There is no replacement for hands-on experience. You can read all you want to about Roth IRAs, 401(k)s, starting your own business, or buying a home, but the experience of actually doing these things cannot be replicated in any other way. My wife and I recently closed on our first home and I now know so much more now about the home-buying process than I did last year. If you are about to start the home-buying process or will be in the coming years, I hope learning from my experience can make things a little bit smoother for you. Here is everything I’m glad I did - or wish I would have done differently - when buying my first home.
Forgot to say - congratulations! I love home ownership, being able to really live in a place is (almost) priceless.
Suggestions: start a home binder. Keep records of significant work on the home, appliance warranties/documents, plot plan/survey, etc. in one place. This binder will be useful during your ownership and a selling point you eventually sell. Prior to selling you can add local amenities, school info, the kind of stuff in a short term welcome binder. Really impresses potential buyers. Imagine seeing a binder like this when you initially toured the home.
Learn how to shut off every utility. Include a brief how-to in your house binder for reference by others. Brief family members. Label the valves.
If you are planning to be there long term - your first consideration should be landscaping, specifically tree planting, both to maximize your enjoyment out of these features and because landscaping takes time to mature and "grow in." The right trees, in the right places are a great asset now, and when you eventually sell the home. I had a mature, beautiful, red Japanese Maple in a home I sold and every buyer what is awe of that tree....
I would always get a home inspection done. Even on new construction. Don’t rely on your local code enforcement officer to keep in check builders that add to the local property tax base.
Daniel, congratulations on buying your first home and on writing this article, which is one of the most balanced accounts I’ve read! My wife and I run a #9 team in PA, and I’m a Personal Finance Coach with Ramsey Solutions, so I would like to add one important budgeting item. Rent was the most one pays for the housing while renting, but mortgage is the least one pays to own. I’ve seen estimated to be between 1%-4% of the purchase price per year. We help our clients narrow this down during the inspection- but with our homes we find 1.5% a year to be about average - but we do tend to be pretty selective about homes we recommend submitting offers on. Also, you should assume that you need 2x that amount during the first year because the seller probably deferred much of the maintenance over 12 months right before listing. While this may sound like an obvious thing, but most people are surprised that a 400k home needs $500 a month set aside for maintenance/repairs on top of a $3,300 mortgage and on top of 6k you’ll need to catch up on deferred maintenance. Enjoy your home and I’m sure you have your basis covered from the finance side - but I wanted to share this point with others.
I would be wary of using an inspector recommended by your realtor. The incentives are misaligned. Both realtors (selling agent and buyer's agent) have a strong incentive for the sale to go through. That is how they make their money. If an inspector is "too good" and finds to many defects, it may can the sale. Most are honest and good realtors are planning on repeat business so in most instances this is not an issue. But fundamentally the incentives are misaligned. Best to use an inspector that you hire directly, not connected to any realtors involved in the transaction.
Pricing (more for the seller than buyer) - again, the realtors incentive is to make the sale. A slightly higher selling price is immaterial in regards to their commission, i.e. $10K more is significant to you but not to the realtor. Thus their incentive is to conclude the sale quickly rather than wait for a potentially higher offer. Studies have shown that when realtors sell their own home, the time on market is significantly higher - their holding out for a better price.
Not bashing realtors (the same goes for Financial Planners or any professional you work with) - know the financial incentives of those you work with and how they may work for/against you. Be an informed consumer.
I keep getting offers for solar power, the offers have been getting over the years but still not good enough to make sense in my case. However, depending on your power company, state/federal subsidies, metering incentives, how long you intend to stay in the home, etc. it can be a good deal. As a new owner, assuming you will be in the home for a while, this may be the ideal time to install solar. An easy indicator if solar might work for you is if other houses in the area have solar.
Forgot to say - congratulations! I love home ownership, being able to really live in a place is (almost) priceless.
Suggestions: start a home binder. Keep records of significant work on the home, appliance warranties/documents, plot plan/survey, etc. in one place. This binder will be useful during your ownership and a selling point you eventually sell. Prior to selling you can add local amenities, school info, the kind of stuff in a short term welcome binder. Really impresses potential buyers. Imagine seeing a binder like this when you initially toured the home.
Learn how to shut off every utility. Include a brief how-to in your house binder for reference by others. Brief family members. Label the valves.
If you are planning to be there long term - your first consideration should be landscaping, specifically tree planting, both to maximize your enjoyment out of these features and because landscaping takes time to mature and "grow in." The right trees, in the right places are a great asset now, and when you eventually sell the home. I had a mature, beautiful, red Japanese Maple in a home I sold and every buyer what is awe of that tree....
I would always get a home inspection done. Even on new construction. Don’t rely on your local code enforcement officer to keep in check builders that add to the local property tax base.
Daniel-WOW. This article will be tremendously helpful to anyone planning to buy a house-not just 1st. timers. Such good work!
Daniel, congratulations on buying your first home and on writing this article, which is one of the most balanced accounts I’ve read! My wife and I run a #9 team in PA, and I’m a Personal Finance Coach with Ramsey Solutions, so I would like to add one important budgeting item. Rent was the most one pays for the housing while renting, but mortgage is the least one pays to own. I’ve seen estimated to be between 1%-4% of the purchase price per year. We help our clients narrow this down during the inspection- but with our homes we find 1.5% a year to be about average - but we do tend to be pretty selective about homes we recommend submitting offers on. Also, you should assume that you need 2x that amount during the first year because the seller probably deferred much of the maintenance over 12 months right before listing. While this may sound like an obvious thing, but most people are surprised that a 400k home needs $500 a month set aside for maintenance/repairs on top of a $3,300 mortgage and on top of 6k you’ll need to catch up on deferred maintenance. Enjoy your home and I’m sure you have your basis covered from the finance side - but I wanted to share this point with others.
I would be wary of using an inspector recommended by your realtor. The incentives are misaligned. Both realtors (selling agent and buyer's agent) have a strong incentive for the sale to go through. That is how they make their money. If an inspector is "too good" and finds to many defects, it may can the sale. Most are honest and good realtors are planning on repeat business so in most instances this is not an issue. But fundamentally the incentives are misaligned. Best to use an inspector that you hire directly, not connected to any realtors involved in the transaction.
Pricing (more for the seller than buyer) - again, the realtors incentive is to make the sale. A slightly higher selling price is immaterial in regards to their commission, i.e. $10K more is significant to you but not to the realtor. Thus their incentive is to conclude the sale quickly rather than wait for a potentially higher offer. Studies have shown that when realtors sell their own home, the time on market is significantly higher - their holding out for a better price.
Not bashing realtors (the same goes for Financial Planners or any professional you work with) - know the financial incentives of those you work with and how they may work for/against you. Be an informed consumer.
I keep getting offers for solar power, the offers have been getting over the years but still not good enough to make sense in my case. However, depending on your power company, state/federal subsidies, metering incentives, how long you intend to stay in the home, etc. it can be a good deal. As a new owner, assuming you will be in the home for a while, this may be the ideal time to install solar. An easy indicator if solar might work for you is if other houses in the area have solar.