Everyone hopes that life after closing on a house will be smooth sailing, but some unsuspecting buyers end up in turbulent waters. The following anecdotes outline missteps that first-time home buyers can make and, most importantly, how to identify those red flags before you're locked into the sale.
No room to grow
Many of the first-time homeowners Chicago-based real estate agent Jonathan Self speaks to say that they underestimated how much space they would need.
“The family expanded faster than they had planned, and they now need to move without owning the house for enough time to reap any benefit of price appreciation," he says. "Life happens, but you want to make sure you've had four to five years minimum in the home at the normal rate of appreciation—and that's just to break even.”
To avoid having to move because of a lack of space, buyers should ask themselves the following questions: Is the size of your family going to change? Is there a chance an older family member will need to move in with you? Do you have space for a dog, if you want one?
“Finding the right home isn't just the sexy, fun stuff like finish selections,” Self says. That's why you need to consider how much space you and your family will really need down the road so you can stay put.
HOA drama
First-time homeowners would do well to understand the
pros and cons of a homeowners association before moving into an area that has one. That's why Self goes as far as going through the HOA's meeting minutes with his clients who are considering living in one of these communities.
“Neighbors are always an X factor, and as agents, we do what we can to investigate. But your best bet at spotting any internal HOA drama is to check out those meeting minutes and budget line items,” he says.
A lack of HOA meeting minutes or transparency with the budget is also a big red flag.
Becky Beach, a business owner and blogger at MomBeach.com in Austin, TX, says her HOA dues are $500, but a lack of communication means she and the other homeowners do not know what the money is going toward.
Living in a community with an HOA suits many buyers, but you want to know what you're in for before signing on the dotted line.
Rushed to buy a home
Aleka Shunk, founder of the blog Bite Sized Kitchen, warns first-time home buyers against a hasty home purchase like the one she made.
While searching for a home in New Jersey, one of her friends sent a flyer from neighbors looking to sell their home. The Shunks loved the home and the area, and the highly motivated sellers wanted to move within six weeks. One of the sellers was an agent, and preferred that the Shunks didn’t use an agent on their behalf—and also said the home would be sold
as is.
“I found a local inspector who said there were a few small problems, but overall the house was in good shape," Shunk says. "I also hired a lawyer to handle the legalities.”
However, a few months after moving, the problems started.
“I woke up to no water in the bathroom faucet, and then a neighbor informed me that the water was gushing down the driveway,” Shunk says. Water was flowing from the ceiling in both the garage and living room. After a week of frigid temperatures, two pipes burst—to the tune of $40,000 in water damage. The cause of all of these problems? There was little to no insulation throughout the house.
“We were just so excited and could not wait to get into our own home,” Shunk says. “However, because we rushed, we did not have time to ask many questions.”
It took three months to fix all of the damage, and the family is saving up enough money to properly insulate the house. The lesson: Don't rush into buying a home, and always get a second opinion.
DIY real estate transaction
Many buyers—first-time or not—underestimate the value of having a real estate agent represent them. You may be capable of combing through online listings, but navigating the negotiations, paperwork, and legal stipulations that arise during a real estate deal requires experience.
“This is a big transaction, therefore, it is very helpful to have another qualified person speak and deal on your behalf,” says Mark Cianciulli, a real estate broker and founder of The Crem Group in Long Beach, CA.
For example, he says, even a home being sold as is can be negotiated—especially one like the Shunks' that came with major problems.
“Because we did not use an agent, we did not know the right questions to ask,” Shunk says. “What does ‘as is’ even mean?”
While she did use a lawyer and got a home inspection, Shunk says she trusted the seller to ensure that everything was taken care of.
Original Article via Realtor.com
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