6 Lessons Learned as a First-Time Home Buyer

Lessons Learned as a First-Time Home Buyer

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?

I’ve explained how to run these numbers here, here, here, and here. Run them yourself, or get help from an objective professional, instead of relying on your realtor or lender.

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.

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7 Comments... Read them below or add one of your own
  • Cassandra September 14, 2017

    Besides everything you’ve listed on here as important steps to do, the only advice I have is: do your research about this exact topic. Ask questions as much as possible and make sure things are clear for you even if it’s multiple times that you have to go over it to get that understanding. There are plenty of views out there on best advice and things to look out for and a lot of it seems to be no-brainers but the most obvious to some is definitely not the most obvious to others. It’s always nice to get several perspectives and then add your own into the mix to find the right “recipe”.

    I wished I was a bit smarter the first time I ended up buying a home and after going through a foreclosure due to unforeseen circumstances and bad choices, it’s going to be awhile before I dive into buying something again but now I have a better handle on what to expect and what to watch out for. I’ve learned a lot in the last seven years that I probably wouldn’t have even ventured to research about ten years ago when I was first buying my home!

    Financial blogs are full of useful tips and information that may or may not come at the right time but will undoubtedly help you in some way shape or form, even if it’s just passing the information on to someone else! The world needs to care for each other!

    • Matt Becker September 15, 2017

      I couldn’t agree more about asking as many questions as possible. This is a huge financial commitment and you deserve to understand exactly what you’re getting yourself into. If you’re working with someone (realtor/lender/other professional) who gets impatient with your questions or doesn’t know the answers, it’s probably time to find someone else.

  • Stacy Taylor September 14, 2017

    This was great advice! I would say your experience was right on par with most first time home buyers, except that you were more willing to “give” than many. As far as hiring the “right” right estate broker; interview them. Ask them exactly what they can and will do for you. In the case of a for sale by owner, they have to watch out for liability with the seller as they are the expert, and most will step back a bit. That makes it tough for the buyer.

    • Matt Becker September 15, 2017

      That’s good to know about realtors stepping back in “for sale by owner” deals. Not something I knew ahead of time, but that definitely lines up with my experience.

  • Karl September 17, 2017

    As far as realtors, interview them for personality fit as well as competence. There are a number of great realtors out there, but their personality will impact your experience. Know yourself to know if you want/need someone who 1) gets excited with you at each stage of the process, or 2) plays it cool and tempers your excitement. With the heavy emotions running through this process, different buyers need different types of support from their realtors.

    Expect things to go wrong. I’ve seen loan docs held up for weeks because of a missing middle initial creating a “mismatch” between paperwork. Take a deep breath, and give others and yourself some grace in the process.

    Don’t let them rush you in signing the closing documents. Don’t try to squeeze this in during a lunch hour, allow a lot of time. Understand each piece of paper you’re signing.

    Visit the neighborhood at different times of the day/week to know what you’re getting into. Does it become party central on Friday/Saturday nights? Are people mowing their lawns at 6 a.m.? How many kids are passing through when school lets out?

    Save enough for a decent down payment that lets you avoid PMI. Not only will it save you money, but it lets you start with some skin in the game that makes the house “feel” like yours sooner.

    • Matt Becker September 18, 2017

      These are fantastic points Karl and I wish I had remembered to include some of them myself.

      At closing, it was clear that both my lender and the closing agent thought it was strange that I wanted to read everything. That reaction felt strange to me, given that we were making an enormous financial and legal commitment and signing our names to dozens of pages of complicated documents. I felt a little rushed myself, like they were annoyed by me reading everything, but it was important enough that I did it anyways.

      You also make a fantastic point about visiting the neighborhood at different times during the week. I didn’t do it anywhere near as extensively as you suggest, though I think it’s a fantastic suggestion. The one thing I did do was drive by after a day of excessive rain, when certain neighborhoods were flooded with a few inches of water. Luckily this neighborhood was dry, otherwise we wouldn’t have moved forward.

      Thanks again Karl! This is really helpful.

  • Jason September 21, 2017

    Congrats Matt. I agree with the post 100%. I’m 6 years removed from the home buying process, I do remember is was quite a ride. If you do your work upfront like you suggest you really set yourself up to be happy in a house you can afford. I would also add once you’ve set into the preliminary contract have a home inspection & radon test done, it is money that is well worth it. Talk to a few inspectors pick the best one. Make time to go through the house and ask questions during the inspection. You can learn a lot about the utilities and other things in a home. How old they are, what type of fuel they use, what condition they are in & maintenance tips. My inspector came recommend from my real estate agent. In hindsight my real estate agent was excellent, the inspector not so much. The inspector missed that 4 outlets in my basement were not properly grounded, this was a big deal to me since we are using it as an office & home theater. He also missed that a roof plumbing vent boot was near failure, caused the roof to leak over our laundry room during hurricane Sandy in 2011. He did make several requirements that benefited us greatly. What I learned from a the process is inspectors can make mistakes, make sure they are thorough. My inspector made the requirement to properly ground the natural gas lines, fix a leaky bathtub faucet, fix the spring on a screen door & properly shim another door that wasn’t useable.. Retested the radon levels, the seller had it test a year prior & warrantied against the need to install a radon fan system. Radon levels were high & we used the warranty to have a $1200 system installed without any money out of pocket.

I’d love to hear from you, please leave a comment