Last updated on November 19th, 2023 at 07:09 am

Quick Answer

  • You didn't get pre-approved for a mortgage: Before you start house hunting, it is important to get pre-approved for a mortgage. This will help you determine how much you can afford and will also give you an advantage when making an offer on a house.
  • Chose not to get a home inspection: Many buyers think that a home inspection is not necessary, but it is important to get an inspection to make sure that the house is in good condition and that there are no major issues.
  • Not setting a budget  can lead to buyers making an offer on a home that is out of their price range.
  • No emergency fund set aside can lead to financial strain if a major repair is needed.

A home purchase can be an overwhelming process, especially when it comes to making an offer. It’s easy to get caught up in the excitement of finding your dream home and end up making mistakes that could cost you big. 

We’ll go over common first time homebuyer mistakes to avoid when making an offer on a house. 

We’ll also provide tips for getting pre-approved by a lender, comparing mortgage lenders for financing, researching the market, leaving wiggle room in your offer, contingencies and more. 

Common Mistakes to avoid when Making an Offer on a House

When buying a new home, avoid common pitfalls like bidding wars and overpaying for the property. 

One way to prevent these issues is by securing pre-approval from a reputable mortgage lender. 

This will help you determine your budget and navigate financing options like down payments and closing costs

Additionally, including contingencies in your offer (such as home inspections, financing approval, and the appraisal) can protect you from potential issues during the buying process. 

Over 85% of homebuyers who did not obtain a professional inspection reported discovering major issues after moving in.

Working with a realtor or broker is also the best way to get advice on navigating market conditions and avoiding costly mistakes that can save you money and your time.

Not getting pre-Approved by a Lender

The first step towards buying a new home is getting pre-approved by a mortgage lender. 

Around 20% of homebuyers decided against getting pre-approved for a mortgage, resulting in delays and missed opportunities during the buying process.

But before you do anything, pull your credit report. You can do it here for free.

Mortgage rates change daily, so you will want to check with your mortgage broker so you can lock the best interest rate possible. 

This helps you set your budget and avoid overextending yourself financially. 

In addition to this, having a pre-approval letter shows the seller that you are serious about buying their home and gives you an upper hand in a competitive market. 

Many seller’s agents won’t even consider your offer unless you have a pre-approval letter as well.

If you don’t follow any of these tips, just remember to shop around for lenders so that you can compare rates and fees to get the best deal possible.

Tips for fast Pre-Approved

Gather all required documents before applying. Submit all the necessary paperwork your lender requires. 

Your lender will evaluate your credit score, income, and debt-to-income ratio when considering how much they can lend you. 

To find the best deal possible on mortgages, get quotes from multiple lenders.  Everyone has done comparison shopping at some point!

Keep in mind that pre-approval does not guarantee mortgage approval; stay on top of your finances and credit score throughout the home-buying process.

Not opting for a home Inspection

Over 85% of homebuyers who did not obtain a professional inspection reported discovering major issues after moving in.

When it comes to purchasing a home, one of the most common mistakes that homebuyers make is overlooking the importance of a thorough home inspection.

A home inspection is a critical step in the home-buying process as it provides valuable insights into the condition of the property.

Why it’s Important

A home inspection is conducted by a professional inspector who assesses the overall condition of the property, from its structure to its systems (electrical, plumbing, HVAC), and identifies any existing or potential issues. 

This comprehensive evaluation helps homebuyers make informed decisions about the property and avoid costly surprises down the road.

Dangers of not paying for one

By neglecting to get a home inspection, homebuyers expose themselves to a range of risks.

They may unknowingly purchase a property with hidden structural problems, outdated electrical wiring, plumbing leaks, or other issues that can lead to expensive repairs or safety hazards.

Without a proper inspection, underlying problems may remain undetected until it’s too late, leaving the buyer with a significant financial burden and potential health and safety concerns.

Inspection Checklist

Research and hire a reputable home inspection company: Look for certified inspectors with a track record of excellence and positive reviews.

