# First-time buyers: Avoid these 5 mistakes in a hot market By Chelsea Levinson, JD | 2022-09-08 > In a hot market, first-time buyers may avoid costly mistakes by working with a skilled agent, preparing their finances before home shopping, and being strategic with offers. ## Key Takeaways ## Key takeaways - Skipping pre-approval could be a mistake in a hot market, as it typically strengthens a buyer’s offer. - Not hiring a real estate agent could put first-time buyers at a disadvantage at the negotiating table. - Other costly mistakes some first-time buyers might make include overpaying, waiving inspection, and hesitating on a home they love. **Meta description:** Avoid the 7 most common first-time home buyer mistakes that cost thousands. Learn what not to do when buying a home — and how to protect your investment. *Reviewed by the Opendoor Editorial Team | Updated June 2025* First-time buyer mistakes cost Americans thousands of dollars every year — and most are entirely preventable. According to the [National Association of Realtors](https://www.nar.realtor/research-and-statistics/research-reports/highlights-from-the-profile-of-home-buyers-and-sellers), first-time buyers accounted for 24% of all home purchases in 2024, many of them navigating the process with limited guidance. Whether you're just starting to browse listings or you're ready to make an offer, knowing what not to do when buying a home is just as important as knowing the right steps. Here are seven common home buyer mistakes — and how to avoid every one of them. > **Quick-reference: 7 first-time buyer mistakes at a glance** > > 1. Not getting pre-approved before you start shopping > 2. Skipping the home inspection > 3. Forgetting to budget for closing costs and hidden fees > 4. House hunting without a clear budget > 5. Making emotional decisions and overbidding > 6. Not shopping around for mortgage rates > 7. Ignoring the neighborhood and resale value [Get your offer](#) ## 1. Not getting pre-approved before you start shopping One of the most common mistakes first-time home buyers make is touring homes before getting a mortgage pre-approval. Pre-approval tells you exactly how much a lender is willing to finance, which shapes every decision that follows — from the neighborhoods you target to [how much you offer on a house](https://www.opendoor.com/articles/how-to-determine-what-to-offer-on-a-house). Without it, you risk falling in love with a home that's out of reach, or losing a competitive bid to a buyer who already has their financing confirmed. Sellers and listing agents routinely prioritize pre-approved offers because they signal serious intent and lower the risk of a deal falling through. **What it costs you:** Skipping pre-approval can mean weeks of wasted time on homes you can't afford — or losing your [earnest money deposit](https://www.opendoor.com/articles/earnest-money) if financing falls apart after you're under contract. **The fix:** Talk to a lender before you attend a single [open house](https://www.opendoor.com/articles/open-house-tips-for-first-time-buyers). A pre-approval letter typically takes a few days and is valid for 60–90 days. ## 2. Skipping the home inspection In competitive situations, some first-time buyers waive the home inspection to make their offer more attractive. This is one of the riskiest mistakes that cost buyers money — and the savings are almost never worth it. A professional inspection uncovers issues that aren't visible during a walkthrough: foundation cracks, outdated electrical wiring, roof damage, plumbing leaks, and more. Knowing [what home inspectors look for](https://www.opendoor.com/articles/briefs/what-do-home-inspectors-look-for) gives you leverage to negotiate repairs or a lower price — or to walk away entirely. **What it costs you:** Undetected problems like a failing HVAC system or hidden water damage can easily run **$5,000 to $30,000+** in surprise repairs within the first year of ownership. **The fix:** Always include an inspection contingency. Use a thorough [home inspection checklist for buyers](https://www.opendoor.com/articles/home-inspection-checklist-for-buyers) so nothing gets overlooked. ## 3. Forgetting to budget for closing costs and hidden fees Many first-time buyers focus entirely on the down payment and forget about [how much it actually costs to buy a house](https://www.opendoor.com/articles/how-much-does-it-cost-to-buy-a-house) beyond the purchase price. Closing costs — which include lender fees, title insurance, escrow charges, and prepaid taxes — typically add up to [2% to 5% of the loan amount](https://www.consumerfinance.gov/owning-a-home/closing/closing-costs/), according to the Consumer Financial Protection Bureau. On a $350,000 home, that's $7,000 to $17,500 on top of your down payment. Other hidden costs include moving expenses, immediate repairs, and homeowners insurance premiums that are higher than most renters expect. **What it costs you:** Buyers who don't plan for closing costs may need to scramble for funds at the last minute, delay [closing](https://www.opendoor.com/articles/how-long-does-closing-take), or even lose the deal entirely. **The fix:** Ask your lender for a Loan Estimate early in the process. This document breaks down every expected fee. You can also ask the seller about [seller concessions](https://www.opendoor.com/articles/what-are-seller-concessions) to offset some costs. ## 4. House hunting without a clear budget There's a difference between what a lender approves you for and what you can comfortably afford. Banks don't account for your grocery bill, student loans, childcare costs, or the fact that you'd like to take a vacation