As regular readers know, my wife and I bought a house for the first time ever just a couple of months ago.
I already wrote about why we made the decision to buy a house right now and today I’d like to share some of the lessons I learned along the way. Because the truth is that while I’ve guided clients through this process before, going through it myself really hammered home the importance of a few big things.
To be perfectly honest, I found the entire process of buying a house to be pretty brutal. And after talking to other recent home buyers, I’ve found that I’m not alone in that feeling.
But hopefully this makes the process a little easier for you the next time you buy a house, and helps you avoid some of the mistakes that I made.
1. Know what you want from a home
As soon as you start telling people that you’re thinking about buying a house, you’ll be bombarded by opinions from extended family, friends, and realtors who all have ideas about exactly what kind of house you should be looking for.
If you’re not careful, it’s easy to get swayed by those opinions and judge the houses you see from other people’s perspectives.
But this house is not going to belong to your extended family, your friends, or your realtor. It will belong to YOU, and the only person whose opinion matters is YOURS (and your spouse or partner’s and your kids’, of course).
To protect yourself from those opinions, and to give yourself a better chance of ending up with a house that you actually like, it’s helpful to take some time both before and during your search to think about what you truly want from a home and to put those things in some kind of priority order.
Then, when you’re looking at houses, you can look at them through the lens of your list and not through the eyes of everyone else trying to tell you what to do.
For example, here’s roughly the list my wife and I came up with:
- Our first priority was moving into a particular school district as our oldest son was starting kindergarten. This was non-negotiable.
- We knew that we weren’t willing to take on a fixer upper. Minor repairs were fine, but it needed to be relatively move-in ready.
- We wanted at least 3 bedrooms so that the house could continue to work as our boys get older and sharing a room gets less appealing.
- We wanted to avoid any high-risk flood zones (common around here).
- The closer to school and work, the better. I wanted to be within biking distance of those things, but that ended up being something I had to sacrifice.
That was our major list. There were other things that would have been desirable (like a big yard and a home office), but we weren’t willing to make them a priority because we knew it would mean sacrificing on the things that truly mattered.
This list helped us narrow down our search and saved us a few times when we started to get swayed by the opinions of realtors and others who, while well-intentioned, didn’t really know what was important to us.
2. Know your money
One of the most frustrating parts of buying a house is that, unless you have unlimited money, you will undoubtedly have to make compromises.
You may not be able to get every single thing on your list of priorities. And you’ll almost certainly see things you love about certain houses, things that weren’t on your priority list, that get you thinking it might be worth paying just a little bit more than you had expected.
On top of that, realtors and lenders will tell you all kinds of things about what you can afford without really understanding your financial situation, or even how the things they’re talking about work.
Trust me. You will almost certainly get at least one piece of bad financial advice from one of the professionals you work with, which is why it’s extra important to know exactly how much you can and want to spend on a house ahead of time.
There are four big things you’ll want to know:
- How much are you willing and able to spend up front on the down payment and closing costs?
- How much are you willing and able to spend monthly on ALL costs, including the mortgage payment, insurance, taxes, and maintenance?
- What is the long-term cost of the interest and PMI over the life of the loan?
- Given the properties available in your area and the length of time you plan on staying in this house, is it better to rent or buy?
3. Give yourself time
I’m very happy with the house we ended up with, but the truth is that we got pretty lucky.
Every other house we looked at was either uncomfortably expensive or required a major sacrifice on at least one of our priority items. This one just happened to show up at the right time, the right price, and with almost everything we wanted.
But there were plenty of moments during the process where I felt rushed. We had a self-imposed deadline of having a house before kindergarten started, and while we realistically had other options if that didn’t work out, we wouldn’t have been very happy with them.
And the truth is that we didn’t give ourselves enough time to be patient and wait for the right house to come on the market. Again, we got lucky, but we only had a few months from when we started house hunting to our deadline, and in a small market like ours there are only so many houses that come available.
If we had been smart we would have started looking at houses at least a year or so earlier. That would have given us more time to understand the market, and more importantly it would have given us better odds of a house we liked coming on the market at a price we could afford.
4. Find a great realtor
This is the biggest lesson I learned from the entire process, and the biggest mistake I made.
To be completely honest, I didn’t fully understand how much work still needs to be done AFTER you sign the contract to buy the house. There are inspections and appraisals to coordinate, repairs to get done, terms to renegotiate, insurance to buy, a loan to get approved, and all kinds of other issues that come up along the way.
In the best of circumstances there are a lot of moving parts to coordinate, most of which you’ve probably never done before and all of which have tight deadlines that require quick and decisive action.
And in our case we also had to navigate multiple major disputes with the seller, two of which very nearly caused the entire deal falling apart.
It would have been really helpful to have a realtor who was on top of all of this and who proactively led us through each step along the way. Instead, I found that I had to find my way through most of it myself, which was stressful, confusing, time-consuming, and almost caused us to miss some important deadlines.
You want a realtor who has helped many similar clients buy many similar houses before. You want a realtor who communicates clearly and proactively so that you always know exactly what is happening now and what needs to happen next, without you having to ask.
I wish I had some good advice about how to find a realtor like this, but unfortunately I don’t. You can ask family and friends if they’ve used someone they liked, and you should definitely interview at least a few before making a decision.
The main advice I have is to trust your gut. There were a few small warning signs early on that I chose to ignore because I thought that I was probably just being overly demanding, and also because I wanted to avoid a confrontation. But those small warning signs turned into bigger problems later on, and I regretted not acting on them earlier.
5. Be wary of “For sale by owner”
I honestly don’t know whether this is something that applies generally, but it was definitely a problem for us.
The house we ended up buying was for sale by owner, meaning that the owner of the house was selling it himself without the help of a real estate agent.
There were a number of things that led to the disputes we ended up having, but this was definitely one of them. Without an agent in his corner, there were certain things the seller didn’t properly understand and that lack of understanding caused some problems.
For example, the seller walked out of our original closing, in breach of contract, because he hadn’t understood that he had agreed to pay a certain percentage of our closing costs. I’m guessing that if he had been working with his own agent, that would have been understood from the beginning and we never would have had to deal with the stress and fallout of that incident.
I’m not suggesting that you avoid for sale by owner properties altogether. Even with the issues we ran into, this was still by far the best house at the best price for our budget.
I’m just saying that if you go that route, know going in that you may have to deal with some extra problems.
6. Expect it to consume your life for a while
From house hunting, to making and negotiating your offer, to everything that has to be done to get to closing, buying a house take a lot of time and a lot of energy.
Quite frankly, it’s stressful and it’s pretty likely that it will consume your life for a while. Both in terms of time and in terms of emotional energy.
So expect that going in and prepare for it as much as you can. If possible, negotiate some flexible work hours or time at home so that you can more easily handle some of the tasks that have to be accomplished during the day.
And as you’re going through it, try to remember that all you’re doing is finding a place to live and that no single house will make or break your life.
What home-buying tips have you learned?
So that’s it. Those are the major lessons I learned as a first-time home buyer and I certainly hope that some of them are helpful the next time you’re looking for a house.
But I am far from the world’s foremost expert on this topic and I would love to hear from you as well. What have you learned from the home buying process? What advice would you give to others?
Share your thoughts in the comments section below. Hopefully we can make this a helpful resource for other first-time home buyers hoping to make a good decision.