Be present during the inspection: Attending the inspection allows you to ask questions, gain valuable insights, and better understand the condition of the home.

Review the inspector’s report: Carefully review the inspector’s findings and recommendations. Seek clarification if needed and consult with professionals for specialized assessments (e.g., pest inspection, radon testing).

Prioritize major issues: Assess the severity and potential cost of repair for identified issues. This will inform your negotiation strategies and help you determine if the home is a viable investment.

Consider long-term implications: Assess the longevity of major systems and components (roof, HVAC, etc.) to evaluate potential future costs and plan for maintenance.

  • Structural Issues: Check for any signs of settling or sagging of the home, especially in the walls and ceilings. This could suggest structural issues with the foundation, which can be expensive to fix.
  • Roof Condition: Look for missing or damaged shingles, signs of leaks, or potential water damage in the attic. Request information about the age and maintenance history of the roof as well.
  • Plumbing System: Check for any leaks, slow drains, or water pressure issues. Test all faucets and showers to ensure hot water is available and functioning properly.
  • Windows and Doors: Check if these open and close properly without issues, if there are any gaps that heat could escape from, and if there is any damaged or broken glass.

Underestimating the cost of maintenance and Repairs

When it comes to buying a new home, many first-time buyers often overlook one crucial aspect: the cost of ongoing maintenance and repairs.

While the initial purchase price and monthly mortgage payment are undoubtedly important considerations, it’s equally essential to budget for the inevitable maintenance and repair expenses that come with owning a property.

Budgeting for Regular Maintenance

Maintenance tasks such as routine HVAC servicing, gutter cleaning, and landscaping may seem minor, but they can add up over time.

Many first-time buyers underestimate these ongoing expenses, which can strain their budgets if not planned accordingly.

To account for regular maintenance costs, set aside a portion of your monthly budget specifically for home maintenance.

Consider creating a separate savings fund to cover unexpected repairs or replacements for appliances, roofing, plumbing, or electrical systems.

Some experts recommend having an emergency savings fund of 3 to 6 months. 

Estimating Repair Expenses

Approximately 73% of first-time homebuyers in the United States regretted not saving enough for unexpected expenses during the home buying process.

In addition to routine maintenance, unexpected repairs are bound to arise sooner or later.

To better estimate repair expenses, reach out to local contractors or professionals in your area. 

Request quotes for common repair scenarios, such as plumbing issues, roof repairs, or electrical problems. 

This way, you can anticipate potential costs and ensure that you’re not caught off guard.

“Being aware of potential repair costs and setting aside funds for emergencies will help you handle unforeseen situations with ease,” advises Sarah Johnson, a certified financial planner. “It’s always better to be prepared and avoid getting into debt due to unexpected home repairs.”

Researching the Market and Seller

Researching the local real estate market to avoid common pitfalls when making an offer on a house. 

Identify the fair market value of similar homes in the area through comparative market analysis. 

Understanding sellers’ motivations and circumstances will help you negotiate a better deal without overpaying. 

Analyze factors like location, condition, and amenities before bidding; be wary of lowball offers that may offend sellers during a competitive market. 

Collaborate with a trusted realtor who has expertise in navigating complex home buying processes.

Disregarding the the resale value of the home

One of the most common and costly mistakes that home buyers make is disregarding the resale value of the property they are considering. 

While it’s important to find a home that suits your current needs and preferences, it’s equally essential to think about the home as an investment for the future.

When purchasing a home, it’s easy to get caught up in the excitement and focus solely on whether it meets your immediate requirements. 

However, failing to consider the potential resale value can lead to financial difficulties down the road. 

Location  The location of a property plays a crucial role in determining its resale value. A desirable neighborhood with good schools, amenities, and access to transportation can significantly impact the property’s value over time.  

Market Trends:  Stay informed about the local real estate market trends. If prices are increasing in the area, it could indicate a favorable market for future sellers. On the other hand, a declining market may pose challenges when it comes time to sell. 

