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What Should You Avoid when Buying a House? Common First Time Home Buyer Mistakes

Learn from these common first time home buyer mistakes (some we personally made) so that you can save yourself a lot of money and headaches in your new home.

realtor handing keys to couple for their first home with text overlay "5 first-time home buyer mistakes to avoid"

We made so many (common) home buyer mistakes when we bought our first time 9 years ago.

And you know what? Some of them are still costing us money.

Since I’m all about showing others how to spend less and how to get more of their paychecks into their savings account, I want to share with you the most common first-time home buyer mistakes home-buyers make.

Trust me – if you’re in the market for your first home (or even your second), you’ll want to pay attention to both common first-time home buyer mistakes + the ones we personally made.

Bonus: you definitely want to read my tips on how to get cheaper homeowner's insurance. These are 9 must-try strategies that have saved us thousands over the last ten years of homeownership. 

Mistake #1: Not Vetting a Home Inspector

The home buying process – especially the first time around – is completely overwhelming.

We had knots in our stomachs, we broke a sweat more than once, and we questioned ourselves along the process.

Because of how lengthy the entire process is, we didn’t even think twice about who the home inspector was for our house. It was someone recommended by the seller’s real estate agent (a bit of a red flag, there), and we just went with it.

To be honest, we didn’t even know you COULD shop around for a home inspector. They just made it seem all matter-of-fact, and so we just went with the flow.

That simple mistake has cost us TENS of thousands of dollars over the year.

This is not to say that we still wouldn’t have bought the house if we had known all the things that would need to be completely gutted during our ownership, but it could have given us a better bargaining chip to negotiate the price down (so that we COULD more easily pay for all the renovations/repairs).

This includes things like:

  • $7,000+ Foundation Repair within a few years of ownership
  • 2 new Central A/C Units and furnaces instead of the one that we thought we’d have to do (Over $11,000 for both)
  • The entire home needs to be re-piped because it’s galvanized piping, which starts to break down at this point (we didn’t know anything about the plumbing, and weren’t told this)
  • The back patio is made out of indoor tiles, so they get seriously slick when wet + they have mostly broken away in the last 9 years

Hint: stick around to the end, where I share my bonus home inspection tips for first time buyers.

Mistake #2: Buying All New Furniture and Appliances

It’s very common for new homeowners to get so excited about everything that they want to deck it all out in new furniture and appliances.

Here’s what I suggest you do instead: focus on buying ONE new appliance or piece of furniture, and use what you’ve got or hand-me-downs to take care of the rest.

Then, upgrade incrementally as the years move on. This is one of those money saving tips that will help you in the long run.

And if I were you? I would make your home splurge REALLY count, meaning make it something you’re going to use all the time.

For us, this meant buying a refrigerator when we moved in. It was the only big purchase we made, and we chose it because we had mistakenly thought there was a refrigerator included with the house (it ended up being a kegerator…which leads to Mistake #3 below).

And then just recently? We upgraded to a new mattress – because, let’s be real, you literally spend around 8 hours every single day in your bed. Buying a new mattress is a GREAT way to feel like you’re really upgrading things.

We could have bought both at the same time, but I’m glad we didn’t – we really needed that money for other things at the time.

Hint: here's how to buy quality furniture for cheap.

Mistake #3: Not Thoroughly Reading Your Contract

On closing day, you will be swamped in paperwork. You might even get a knot in your own stomach – like we did – and feel like you’re signing your life away.

I’m a contracts person, and so I tried my best to look over all of the paperwork being sent our way in the closing room. And I know that I read more than most, as the closing person clearly showed her dissatisfaction at the slow progress we were making.

But guess what I missed? The sellers had put an asterisk in the contract saying that the refrigerator in the garage was included (I thought they meant the refrigerator in the kitchen).

After closing and turning the keys to our new home for the first time, we quickly learned that they had left their kegerator “refrigerator” for us in the garage, and taken the one in the kitchen. And, yes, it was there in “plain” black and white (our realtor pointed out to us, after we called her and asked what had happened).

*sigh*.

Do I think you’re going to catch everything in the contracts? No. But you need to read through them, that’s for sure.

Mistake #4: Emptying Your Savings Account for the Down Payment

Just one month after we purchased our home, we lost our second car. It was a beater car anyway, so its days were numbered. But, did we think we’d need to pay for a second vehicle right after paying for a down payment?

Nope.

We ended up paying cash for another beater car, but for a few months there we were very low in our emergency savings fund.

Let our mistake be a lesson to you: do NOT empty your savings account and/or emergency fund to pay for the down payment.

You don’t know what issues you’re going to find in your home, or what life will throw at you once you buy your first home. So, you need to save up a down payment ON TOP OF your emergency savings fund.

