If you’ve been dreaming about buying a house for as long as you can remember, it can be a real challenge to keep a level head when you find what you think will be your ideal first home. The relief and flood of emotions can quickly get ahead of you and letting your guard down in front of a real estate agent can affect your chances of buying within your budget. So, to help you maintain a poker face and successfully purchase your dream home, while keeping your budget intact, here are four of the most common emotional mistakes of a first home buyer that you definitely don’t want to make.
1. Not Maintaining Your Cool
House hunting can be equally exhilarating and exhausting but it’s important to maintain a steady and calm demeanour when you find the right property – especially where the real estate agent is concerned. Remember, the agent’s job is to get the very best price possible for their client. That means they’re skilled at making the most of whatever competition may exist for the property and an emotional buyer will often pay more. Openly showing you’ve fallen in love with the property or squealing “this is it!” is the quickest and easiest way to give away all of your negotiating power.
Be clear during any open house inspection on what your goals are and try to stay focused. Stroll through the property, express casual interest but don’t give any indication to the agent that in your mind you’ve already bought the house and are working out where your favourite armchairs should go. Oh, and don’t launch yourself into an armchair in front of the agent. That also says you’ve already bought the house in your mind and are relaxing into that idea. If you truly do love the house you’ll need all the neutrality you can muster to ensure you don’t wave the white flag in surrender when the time comes to negotiate the purchase price.
2. Peaking Too Early
Until you’ve agreed a price and exchanged contracts of sale, the house is not yours. It’s okay to get excited, but try to contain it and express that emotion behind closed doors so to speak, rather than in full view of the agent. Overly enthusiastic first home buyers can get so excited about a property they want everyone they know and love to share their joy. Urgently booking private appointments to show family and friends ‘how beautiful the house is’, is a sure-fire way to let the agent know you’re an easy target – especially if the property has only just hit the market.
If you have a close family member or friend whose opinion you value, by all means have them attend an open house inspection at the property and give you their opinion, but after the inspection, not in front of the agent. Attend on the same day but don’t appear as if you are there together. Brief them thoroughly beforehand and meet them in a café nearby afterwards to get their impressions. Attending more than one open house is fine, especially if you give the impression you have doubts so had to come for a 2nd look. But turning up again and again, with someone else each time, and openly discussing pros and cons with them sends the agent a clear message that your naivety may work in their favour.
3. Spending Money you Don’t Have
Making an offer on a property before you know how much you can afford to spend is a rookie mistake. Making an offer too quickly, before you are prepared, can result in you either falling short because you didn’t crunch the numbers, or overpaying because your choices were driven by emotions rather than logic. How much you would like to spend is not the same as how much you CAN spend. Before you even think about attending open houses, you should have a clear understanding of your budget and how you intend to finance your new home.
The best approach is to secure finance before you start shopping. With the deposit ready to go and pre-approval for financing in place (and maybe even a solicitor and building and pest inspectors on standby), you put yourself in an ideal position to move quickly to an exchange of contracts, once a price has been agreed. This not only gives you a stable foundation to be property hunting from, it also ensures you can get in fast on a great property before other less prepared buyers.
4. Treating the Agent like a Fool
If you are serious about buying the property then understand that making an offer is somewhat of a game, but play the game like an adult. Making outlandishly low offers, or attempting to question the market value by talking the property down, just makes you look foolish. Remember… agents have heard it all before and they know that if you’re completely unrealistic you’re a waste of time. Chat with the agent and get a clear understanding of the pricing strategy and of course compare it with the research you’ve already done on the local market.
Making low ball offers tells the agent you are not a serious player and may eliminate you from their call sheet if the vendors decide to negotiate with other buyers. If you are unsure about the likely market value, or don’t want to pay what they’re asking, hold off on your offer and see what surprises auction day brings.
There are many traps out there for first home buyers and being overly emotional with the most important financial purchase of your life is certainly the biggest. Do your research, keep your cool and get professional advice wherever possible. For further information and advice, check out our Buyers guide.