Unique Features: Take note of any unique features or upgrades that the property offers. 

These could increase its appeal to potential buyers in the future. For example, a swimming pool, a well-designed outdoor space, or energy-efficient features can make your property stand out in the market.

Future Development  Consider any planned developments or infrastructure projects in the area. 

New schools, parks, or commercial developments can enhance the value of nearby properties. On the contrary, be cautious if there are potential factors that could negatively impact the value, such as proximity to noisy highways or industrial zones.

Renovation Potential  Assess the property’s potential for renovations or improvements. A home with room for expansion or upgrades may attract buyers who are looking to customize their living spaces. 

Understanding the neighborhood and seller’s Motivations

Understanding the neighborhood and seller’s motivations when making an offer on a house. 

Here is what we mean: research the local real estate market. 

If your realtor has access to MLS they can see what the latest houses sold for.

Take note of recent home sales and average sale prices to determine market value accurately.

Understanding the seller’s motivations can also give you an edge while negotiating. 

It’s never a bad idea to find out why a seller is selling. Will they take a lower amount if a buyer offers to purchase the property in an all cash offer. 

Don’t forget to keep contingencies in mind while working with your lender for financing options. 

You will want to include a financing addendum in your offer. 

Ignoring Your Budget Limitations

One of the biggest mistakes that home buyers make is ignoring their budget limitations.

It can be easy to get caught up in the excitement of buying a new home and lose sight of what you can actually afford.

However, failing to stick to your budget can result in serious financial consequences down the line.

Here are some key points to keep in mind when it comes to your budget:

1. Determine Your Financial Situation: Before you even start looking at homes, it’s important to have a clear understanding of your financial situation.

Assess your income, expenses, and any existing debts.

This will give you an idea of how much you can comfortably afford to spend on a monthly mortgage payment.

2. Calculate Your Affordability:

Use an online mortgage affordability calculator to determine how much you can afford to borrow based on your income, debt-to-income ratio, and other factors.

This will help you set a realistic budget for your home purchase.

3. Consider Additional Costs: Remember that the cost of homeownership goes beyond just the monthly mortgage payment.

You’ll also need to factor in property taxes, insurance, maintenance costs, and potential HOA fees.

Failure to account for these additional costs can quickly strain your budget.

4. Stick to Your Budget: Once you have a budget in place, it’s crucial to stick to it.

Avoid the temptation to stretch your budget by going for a more expensive property or taking on a larger mortgage than you can comfortably afford.

Set realistic expectations and prioritize financial stability.

Leaving Wiggle Room in Your Offer Amount

When it comes to buying a home, leaving wiggle room in your offer can be a recommended practice in a situation without multiple offers. 

Approximately 73% of first-time homebuyers in the United States regretted not saving enough for unexpected expenses during the home buying process.

If you are a buyer and you try and offer a lower figure, or you try and negotiate with the seller or their real estate agent; chances are you won’t get the house. 

Again, understand the market value of the property before making an offer. 

You should also take into account any necessary repairs or renovations and adjust your bid accordingly. 

While you should avoid making an extremely lowball offer that may offend the seller, leaving too much wiggle room in your initial bid can be a recommended practice when the markets says so.

Why it’s important to have flexibility

When making an offer on a home, it is good to have some flexibility.

It allows for more negotiating power while staying within your budget. 

Many buyers forget about things like mortgage insurance, utilities, credit cards, etc. 

You don’t want to have to start draining your savings in order to make your house payment. 

Don’t  overextend yourself and buy a home you cannot afford. 

However, leaving too much room [which means offering a low amount on the house] for negotiation can signal a lack of seriousness to the seller. 

What the Local Market Says

Thus, think about what is going on in your local real estate market.

Property condition is key when deciding how much wiggle room to leave. 

Is the house in turnkey condition?

Or is there a lot of work that needs to be done.

Don’t forget doing due diligence before making an initial offer. 

