When people are buying a house, they often will look for certain perks and necessities. Many people want a pool in the backyard, a pre-installed washer and dryer, or just a simple dishwasher.
Along with those material items, the top three goals homebuyers want to achieve are privacy, family needs, and asset accumulation. While these things may make or break a person’s decision to place an offer on a specific home, many first-time home buyers fear that what they want in a home might cost them more than their budget. However, that doesn’t have to be the case.
According to USA Today, first time home buyers tend to pay thousands of dollars more than what they need to be paying. In fact, those home buyers actually overpaid an average of around $2,200 for a home. USA Today says senior economist Jessica Shui and economist Shriya Murthy of the Federal Housing Finance Agency analyzed data from late 2012 too early 2016 regarding appraisal data from 1.7 million house sales. They found that the average home price was $275,020.
From their research, they found that you don’t have to pay a ton of money on your first home. First time buyers usually buy starter homes. The study questions why those specific buyers are willing to pay more than they actually need to. The researchers found that the reason for this is buyer inexperience. Jim Murrett, the president of the Appraisal Institute, says the reasons go way beyond experience.
“First-time homebuyers, many times, let their emotions get the better of them,” he said. “They have the excitement of owning their first home, and they sometimes kind of look at a property with blinders on.” He said first-timers “tend to overlook potential negatives and only look at the positives of a particular house.”
Neil Garfinkel, a real estate attorney for Abrams Garfinkel Margolis Bergson, believes that people buying homes for the first time tend to think with their hearts instead of their heads. He says someone who is in the process of home buying for the third or fourth time is able to realize what they should and should not be paying. The experience, he says, allows the buyer to turn down a home if the price is wrong.
If you are buying a home for the first time, Garfinkel says you should work with an agent who is there to put your interests first, use online home value estimators, and seek advice from home buying agencies. These are simple steps that can help you pay exactly what you need to pay instead of more.