Top 5 House-Hunting Mistakes to Avoid & Free Checklist
Home buying is an emotional experience, but you can’t let those emotions lead you to make some serious house-hunting mistakes.
Your goal is to find a home that you love at an affordable price, but you can shoot yourself in the foot by overlooking some simple steps.
You can save our free house-hunting checklist below to guide you through the buying process, but first let’s take a look at the top five most common house-hunting mistakes you need to avoid.
❌ Not Knowing What You Can Afford
Once you fall in love with a listing, it’s hard not to imagine yourself living there hosting family dinners, throwing birthday parties, and having neighbourhood BBQs.
Now imagine falling in love with a listing that in the end, you can’t afford.
To avoid any heartbreak, make sure you determine your maximum budget before you start looking at listings. Also, keep in mind that most properties will sell for more than their listing price. That means if your maximum budget is $500,000 for example, consider looking at homes in the $450,00 – $480,000 range to leave room for you to make a competitive bid.
2020 is a seller’s market in Waterloo Region, so expect to see numerous bids for popular listings.
Start searching at the low end of your price range. If you can find a home that meets all of your must-haves, then you can always invest the rest of the budget in renovations or savings.
❌ Skipping Mortgage Pre-Approval
You need to apply for your mortgage pre-approval before you start seriously house-hunting.
Why? Because what you think you can afford and the amount the bank is willing to lend you may not match up. This is definitely the case if you lack good credit, have an unstable income, or are self-employed.
Book a meeting with your bank or mortgage broker to review your finances and complete a mortgage application. You will need to provide specific documents to complete your application such as:
- Latest pay stub
- Recent tax return
- Signed contracts
- Recent invoices
- Letter of employment
- Bank account information
- SIN of all names on mortgage
- Place of residence
- Credit information
- Example listing (choose a listing in the area, price range, size, and quality you’re hoping to purchase)
It’s important to note that even if you’ve been pre-approved for a mortgage, your loan can still be denied if you alter your credit score.
For example, if you take on additional debt such as buying a vehicle or opening a line of credit, than can nullify a pre-approval.
❌ Ignoring The Neighbourhood
I know it’s hard, but try not to focus only on the house. You can’t predict the future of your neighbourhood, but researching the area can help you avoid unwelcome surprises.
Going for a walk and/or drive through the area is a great way to explore local recreational facilities, parks, trails, and businesses first-hand.
An important step buyers often don’t think about is if the neighbourhood feels safe at night and if there are noise issues (i.e. are you near the expressway?)
Here are some great questions to research about your new potential neighbourhood
- Are there any plans for development in the area?
- What is the traffic like on the street?
- Is there any highway access? Are there plans for it in the future?
- What are the zoning bi-laws in the area?
- How much land in the area is undeveloped?
- What percentage of the neighbourhood rents vs owns?
- Are there any green spaces or recreational facilities nearby?
- Are there good schools in the area?
- Is there access to transit such as bus routes, bike paths, LRT stations, and GoTrain stations?
Speaking to locals about the neighbourhood is a good way to get a sense of its history and reputation as well. This can also help you predict where it might be going in the future.
❌ Rushing to Make an Offer
Homes are selling on average within 21 days of being on the market this year. It will probably be necessary for you to make a quick offer if you find a home you really love, but you can’t let the stress cloud your judgement.
This is why it’s important to discuss decisions like what is your maximum bid, will you have any conditions, what is your ideal closing date, and how much of a deposit can you afford before you start viewing properties.
Sometimes pre-emptive offers (or bully offers) are actually a good strategy, but that’s a discussion to have with your easy home realtor.
❌ Getting Desperate
When you’ve been searching for a home for a while and you’re not seeing anything you like or you’ve been outbid several times, it’s easy to become desperate.
Patience is very important when house-hunting. You have to wait until the right opportunity comes along and depending on the market that could take time. Inventory has been very limited in 2020, with the average number of listings each much far below the typical average.
You don’t want to move into your new home and have it fall short of your expectations. You also don’t want the risk of losing out on another property to drive you to bid beyond your means.
House-Hunting: The Bottom Line
Purchasing a home is one of the biggest decisions you’ll ever make, so it’s okay to be a little nervous. With the right research, information, and guidance, you can avoid these mistakes and have the house-hunting process go smoothly.
Be realistic, take your time, don’t be impulsive, and make a purchase that you feel is worth it.
Your Free House-Hunting Checklist
Now that you know what not to do, download and save this house-hunting checklist to guide you through the correct steps. Good luck and don’t hesitate to ask for help!
Do you have more questions about houst-hunting? Our trusted real estate specialists can help, reach out today.
For more help buying your home, you can also use our free Buyer Toolkit.