Mistake #5: Expecting Too Much Out of a Home Warranty

Many times when you buy an older home, they'll throw in a 1-year Home Warranty service for free. It's to help you feel better about some of the things that are on the way out in your home, especially after just plunking down most of your savings to get it.

And don't get me wrong —  it can be helpful.

But you can't expect too much from it (like we did, as first-time homebuyers).

Here's how this went down, for us.

When Paul and I purchased our home, we were quite put off by the outdated A/C and heating units. Each time we were in the house, we loved everything about it…except breaking out in sweat.

We did our homework and found out the cost of how much it would be to replace the two compressor units. Then at the negotiating table, we asked the owners to drop their price by $5,000, which would cover our costs.

They balked and offered $600 off the price, which they calculated is what it would cost to place new Freon in the system. We were sorely disappointed.

Finally, they decided to give us $800 off the asking price, plus pay for a year on a Home Warranty extended plan (approximately $475) so that if they A/C units died on us in our first year, the home warranty company would pay the cost.

We accepted.

I honestly wish I hadn't — and I can say that from the standpoint of having replaced both the Central A/C units in the upstairs and downstairs of our home, at a cost of approximately $11,000.

We spent that first June together in a home that would not go below 84 degrees Fahrenheit in a humid-plagued city (Houston).

Over the course of 15 service calls to the Home Warranty company, we had the following done (remember, you have to pay a $60-$75 service fee each time; though if it's the same problem, they usually don't charge you again):

  • Cleaned the coils and flushed out the line before adding all new Freon.
  • Replace the compressor.
  • Replaced fan motor, fan blades, and capacitor.
  • Replaced a valve.

I priced the components that we had replaced, and the approximate cost would have been $1300. So that sounds good, right? But the 20+ year old unit never got the home lower than 80 degrees, even after all that stuff was replaced, and so it had to be replaced.

The shady part? I heard from two different service people who came out essentially what I knew in my gut: the Home Warranty company was NOT going to replace our unit. Even though the contract made it appear as if they'd have to.

One service person told me that the Home Warranty company was never going to replace the unit (after having come out to our home like 5 times, and for getting the same bad temperature coming out of the register), and another person said that if he tried to get our warranty company to replace the unit, he could lose his job.

Pssst: You might want to check out my articles on tv shows that remodel homes for free, and whether or not you can get a free home renovation.

Bonus Mistake: Ignoring Your Junk Mail

As new homeowners, our mailbox was flooded with tons of offers from companies undoubtedly trying to get us to spend all of our first-time homebuyer’s tax credit. We had landscaping companies putting their business cards in our mailbox, coupons for plumbers, a new roof and purified water delivered right to our door, ads for real estate agents, churches who would like our membership, and security systems (think matrices of invisible lasers all over our property).

If you're a new homeowner, or you're looking to purchase a home, you will most likely receive many of these mailings as well.

So how do you separate the good, from the bad and the ugly? Here’s how we did it.

Coupons and Free Trial Offers

Not all of the ‘junk’ mail that has passed through our mailbox has truly been junk.

For example, we received:

  • a free one-week trial to the YMCA just a mile from where we live, which I will be taking advantage of soon
  • I had a free estimate completed on insulating our attic, and received a free hot water heater blanket for doing so. With a Lowe’s just a few miles away
  • a valuable 10% and $10 off $50 purchase coupons
  • The Houston Chronicle gave me free coupon inserts and a $1.00-a-week delivered Sunday paper subscription for 20 weeks (a savings of $15 I would have spent anyway)

These offers were all valuable to us, so make sure you open up the ‘junk’ mail and find coupons that are useful to you.

Competing Offers You Can Use to Your Advantage

Perhaps one of the most useful parts of receiving all of these unsolicited offers in the mail is that companies in the same line of work are competing for our business.

This helps us out because typically they will undercut the price of offerings of each other, making the consumer the winner in the end.

But this also helps us out because I can now use these mailings and advertisements as a negotiating tool to call up our current providers and talk them into giving us a more competitive price.

If your current cable, home phone, insurance company, etc. is more expensive than a similar offering from another company, take the opportunity to call up your provider and ask them to reduce their price…or you will walk.

They may ask you to prove this competitor’s price, in which case you will have the proof in your mailbox.

Beware: Suspicious Official-Looking Mail

Something we began receiving almost immediately were letters claiming that we had to have mortgage insurance, and that looked quite official (including our loan terms, amount, interest amount, etc.). The letters did not come from our mortgage company, but you really had to read closely to understand that, in fact, the mortgage company would not be taking your keys away if you do not purchase this insurance.

