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While the thought of finally owning your dream home is exciting, 54% of first-time homebuyers view the actual homebuying process as painful, according to TD Bank’s First-Time Homebuyer Pulse, which polled more than 1,000 Americans planning to buy their first homes in 2022.
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While it’s likely no surprise that home prices being up (way up in some areas) makes things difficult, other challenges of homebuying might not be as apparent — especially if this is your first attempt at tackling the market.
Here are home-purchasing pitfalls to be aware of, so you’ll have a better chance of reaching the closing table sooner rather than later.
Outbidding Other Potential Buyers Might Not Be Enough
It’s not all about bidding the most for the home itself — other factors can come into play.
“For example, even though you may offer slightly more than the asking price, another buyer may agree to a two- or three-month leaseback upfront or offer to buy the bulk of the seller’s furniture, tools and toys for a separate sum,” said Baron Christopher Hanson of Echo Fine Properties. “Whatever the circumstances, it’s important to understand the seller’s predicament, motivation and timing as best you can, so you can decide to be a more flexible homebuyer — or not — depending on your wishes.”
The House Might Fail To Meet Inspection Requirements
“The house you want may fail an inspection and not appraise at the value you’d hoped for in order to satisfy your lender,” said Hanson. “What this means is that the seller may not be willing to pay for or complete any repairs, which will come out of your pocket. Your lender, in turn, may also require a much larger down payment. It’s important to either plan for this financial double-whammy in advance, or be prepared to shop for another home that does not require repairs and will appraise well.”
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Your Offer Might Turn Out To Be Over the Appraisal Value
If you’re trying to buy a home where inventory is low and competition is high, you may find yourself in a bidding war and make an offer to the seller that’s well over the home’s appraisal value. Unfortunately, this can cause a shortfall between what you offered and what your lender is willing to loan you.
“You will want to offer to cover any appraisal gap in the form of an appraisal …….