We love first time home buyers, and after working with quite a few, have an insiders perspective that should help with your planning as you get ready to buy your first home.
1. Budget For the Extra Expenses
A pre-approval can give you a good idea of the amount of house you can afford, but don’t get caught not planning for the other expenses that come with home ownership. Costs will vary depending on the home price and location, but you will invariably have extra expenses you need to budget for, so make sure you know what they are. These are some of the common ones:
- HOA (Home Owners Association) fees
- Home Owners Insurance
- Utilities (don’t forget new utilities you may not be used to like trash and sewage)
- Lawn care
- Basic home maintenance (HVAC inspections, painting, landscaping etc.)
2. Always Make Resale Value Part of Your Purchasing Decision
Most first time home buyers typically stay in a home for 5 to 7 years, so even though you may be able to overlook that low power line in the back yard, it may be a real turnoff to the next buyer. Other things that can affect resale include being near busy streets or highways, sloping driveways, lay of the lot etc..
3. Building A New Home May Not Give You the Same “Bang for the Buck” as a Resale
The thought of building a new home is exciting! Getting to customize it the way you want, and knowing you’re the first to live in the house is great, but it does come at a cost. When building new, you can run into unexpected costs, whether its upgrades during the build, site condition costs, or the basics like adding a garage door opener, blinds, and a fence after you move in. A resale home will already have many of those items, along with other upgrades the homeowner may have done after moving in. With a resale there may also be items you can negotiate for at closing like appliances, home theater equipment, and furniture.
4. Be Prepared for Earnest Money, Inspection And Closing Cost Expenses
When you write an offer on a home, be prepared to write a check for $500 to $1000 for an Earnest Money Deposit. This money shows your good faith to purchase the home, and will be applied to the down payment at the homes closing.
If your offer is accepted on a resale home, you will typically have 10 days called an “Inspection Period” to have the home checked out by certified/licensed inspection professionals to uncover any potential problems. Problems found in inspection reports can then be negotiated for repair. The most common inspections in the KC area are:
- Whole Home – typically around $300
- Termite – $60 – $80
- Radon – $125
Other inspections may include, plumbing, structural, roofing, mold testing etc.. Although not required, having inspections performed can save you from serious and costly repairs down the road.
5. The Agent On The Sign of the House You’re Looking at is Representing the Seller, Not You!
As a first time buyer, you may find a house for sale, and decide to call the Agent on the sign for more information. That is all fine and good, but before you make an offer, realize that the Agent selling the house is representing the seller, and looking out for their best interest not yours! This means they have a legal and fiduciary obligation to get the best deal for their client – meaning you will likely come out the loser on any negotiations.
There are two options if you don’t bring your own Buyers Agent. The first is that you are completely unrepresented – this is a bad idea, as you have no one advocating for your best interest. The second is that the Agent selling the house acts as a “Transaction Coordinator”. This means they handle all of the paperwork, but remain neutral, neither advocating for you, or the seller. You and the seller would have to agree to this, and as you can guess, it is also generally a bad idea.