The No. 1 Lesson
After years of moving in and out of apartments, my husband and I were confident that we were ready to take the next step and become homeowners. So we started looking for houses — the way we looked for apartments. How big were the closets? Would our furniture fit in the master bedroom?
What we neglected to consider were the issues that cost us quite a few bucks in the long run: The old furnace with the pilot light that tended to go out on the chilliest of nights and a curious cutaway in the basement ceiling that we eventually figured out came from a leak in the first-floor tub.
The No. 1 lesson I wish I knew before we took ownership of that first house? Buying a home is more like buying a used car than renting an apartment. You need to ask questions, look under the hood and take it for a spin. Turn on all the faucets. Flush the toilet. Blast the heat and see what happens.
Gabby Orcutt of Rockton, Penn., had a similar epiphany when she bought her house a year ago. She and her husband only did one tour before submitting an offer. During their final walkthrough, two months later, they didn’t actually “walk through.” Instead they only stayed long enough to stock the fridge and fire up the wood-burning stove.
What they discovered after they had finished signing all the closing documents left Orcutt with thousands of dollars in extra repairs and several key pieces of advice, the first of which is: Don’t be afraid to get your nose close to the carpet.
Here’s why, along with eight other things you should know before you buy your next home.
Turn On All Five Senses
When Orcutt and her husband first toured the home they were about to buy, they noticed a strong wood-burning smell, “like a campfire.” But they didn’t think too much of it because after all, the house had a wood-burning stove. After they closed on the house, however, they started to notice a different odor mixing in with the wood scent. It came, Orcutt realized, from the carpet.
“It had a urine smell of some kind I couldn’t put my finger on,” says Orcutt. “I don’t know if it was human, mouse or dog.” Any could have been a possibility since the previous owner had a dog and, the Orcutts realized after the fact, a significant mouse problem.
“I tell people now don’t be afraid to get your nose near the carpet,” she says. “Take a flashlight with you and look under the beds. Move furniture around. If the basement is finished, make sure you knock on the walls to see if they sound hollow. Peek up on closet shelves — that’s where we found mouse poop. Open the dishwasher — that’s where we found ants. Open the dryer — that’s where we found ink stains and melted candy wrappers”
And that wood-burning smell? Turned out that the firebox was cracked and the flue was defective, thus filling the house with carbon monoxide. “We needed to buy an entire new heating system,” Orcutt says.
Use Skilled Professionals
Orcutt’s purchase was directly from the seller, so no real estate agents were involved. This saved on commission, but without someone to advise her, Orcutt made two crucial missteps: She didn’t get a home inspection and did not do a full walk-through before closing.
Orcutt doesn’t regret not using a Realtor, but she does regret putting so much trust in the seller. She also regrets not hiring a better lawyer. It turned out their lawyer was also representing the seller, and he never advised them to have the seller sign a disclosure form. That could have given them more legal recourse after the fact when they had to sue the seller regarding the faulty heating system, damaged appliances and rodent problems.
“Don't be timid, shy or intimidated about the process,” says Orcutt. “You're going to sink a lot of money into this. Make a smart buying decision and do your homework.”
Don’t Fall in Love
When shopping for a new home, leave your heart at the door. Love at first sight is so easy, especially when you’re looking at homes that are a step up from where you are now. I remember distinctly the feeling of “this is my future!” that cascaded upon me when I first walked into my current house. It had everything we needed: a backyard, a garage and tons of natural light. I swooned. By the time we started talking money I was so intoxicated by the idea of me in that house that I glossed over facts, such as that the down payment required might exceed how much we’d earn on the sale of our current home. It somehow seemed inconsequential because I was in love, and that would make it all OK, right?
Wrong. Don’t shop with your heart. Shop with your mind and be guided by your monthly budget. And don’t look at houses that are beyond what you can afford because that’s the quickest path to disappointment.
Don’t Get Pressured
Our realtor called us with great news: The perfect house for us was set to go on the market that evening at 5pm. We had to drop what we were doing and race to meet her there. When we walked in, the house was definitely a dream. However, it was slightly more than what we’d hoped to pay. But, as she told us, the resale would be phenomenal. We were only talking a few extra dollars a month in the mortgage payment. The location was perfect. But, gasp — three people had already seen the house before we had set foot inside.
“I’m sure they’ll have an offer by tomorrow morning,” the Realtor said. “If you’re interested, you have to make an offer tonight.”
