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What I Wish I'd Known Before Buying a Home
Oh, homebuying. It’s sold to us as the American Dream. And it really is great to know that you own your home, and that you aren’t just giving your money to a landlord or management company. But it’s just not possible (or desirable) for everyone.
I often read about older generations scolding Millennials for not being able to buy our own homes. But it isn’t just young people being too lazy or bad with money. The housing bubble burst when we were just entering the workforce. Banks are more squeamish about giving out mortgages. Costs are higher! I don’t fault anyone for not being able or not wanting to go through this process.
In fact, the only reason my fiance and I were able to buy a house is because I received a settlement this summer for an injury I sustained. If that didn’t happen, I honestly don’t know when we would have been able to afford to buy, especially in the DC area.
All in all, I’m very happy that we were able to buy a house. We aren’t living in it yet, but I’m so excited to make it our home. However, there were a lot of lessons learned during the homebuying process, and I want to make sure you all know them before (if) you do it yourself.
Your real estate agent matters
When Dan and I first started looking at houses, we weren’t very serious about it. We didn’t have the money for the down payment yet, so we just wanted to see what was out there. We started off booking tours via Redfin, and didn’t have our own real estate agent. We thought we had plenty of time to find one before we found a house we loved. But then we fell in love with the eighth house we looked at. It was the right price (and SO beautiful!), and we wanted to make an offer on it before anyone else did. In order to do that, we had to sign a contract with the Redfin agent in the area. Ultimately, that house was bought by someone else (in cash?!). But we had already signed the contract, so we continued to look at houses with that Redfin agent.
Everything turned out fine, but we didn’t feel like our agent knew what we really wanted. She didn’t send us houses that we loved or were particularly interested in. We were usually picking out houses on our own and then she would meet us there. At first, I thought that was fine, because I was able to be more in control of the process. As time went on, though, it was exhausting to be doing all the leg work. One of the reasons you hire a real estate agent is that they do a lot of the searching for you. Our agent also ended up moving to a different state in the midst of our search, so we had to switch to a different Redfin agent who we didn’t know as well. She was super nice, but we didn’t feel like she was aggressive enough throughout the eventual negotiation process.
(If you’re in DC, might I recommend connecting with my real estate agent friend Liz Delgado-Steo. She’s wonderful, funny, and really has your best interest in mind when it comes to buying a home.)
Dealbreakers aren’t always dealbreakers
When we first started looking at houses, I had many dealbreakers in mind. It couldn’t be over a certain price. It couldn’t be more than a 10 minute walk from a metro. It had to be a combination of old and new. It had to have at least 2 bathrooms. It also had to be livable, with no major problems. Ha! That bubble was burst pretty quickly. If you expect to get every single thing you’re looking for, you can also expect to pay a premium for your home. If you expect to pay a smaller amount for a home, expect it to be a fixer-upper or not in your favorite part of town. I was surprised at how flexible I was on certain things. I realized that when it comes to homebuying, dealbreakers are negotiable.
The process isn’t quick or easy
Before we made an offer on our home, we looked at about 27 houses. This doesn’t seem like many, but that was in the course of about two months. We spent every weekend touring houses in the DC area. We thought that once we found a house and our offer was accepted that things would move quickly. Unfortunately, negotiating repairs with the sellers took over a month! In fact, we were still arguing about fixes the day of closing.
It also takes quite a while for the bank to approve your mortgage. They need to check every single piece of your financial history. You should budget at least 30-45 days from signing the contract to actually closing on the home. And depending on other issues, it often takes longer than that. My older sister said it took four months to close on her house.
Closing costs are super expensive
Ever wonder how your parents or grandparents were able to buy a house? Well I think I found the secret. In years past, people were able to buy houses without a big downpayment and without closing costs. That meant they just had to get approved for the mortgage by the bank and then pay every month! Now, we have to come up with 20% of the cost of the home, or else we have to pay private mortgage insurance. Not only that, but we have to pay huge closing costs once we sign for the house. Closing costs tend to be about 3% of the cost of the house. If you’re buying a $300,000 house, that’s quite a bit of cash!
This was not something I was initially aware of, and it kind of knocked me on my ass when I saw the number. Luckily, when we were making the offer on our house, we requested that the sellers pay for most of the closing costs. They agreed, and then a repair credit from them covered the rest.
Looking for a house can be very emotional
For me, once I decided I wanted to buy a house, it felt urgent that we find one. But the housing market in the DC area is really tough! Houses are metaphorically flying off the shelves. There were several homes that we weren’t even able to tour because they sold within hours or days of going on the market. The first house we loved had been on the market for 45 days with no offers. But somehow the moment we saw it and decided to make an offer, someone else bought it! I didn’t think I would find another house that I loved like that one. (It’s still the one that got away…) When my friends told me that they made offers on 9 or 10 houses before they got one, I couldn’t believe it! How could you love that many houses?? There were a lot of emotional ups and downs, with Dan and I switching back and forth between despair and cautious optimism.
The home inspection is not necessarily fun
I don’t know if I’m just super naive, but I expected to enjoy the home inspection process. I couldn’t wait to know every little thing about my future home. I knew there was potential for problems, but I had no idea how extensive it could be. We ended up leaving our inspection fearing the worst about our foundation, worrying about major electrical issues, and stressed about other problems. Luckily for us, a structural engineer signed off on the foundation being safe and functional, but we won’t know the extent of the electrical problems until we get a full safety assessment from an electrician. In the end, it was worth it to us to buy the house and make improvements, rather than search for the mythical perfect home.
Negotiating with the sellers can be awful
Our sellers had been trying to sell their house for about two years. Which, in the DC area market, is AGES. It was a little overpriced, but otherwise, we couldn’t really understand how no one else had snatched it up. We easily negotiated on a lower asking price and closing costs, and thought things would move smoothly from there. Oh, we were naive.
Unfortunately, things got really difficult after the home inspection. The inspector found issues that could have amounted to about $30,000 in repairs (including the potential foundation work). Many of the problems were the result of the seller doing a lot of the work himself, so we wanted to hire our own contractors to fix the problems. The sellers would not agree to that. They also wouldn’t agree to giving us a full credit to cover the repairs. In the end, after weeks of negotiating, they only fixed a few things and gave us a small credit to cover the rest.
Our real estate agent didn’t really prepare us for this type of situation. It felt completely crazy and out of the norm to us. Because it felt so abnormal, I worried that we would lose the house at any moment. I worried that the sellers didn’t really want to sell their house, and that’s why they were making it so difficult. It took my friend Liz reassuring me that this process is always the worst to calm me down. But I still wasn’t completely confident that the house was ours until we actually signed the papers.
Writing this article felt pretty cathartic, and I hope it didn’t scare you off from buying property! I just think it’s important to know all the good and bad things that can happen. That way, you’ll be more emotionally prepared when the bad things come around.
Have you been through the homebuying process? Share your experience in the comments! Wondering how much your closing costs might be? Check out the great NerdWallet calculator below!