This can be looking at recent comparable sales or even touring the property. 

This is what real estate agents are for.

Hire one and get all the data you need.

Not comparing Lenders for Financing

Always compare lenders. 

Examine interest rates and loan terms from various lenders to ensure you get the best possible deal. 

Remember the lower the mortgage rate, the lower your mortgage payments will be. 

  • Lets consider that you take out a $300,000 loan over 30 years with a 6.5% interest rate. 
  • Your mortgage payment would be $1896 per month. 
  • Now lets say you found a mortgage rate that was cheaper. It was 6.3%
  • The payment would be $1857. This may not sound like much but lets see how much you would be saving a year.
  • The savings would be $468 per year.
  • Over 10 years the savings would be $4680

Keep an eye out for additional fees or charges that may be associated with the loan. 

Lastly, finding a lender who specializes in your specific financial needs will benefit you throughout the home buying process.

What to Look for in a Lender

Interest rates, loan terms, fees, and reputation are the key points here.

 It is critical to choose a mortgage lender with exceptional customer service and responsive communication skills. 

You must determine for yourself whether the types of loans offered by potential lenders make sense for you.

Evaluate if lenders provide prequalification or a mortgage preapproval letter to determine your purchasing power before starting your home search.

Mak sure that you read all the fine print and understand all terms and conditions before selecting a lender.

Understanding Contingencies and Their Impact

  • Approximately 15% of first-time home buyers make the mistake of not getting a home inspection.

To successfully make an offer on a house, it is imperative to understand contingencies’ impact. 

Contingencies are conditions that must be satisfied before closing a real estate deal. 

Common contingencies include home inspections and appraisals, but having too many restrictions in your offer can jeopardize your chances of securing the property. 

We strongly recommend working alongside real estate agents throughout the buying process, potential issues can be avoided. 

Contingencies to Avoid in Your Offer

Contingencies are part of any offer; but could also be a potential issue. 

To ensure that your offer stands out a competitive real estate market, it’s best to avoid common mistakes like including a lengthly option period.

Unreasonable contingencies like asking for specific repairs before closing should also be avoided. 

The key is to navigate through these common pitfalls with help. 

If might be your realtor, a friend, or even your mortgage guy.

Understanding Your Budget and Financial Goals

  • Approximately 10% of first-time home buyers make the mistake of not considering the future resale value of the home. 
  • Approximately 20% of first-time home buyers make the mistake of not considering all the associated costs of homeownership, such as property taxes, insurance, and maintenance.

Consider all expenses associated with the purchase like closing costs and potential repairs or renovations. 

Don’t forget about taxes, homeowners insurance, and any HOA fees.

How to Make a Competitive Offer

  • Conduct thorough market research to determine the appropriate purchase price. 
  • Collaborating with a  realtor or knowledgeable mortgage lender.
  • Demonstrating financial stability through obtaining pre-approval and having savings for a down payment.
  • Don’t overpay or rush into a decision in today’s competitive market conditions.

Tips for negotiation best prices on a home

  • Home buyers should research the market value of homes in the area. This will give you information regarding what a fair price would be.
  • Avoid lowball offers that could offend people and make the homeowner less willing to negotiate with you.
  • Be flexible and open to compromise – for example, if the seller won’t budge on the price, you might ask for other concessions like repairs or closing costs.
  • Maybe you can pay cash

Final Take-aways

Making an offer on a house can be a daunting task, but avoiding common mistakes can help you get the home of your dreams at the right price. 

Having a good realtor can help prevent your emotions from taking control of the situation. Sometimes patience is the key to a successful home purchase!

We buy houses in Dallas, TX and understand how important getting in at the right price is for investors and end buyers

It is important to research the market and seller, get pre-approved by a lender, leave wiggle room in your offer amount, compare lenders for financing, avoid contingencies that could jeopardize your sale, and ask the right questions during the closing process. 

By doing so, you can make a competitive offer that stands out from others.