What? We had barely started looking for houses. While she said the neighborhood was great, we were unfamiliar with it. And yes, the house was nice, but how could we sink all of our money, hopes and dreams into a house we’d seen for 10 minutes?
I still remember dinner that night with my husband. We had a fear-induced fight. The pressure to act was intense. In the end we accepted that we weren’t ready, and that was a hard pill to swallow. But it was the right one. Don’t let anyone or any circumstance pressure you into making what could be a huge mistake.
Know What You Can Afford
When we were shopping for our first home, I submitted a pre-qualification application with an online bank. A representative called me immediately with great news: We qualified for a $250,000 mortgage. Really? I was amazed. According to our math, when you considered the mortgage amount, taxes and insurance and all our other bills, the most we could afford was $175,000. But the bank was willing to give us so much more, so I must have been wrong. I called my husband enthusiastically. Fortunately, he was the voice of reason: It doesn’t matter how much money the bank is willing to loan you. What matters is what you are comfortable paying every month, and that number might be much, much lower.
“The bank, the real estate agents, the loan officer, they should not tell you your affordability, you should tell them your affordability,” says Michele Serro, founder and CEO of Doorsteps.com. This was 13 years ago and fortunately I ignored that bank’s attempt at luring us into a bigger mortgage than we could afford. But many people didn’t (subprime mortgage crisis anyone?)
Search for a House That Fits Your Life, Not a Life That Fits Your House
With our first house, my husband and I dreamed of flower beds and sculpted bushes. What we didn’t think about was all the work that would go into maintaining that beauty. We realized quickly that we didn’t want to spend our weekends pulling weeds, and soon the front and backyard became another chore on the list (one that was all-too-often neglected).
Don’t dream of the house you want to live in. Think about what type of house will fit your life. “The first step should be to visualize home ownership,” says Serro. “What type of life are you looking to lead? How long are you going to be there?”
Buy a House You Can Afford Now … and Later
Affording our first house relied strongly on the fact that both of us were working. So when our daughter was born, we had to do some new math, and the numbers didn’t bend the way I hoped they would. I took six months off before realizing that my fantasy stay-at-home mom life was going to dig us deep in debt.
Think about the expenses you might have down the road. Will you have to pay for private school? For a nanny? Your car is paid off now, but how long before you’ll have to replace it with a new one? Make sure your mortgage leaves you with some wiggle room to take on new expenses when necessary and save more in preparation for them.
Be Picky When Choosing an Agent
One day we drove past a house we really wanted to tour. We didn’t have an agent yet, and so we called the number on the sign. Within an hour he had arranged for a showing. He quickly had a list of other houses he thought we should see. “Now we have an agent,” we thought. “That was easy.”
This was truly the wrong way to hire an agent. We hadn’t asked him a single question about his experience (turned out he was brand new to the job) or how many houses he had sold (not many). Our sole criteria was: He’s here and he seems like a nice guy.
“You need to be interviewing these people and asking them the right questions,” says Serro. “Just like I don’t want you to fall in love with the house, I don’t want you to fall in love with an agent because you believe that they are a nice person.”
When looking for a Realtor, Serro says a personal referral is the best way to start. If that’s not available, ask a prospective agent for a reference or two. Two-thirds of home buyers only interview one agent before hiring her, according to the National Association of Realtors, which is the wrong way to go, according to Serro. She recommends you always interview several agents before settling on one. Ask how many buyers they are currently representing (you don’t want to be one in a herd trying to get her attention) and their work style. For example, if you hate to talk on the phone, make sure your agent is email and text-savvy. And finally ask yourself: Do I like this person?
“On the buying side, I do think that the emotional stuff is important because there’s going to be moments when you feel really down,” says Serro. “You’re going to want someone you trust there to be able to give you the confidence you need.”
Don’t Set an Unattainable Timeline
You start your home search in May sure that you’ll be in your new home by the time school starts in September. But don’t be surprised when that is not at all the case. The average home search takes 12 weeks, according to the National Association of Realtors. Once your offer is accepted, Serro says to expect a 90 to 120 day wait before you sit at closing with a pen and a huge stack of papers.
So don’t plan too far into the future. If you’re currently renting, go month to month on your lease if possible. It’s better to take your time and find the house that’s right for you than to be forced into something less-than-perfect because you’re operating on someone else’s timeline.