Searching For Your First Home? Watch Out For These 12 Red Flags

Expert Panel
FORBES REAL ESTATE COUNCIL

When browsing the market for a new home, first-time homebuyers are often eager to find their dream property. Unfortunately, some are so eager that they can blind themselves to potential red flags.

Settling for a house that’s not right for you is an easy mistake to make, but it’s one that can be detrimental in the long run. You don’t want to be stuck with a property you don’t like—or worse, can’t sell—simply because you rushed the buying process. Below, Forbes Real Estate Council members discuss some of the warning signs to watch for when evaluating a potential home. Here’s what they said:

1. Not Enough Room To Grow With Your Future Plans

Make sure you know what you really need. How many kids do you plan on having? How many pets do you plan on caring for? What will you be acquiring for the new home? Consider the storage or closet space needed now and in the future. There are so many things to consider and these are just a few of them. – Michael J. Polk, Polk Properties / Matrix Properties

2. Only Available For Viewing During Certain Times

If the home is only available for viewing at certain times, ask yourself why. Does the street get extremely busy during certain times of the day? Is it really loud at specific times, from trains, airplanes, school marching bands or football games? Even if there are no viewing restrictions, I recommend seeing it at various times of the day or week, just to know what you’re getting in to. – Sam Grooms, WhiteHaven Capital

3. Solely Considering The Visual Impact

Experienced realtors and savvy sellers rely on a positive emotional reaction when visually packaging their listings to sell. Don’t “fall in love” with a listing and consider a major investment without compiling a task list of exactly what it will cost you in terms of time and money to make this house your home. Warning! Positive emotional impact does not always equal a smart financial investment. – Caroline Carter, Done In A Day, Inc

4. Low Cash Reserves

Don’t become cash poor for any house. The house must be affordable and PMI must be avoided. Mortgage payments must be low enough to allow homebuyers to contribute to savings, emergency funds and retirement contributions. It’s never good to allow house payments to override life for the sake of a showpiece property that someone else said you could afford. Set your budget and stick to it. – Ross Hamilton, Connected Investors

5. Not Being Clear On Your Feelings

One of our jobs as a real estate broker is to help people think about what they want. I have various exercises I do throughout the home-buying process. One I like is to ask them to think about how they would feel if I told them someone else was interested in the house. Would they be disappointed? Or relieved? This helps buyers crystallize their feelings. We can then strategize accordingly. – Deborah Rabbino Bhatt, Vesta New York

6. An Unrealistic Market View

No house is perfect. Remember there is a tradeoff. First-time homebuyers should make sure they are realistic about the market so they don’t shoot themselves in the foot. Ask yourself, “Could this home meet my needs for the next few years?” Then plan to keep it as an investment to build your real estate empire. Negotiate repairs, but don’t be scared. – Courtney Poulos, ACME Real Estate

7. Feeling Uneasy In A Neighborhood

Equally important to finding the right house is finding the right neighborhood. While you can directly make improvements to a house, you can’t with a neighborhood. Take your time in getting familiar with the neighborhoods by walking and driving around during the day and night, not just during open house hours! And if you’re feeling uneasy about a neighborhood, take a step back and re-evaluate. – Brad Le, Compass

8. The Costs Of Repairs And Renovations

While the house within your budget may not be the dream home, first-time homebuyers should keep in mind that almost any home can be repaired or renovated to your tastes. It’s important not to take on too big of a project without experience, since fixer costs add up very quickly. Overhauling a home is not as easy as it looks on reality TV. – Beatrice de Jong, Open Listings (YC W15)

9. Failing To Do Your Due Diligence

Due diligence is your No. 1 saving grace in a first-time home purchase. The three biggest killers in any home purchase will be from not doing an inspection, not getting an appraisal or not closing with an attorney or title company who will do a title search before you close. When you are making the biggest purchase of your life, don’t skip proper due diligence. – Dani Lynn Robison, Freedom Real EstateGroup

10. Incentives To Waive The Home Inspection

Be cautious of someone who provides incentives to waive inspections. The inspection process provides the buyer with a contingency and leverage to exit the deal or, if willing to run the risk, negotiate a lower price. An inspection can reveal structural faults, water damage, confirm the home is up to code and has received the necessary permits. It’s a smart move and provides peace of mind. – Bobby Montagne, Walnut Street Finance

11. Borrowing Too Much

The real estate market has become very expensive and at the same time, loans are much easier to get than they were a few years ago. Some may say that’s a familiar tale like in 2008 with the global financial crisis where many people lost their homes. So be wary of how much you’re borrowing, the interest rate and bank loan terms. Don’t borrow too much money that you can’t afford to pay. – Engelo Rumora, List’n Sell Realty

12. Getting Caught Up In Emotions

When buying a first home, it’s easy to get caught up in the moment and not think logically. It’s critical to stick to how much you’re willing to spend as well as your “must haves.” If a house under-appraises, problems arise during an inspection, or the mortgage payment is beyond your comfort zone—always make sure that your purchase still makes good business sense, and walk away if it doesn’t. – Lisa Fettner, ReferralExchange