3 home buying tips that no longer applied when I bought a house
- My family and friends told me to negotiate with the seller in my offer, but I had little bargaining power.
- People may scoff if you buy a home without an inspection, but sometimes that makes the most sense.
- Making a large deposit was not good advice for me, as it wouldn’t have saved me a lot of money.
My husband and I started shopping for a home in February 2022, which was a tough time to be a first-time home buyer.
At first, we found ourselves eating nuggets of wisdom from others. Our parents had advice, but even though they were experienced homeowners, they hadn’t bought a house in about 30 years. Even our friends, who had bought homes in the last five years or less, didn’t seem to understand what position we were in as homebuyers right now.
Everyone had the best intentions giving us advice, but we soon realized that we were going to have to figure out some things on our own. Here are three common home buying tips that haven’t worked for us.
1. Negotiate with the seller
My favorite thing was when I told people that I was interested in a house, but it needed some repairs. Their response was usually like, “You can probably negotiate with the seller to do some of the repairs before you move in.”
It’s like when I tell someone that I have
, and they’re like, “Oh, have you tried yoga?” Your heart may be in the right place, but you have no idea what’s going on.
The United States is currently a seller’s market, which means that there are more people buying homes than there are homes for sale. The advice on negotiating with the seller assumes that you have leverage as the buyer. And in a seller’s market, you lose a lot of your leverage because you’re usually competing against lots of other people who might have higher bids, earlier closing dates, or fewer contingencies than you. .
My friends and family may have been able to negotiate the price of their house or the repairs, but we didn’t have that option.
2. Never buy without inspection
Normally, I’d say that’s good advice. If you skip a home inspection, you may find out too late that the house has major problems that will be expensive to fix – and you might not have bought the house if you had known about these problems. . An inspection protects the buyer.
But in many US housing markets (including the one where I live), having an inspection reservation in your offer virtually guarantees that the seller won’t choose you.
When a seller accepts an offer with an inspection condition, you as the buyer can legally walk away from the sale if the inspection reveals serious issues, such as a crumbling foundation. You will also get your deposit back, which is a percentage of your
you do in advance.
If your offer is exactly the same as someone else’s but theirs waives the possibility of an inspection, their offer is a safer bet for the buyer. This means there is less chance of the buyer terminating the contract.
Luckily, my husband and I were able to get pre-offer inspections on the homes we considered. These are similar to regular inspections, but they take place before you make an offer and help you decide if you want to buy a home. But because homes are flying off the market, there isn’t always time for a pre-offer inspection. You can visit a house on a Friday and have to make an offer by Saturday, and you don’t have time to schedule one.
That said, I have two friends in other parts of the US who have been able to schedule regular inspections – it all depends on where you buy from.
If skipping an inspection or pre-inspection is a deal breaker for you, that’s okay. A year ago, I would have silently judged someone who told me they had bought a house without doing an inspection. Today, I would nod empathetically and give them a pat on the back.
3. Make a big deposit
This is advice I’ve only heard “around” over the years, rather than specifically from my family and friends. Mostly because I grew up in a community that loved Dave Ramsey, a personal finance personality who insists on putting at least 20% less. (But of course paying cash is best, says Ramsey.)
But house prices have skyrocketed over the past year, so having a 20% down payment was just unrealistic for us. We should have been saving for years, and by then house prices would probably be even higher – and we would just have to save even more.
Along with having more equity in your home, the main benefit of a 20% down payment is that you don’t have to pay for private mortgage insurance when you buy. But because my husband and I both had good credit scores, our PMI only costs a little over $100 a month. I’d rather pay around $100 a month than save another 10 years for a house and not accumulate equity during that time.
I also always assumed that a large down payment would significantly reduce my monthly payments – but that wasn’t necessarily the case. To pay, say, 7% instead of 6%, you would have to pay $4,000 more. But that would have only saved us about $30 on principal and interest each month.
In the end, we made the minimum down payment of 3%. If we had gone down 5%, our interest rate and PMI would have gone down a bit, resulting in a slightly lower monthly payment. But we agreed we’d rather keep money in our emergency fund and retirement accounts than withdraw it for a slightly larger down payment. I have no regrets for having made such a small deposit.