Avoid These Common Real Estate Mistakes
You want to buy with confidence...
Housing affordability is a real challenge in the U.S.. But you’re not powerless.
With the right preparation and mindset, you can avoid costly mistakes and put yourself in a stronger position when the right opportunity comes along.
Here are some of the most common mistakes and misconceptions I see when talking to people—along with ways to avoid them.
Mistake #1: Not Understanding What’s Affordable
The list price of a home doesn’t tell the whole story. Too many buyers look at the “sticker price” and forget about the other costs that go into owning property.
Things to consider:
Monthly mortgage payment (principal + interest)
Property taxes
Insurance and HOA fees
Utilities and maintenance (lawn care, parking, etc.)
Reserves for repairs (roofs, appliances, etc.)
Closing costs and deposits
Lenders may approve you for more than you should realistically spend. You do not want to be house poor…Run your own numbers and make sure you can comfortably cover your housing payment while still saving elsewhere.
Mistake #2: Not Getting Pre-Approved Early
Some buyers wait until they find something before getting pre-approved. You are wasting time if you are just scrolling Zillow to see what’s out there.
Find out what you can get as a loan, and that will help refine your search.
Also…
A pre-approval letter shows sellers you’re a serious buyer. In many markets, you won’t even get in the door to tour higher-end listings without one.
Pre-approval forces you to review your income, assets, debts, and credit—so you understand your budget from the start.
Monitor your credit score and cash reserves well before you plan to buy. Improving your credit score even slightly can save you thousands over the life of the loan.
Mistake #3: Not Knowing What You Want
Everyone says they want to buy, and then when you push them they’ll say, “Well I’m not really sure what I’m looking for…”
That lack of clarity wastes time and drives your real estate agent nuts…
Before you search, define your must-haves:
Location and neighborhood
Bedrooms, bathrooms, and parking needs
Commute times
School systems
Whether this will be a primary residence or an eventual rental
Mistake #4: Not Doing Research
Falling in love with a property without understanding the market is risky. Or just blindly throwing out offers to buy is not going to be a good strategy…
Do your homework:
What has sold in the area recently?
Are prices trending up, flat, or down?
What are the property taxes historically?
Any major developments nearby?
Don’t assume the highest price always wins. Sometimes sellers care more about timing (e.g., they need to move quickly), or they want to sell to someone who has a story (like building a family or some emotional attachment.) A well-structured and thought out offer can stand out.
Mistake #5: Misunderstanding Mortgages & Refinancing
This is where many people get tripped up by headlines or bad advice:
Waiting for rate cuts: When the Federal Reserve cut rates by 0.25% yesterday, many people immediately thought mortgage rates will instantly drop. The truth? Interest rates, and mortgage rates, have been trending down for a few weeks. Mortgage applications jumped 30% last week, largest weekly gain since January… Mortgage rates respond more to bond markets than Fed announcements.
Rushing to refinance: Refinancing isn’t free—you’ll pay closing costs and fees. A general rule of thumb: refinancing usually only makes sense if you can lower your rate by about 1% or more and plan to stay in the home long enough to recoup the costs.
Not knowing loan options: Some people still think you need to do a 20% down payment when in reality, there are conventional loans with as little as 3% down or FHA loans at 3.5% down. I like putting more than 5% down typically to help lower PMI and have immediate equity. But sometimes it’s better to buy sooner with less down than to drain all your cash and leave yourself without reserves.
Buying a home is one of the biggest financial decisions you’ll ever make—but you need to put in some time and work.
Whether you’re six months away from buying or three years away, start preparing now. The more intentional you are, the better positioned you’ll be when the right home comes along.
Disclosure: This material is for general information only and is not intended to provide specific advice or recommendations for any individual. All investing includes risks, including fluctuating prices and loss of principal.