If there are some things that are important to have, don’t use a home’s cost per square foot as your measuring tool.
Buy the worst/smallest/ugliest house in the best neighborhood.
A lot of people live by the advice that it’s better to be the smallest duck in the big pond than the biggest duck in the small pond. But that’s not always the truth. This might be sage wisdom for an investor, because what they care most about is paying the least to get the most equity when they go to sell. To be honest, it’s not the best advice for a family who’s looking for a home they’re going to live in for a while. It’s more important to find the house you want and will be more comfortable in, even if it’s not in the “right” neighborhood. Neighborhoods go through cycles. They’re always changing and growing. Who’s to say that the block you buy on won’t outrank the number-one neighborhood five years from now?
Buy as much house as you can afford.
You might qualify for a $500,000 home, but that doesn’t mean you should run out and buy one at that top amount. Do you really want the majority of your earnings to pay for your house, property taxes, insurance, maintenance, and other costs associated with homeownership? The smart move is to find something that fits your needs and wants but is still under your budget. You might not always have the same job you have right now, and you certainly don’t want to tie yourself down to being required to bring in the same pay year after year. The best thing you can do for yourself is to buy under budget, use the money you save to pay extra toward your principal loan amount each month, and pay off that mortgage much earlier than expected.
Never offer full price!
We’ll tell you a universal truth. Submitting a lowball offer to another real estate agent is one of the most embarrassing things agents have to do. We completely understand that you want to get the best deal, but when your agent advises you against making a lowball offer and you insist on doing it anyway, it makes both you and your agent look bad. You might think that it can’t hurt to ask for that low price, but it actually does. Submitting any offer takes up valuable time and resources on both sides, and to waste time on a lowball offer is honestly an amateur move—especially during a seller’s market.
We could go on and on about all the bad advice we’ve heard people give homebuyers over the years, but we’d be here all day. In all seriousness, the best advice you can get about buying a home is from an expert, licensed real estate agent. They know the market like no one else because it’s their job to do so. So the next time Joe Shmoe approaches you with all his sage real estate wisdom, just hand him your Realtor’s business card and tell him you’ve got it all handled!