Global index says Metro Vancouver's home prices are 65 per cent
Navigating the real estate market can be tough. It's only natural that some people are going to make missteps. With that in mind, I went straight to the source and asked industry professionals to share their experiences with the biggest mistakes that buyers make. Read on to learn how to avoid making one of these all-too-common pitfalls.
Not meeting with a lender early:
"I'd say the most common mistake I see first-time homebuyers make is not meeting with a local lender right away. I believe a lot of people worry about ‘wasting’ the lender’s time, especially if they aren’t ready to buy immediately. I try and counsel clients to understand that the earlier they consult with a lender, the better. Sometimes it takes a long time for people to qualify for a loan and that’s okay. Lenders are almost like free financial advisors and can help buyers develop a plan to get to their goals."
Relying too much on the advice of family and friends:
Waiting for the 'perfect' home to arrive:
"In a competitive market like the one we're in now, no buyer is going to be able to find everything they want in a home. They need to be clear on which features they may want, but are ultimately able to live without. If not, while they are looking for the perfect home, the property they may have been able to make into their ideal home will be gone. While they may not like the kitchen or bathrooms to start, it's much smarter to consider whether they could move in, live with them for a while, and upgrade later. "
"If new homeowners think the mortgage will be their only cost, they’ll be in for an awakening. They should make sure they have the monthly budget to cover regular, as well as unexpected maintenance items. For example, will the house need a new roof, water heater, HVAC, windows, or exterior siding in the next 3-5 years? In addition, there's also property taxes and HOA fees to consider. Buyers who make the mistake of not accounting for these costs upfront can end up feeling 'house poor'."
Going on a 'shopping spree' after applying for a mortgage:
"Many buyers jump the gun after their offer has been accepted and go furniture shopping or book a vacation. But, that's a mistake because it hurts their chances of getting a mortgage. Going on a shopping spree will create a new debt to income ratio if those purchases are financed, potentially causing their mortgage application to be denied. Moreover, even if the buyer does not finance these purchases and pays cash, it will diminish their cash reserves which the underwriter for the bank or lender may look negatively upon.
The lesson: It's crucial to keep your finances as steady as possible during the underwriting process."
This response has the possibility of upsetting some people, but one of the biggest mistakes buyers make is listening to their family and friends about their real estate experiences. What buyers need to understand is that every transaction is different. When well-meaning family and friends give advice, they do it with the best intentions, but rarely do you give the details of their finances or their circumstances.
Real estate is personal and regional. What works in one state, doesn’t necessarily work in another state. Or, what a homeowner experienced three years ago, may not be relevant to current market conditions. Seeking advice from family and friends rather than industry professionals - who know their unique circumstances - could be a set up for frustration and disappointment."