Mortgage Insurance is not to be confused with PMI, or Private Mortgage Insurance that protects the lender, and that is mandatory for those who purchase their homes with less than 20% money down. Instead, Mortgage Insurance is to protect you in case you become disabled, ill, lose your job or die, so that your mortgage will be paid off. Many times this can be covered under policies you already have, such as Life Insurance, long-term and short-term disability, etc. Make sure you look at your own plans and see what will work best for you and your family.

Another official-looking letter we received was from the “National Deed Service, Inc.” discussing our deed, the fact that it was recorded with the Harris County Recorder, and the fact that the U.S. Government Federal Citizen Information Center advises us that we should have a certified copy of this document. This company was willing to give us this for $59.50. First of all, check your closing materials because you most likely have a copy of your deed. Secondly, you can get a new copy, and have it certified by Document Pros for typically $0.50-$1.00 per page and an extra $5.00 or so (total for one document) for the certification. You need to call your County Clerk’s office, or Recorder of Deed’s Office, or the comparable agency in your own county to do so.

Bonus: Home Inspection Tips for First Time Buyers

This single mistake has cost us so much money, that I want to add a bonus section to answer a few more questions and prepare you for your own home inspection.

  • Do buyers go to home inspection?: Yes – absolutely. You want to be there, and you want to get answers to any and all questions that you have. On top of that, if you suspect your home inspector doesn’t know in-depth about a particular area, such as plumbing, you can pay a small fee to have a plumber come and inspect something to tell you what’s what.
  • Who should pay for a home inspection?: Typically, the buyer pays for the home inspection. This is in your self-interest, as you want the inspector to be working for YOU, and not for someone else (though, of course, I’m sure most home inspectors have integrity here and do their job to the best of their ability regardless of who is paying).
  • What should I expect during a home inspection?: You can expect the inspector to go about his business and fill in his inspection papers. You need to proactively talk to them and ask them questions that you have – this is your chance to get information about this house before you purchase it. A good idea is to make a list of any possible concerns you have, and address them with the inspector. If they don’t know or don’t appear to know, then go ahead and bring in a specialist for a small fee to inspect the issue and get you an answer.
  • What should I know as a first time home buyer?: You should know and at least understand a little each of the major systems of a home. That’s because these are the things that have the most ability to break down and cost you lots of money and discomfort over the years. Major systems include how your home gets cooled down (A/C), heated up (gas/electric), the duct system (how air moves throughout the home), the foundation of the home and how that’s looking, the water heater, piping, etc. For purposes of the inspection, you need to stop thinking in terms of looks, and start thinking in terms of the health of the home.

I hope you not only find these first-time home-buyer tips helpful, but that you follow them. Learn from our mistakes, and the mistakes of others to lose less money out of your own pockets over the years. And may your first home be a good one!

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Amanda L. Grossman is a Certified Financial Education Instructor, Plutus Foundation Grant Recipient, and founder of Frugal Confessions. Over the last 10 years, her money work helping people with how to save money and how to manage money has been featured in Kiplinger, Washington Post, U.S. News & World Report, Business Insider, LifeHacker, Woman's World, Woman's Day, ABC 13 Houston, Keybank, and more. Read more here.

Michael Zhang

Monday 11th of January 2021

Thanks for sharing these common home buyer mistakes, it would definitely come in handy as I try to buy my very first home. I think now is a good time to try and find a house for sale as it's stated in the blog that properties sit on the market longer than usual right now so hopefully I could use that to my advantage to try and negotiate a lower price than what the seller is originally asking for. Hopefully everything goes smooth and I'll keep the other mistakes to avoid in mind.

rachel frampton

Monday 30th of March 2020

I've been planning to purchase a new house here in Arizona, but since this will be my first property purchased, I'd gladly need some tips. I guess you're right; it'll be smart to hire a home inspector to avoid foundation repairs that will probably cost $7,000. I'd make sure to make this happen once I finally found my ideal house.

Stefan Bradley

Wednesday 16th of October 2019

You make a good point when you mention the importance of thoroughly reading your contract. I am planning on buying a new home soon. I'll make sure that I read through the contract once I find a house that will suit my needs.

Derek McDoogle

Tuesday 15th of October 2019

I like how you mentioned to do not empty your savings account and/or emergency fund to pay for the down payment. My brother told me that he has been saving money for his new home but he is looking for options. I will recommend him to read this article so that he does not go through the same mistakes and can get a better option.

Fay

Tuesday 17th of September 2019

Thank you for talking about how you should not empty your savings account when buying a home. My husband and I finally saved enough money to be able to buy our first home, and we need advice. I liked this article, and I am really glad I found it because it is important.