7 Tips for First-Time Home Buyers

How to avoid wasting money on your first major real estate purchase.

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You've been out looking at homes with your realtor all day. And as you walk through the door of the last house on your list, your mouth falls open. Finally, you've found The One, the perfect house. Stars begin to shimmer in your eyes. You love the layout, the paint colors, and the little powder room by the back door.

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So you make an offer and move in within the month. It's not until things settle down that you discover the roof leaks and the foundation might need to be replaced...immediately. Suddenly, the stars dim as you face the prospect of several expensive repairs and unexpected home improvement costs. Not fun at all.

Buyers, especially first-time home buyers, often get caught looking at the wrong things when they buy a house. They fall in love with all the things that are easy to fix, and never think to look at the really important clues that the house might be more trouble than it's worth. I did the same thing with my first house and many others have made similar home-buying mistakes. So, what should you look for to make sure you're not buying a lemon?

1. Check the Foundation

The home's foundation is probably one of the most expensive things to fix, which is why you need to go down to the basement before you even look at the rest of the house. Do you see any cracks in the concrete or stone? If so, the foundation might be structurally unsound. If the basement is finished, then look for cracks in the drywall, especially around windows and doors.

2. Check the HVAC Equipment

While you're down in the basement, look at the heating and cooling equipment. How old is it? Does it look like it's running properly? Are the vents connected well? These are important questions to answer in order to make your home energy efficient and ensure that you reduce utility bills. Replacing a home's HVAC system can cost tens of thousands of dollars, but many first time buyers never give it a second look.

3. Look for Water Damage

If the house has had problems with water in the past, you're looking at several expensive fixes. First, what happened once (like a leaking basement) can easily happen again. Second, that water damage could have opened the door for mold, especially the dangerous black mold, to start growing. Look for brown or white stains down the side of the basement walls (which would indicate a past leak). If the floor is bare, then look for horizontal stains. Be suspicious if the basement has been freshly painted. Sellers often do this to hide water damage stains. It's also important to check the bathroom, and under the kitchen sink. Look for stains that would indicate mold growth.

4. Check the Electrical

If the home you're looking at is pre-1930's, it might still have the old knob and tube wiring. Knob and tube wiring is relatively safe as long as it hasn't been tampered with in any way. For instance, if the house has blown insulation in the attic sitting on top of the knob and tube wiring, this is tampering (and it's a serious home fire safety hazard). Most insurance companies consider knob and tube wiring to be unsafe, so you're going to pay more for homeowner's insurance coverage (if they'll even insure you at all) if you don't replace it. Replacing it means rewiring the entire house, which will cost tens of thousands of dollars.

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5. Never Buy a Home You've Only Looked At Once

Remember, when you first see that "perfect house", you're looking through rose-colored glasses. Always sit on the decision to make an offer, and go see the house again a few days later.

6. Always Get a Home Inspection

Seems like old advice, but plenty of people still don't get a home inspection done before they make an offer. If the home inspector says more research is necessary, or their report is inconclusive, then get a second opinion.

7. If the Price Is Too Good to Be True, It Probably Is

Trust your gut here. If your dream home's price is suspiciously low, there's probably a good reason. Beware. Buying a house is a huge decision and investment, especially if it's your first. Don't be so easily swayed by first impressions and appearances. Make sure you do your research and watch out for some of the pitfalls mentioned in this article.

Have you had any surprises after buying your first house? What are some other things to watch out for?

Heather Levin is a contributor for the Money Crashers personal finance blog and founder of The Greenest Dollar, where she talks about issues around saving money and saving the environment.