once a year. First-time buyers who max out their approved amount often end up "house poor" — owning a home but struggling to pay for everything else. Before you start searching, figure out [how much to save for a house](https://www.opendoor.com/articles/how-much-to-save-for-house) that fits your full financial picture, not just the monthly mortgage payment. **What it costs you:** Stretching your budget by even $200/month adds up to **$72,000 in extra payments** over the life of a 30-year mortgage — money that could go toward retirement, emergencies, or [home improvements that increase value](https://www.opendoor.com/articles/improvements-that-increase-home-value). **The fix:** Set a firm monthly housing budget (including taxes, insurance, and maintenance) before you shop. A common guideline is to keep total housing costs below 28% of your gross monthly income. ## 5. Making emotional decisions and overbidding Buying a home is personal, and it's easy to let emotions override logic — especially when you've been searching for weeks and finally find a place that "feels right." But emotional overbidding is one of the biggest mistakes first-time home buyers make. Offering well above asking price to win a bidding war can leave you with a home that [appraises for less than you offered](https://www.opendoor.com/articles/how-long-does-an-appraisal-take), forcing you to cover the gap out of pocket or renegotiate under pressure. **What it costs you:** Overbidding by $15,000–$25,000 is common in competitive markets. If the appraisal doesn't support the price, you'll either pay the difference in cash or risk losing the home — and your earnest money. **The fix:** Set a maximum offer price before you submit a bid and stick to it. Understand [how to determine what to offer on a house](https://www.opendoor.com/articles/how-to-determine-what-to-offer-on-a-house) based on comparable sales, not emotion. If you lose one house, another will come along. ## 6. Not shopping around for mortgage rates Accepting the first mortgage rate you're offered is one of the most expensive — and most common — home buyer mistakes. According to the [Consumer Financial Protection Bureau](https://www.consumerfinance.gov/about-us/blog/nearly-half-of-mortgage-borrowers-dont-shop-around-when-they-buy-a-home/), nearly half of borrowers don't compare rates from multiple lenders. Even a small difference in interest rates adds up significantly over time. **What it costs you:** On a $300,000 mortgage, a difference of just 0.5% in your interest rate can cost you more than **$30,000 in additional interest** over 30 years. That's real money lost to a mistake that takes just a few hours to prevent. **The fix:** Get quotes from at least three lenders — including banks, credit unions, and online lenders. Compare the annual percentage rate (APR), not just the interest rate, since APR includes fees. If you're new to mortgage terminology, our [real estate terms glossary](https://www.opendoor.com/articles/real-estate-terms-you-should-know) can help you decode the jargon. ## 7. Ignoring the neighborhood and resale value First-time buyers tend to focus on the house itself — square footage, kitchen finishes, number of bedrooms — while overlooking the [factors that actually influence home value](https://www.opendoor.com/articles/factors-that-influence-home-value). School district ratings, walkability, commute times, nearby development plans, and local crime statistics all play a major role in whether your home appreciates or stagnates over time. Even if you plan to stay for years, life changes. Buying in a declining area limits your options if you ever need to sell quickly. **What it costs you:** Homes in less desirable locations can appreciate **30–50% slower** than comparable homes in stronger neighborhoods, potentially costing you tens of thousands in lost equity when it's time to sell. **The fix:** Research the neighborhood as thoroughly as you research the house. Visit at different times of day, talk to neighbors, and check local zoning plans. Think of every home purchase as both a lifestyle choice and an investment. ## How to protect yourself as a first-time buyer The common thread behind every mistake on this list is the same: acting before you're fully informed. The home-buying process [takes time](https://www.opendoor.com/articles/briefs/how-long-does-it-take-to-buy-a-house) — typically 3 to 6 months from first search to closing day — and rushing any step increases the chance of a costly error. Start by getting pre-approved, set a realistic budget, and assemble a team you trust: a qualified lender, a reliable inspector, and an agent who knows the market. Consider whether a [5% down payment](https://www.opendoor.com/articles/briefs/is-5-percent-enough-down-payment) works for your situation or if saving more upfront makes sense. If you're buying or selling on a tight timeline, Opendoor can simplify the process with competitive [cash offers](https://www.opendoor.com/articles/what-is-a-cash-offer-in-real-estate-and-why-consider-it), transparent pricing, and a streamlined closing experience — so you can focus on finding the right home without the usual stress. [Get your offer](#) ## Frequently asked questions ### What is the biggest mistake first-time home buyers make? The single most impactful mistake is not getting pre-approved for a mortgage before shopping. It sets your budget, strengthens your offers, and prevents the heartbreak of pursuing homes you can't finance. Beyond pre-approval, skipping a home inspection and not shopping mortgage rates are close behind in terms of financial risk. ### How much do home-buying mistakes actually cost? The dollar impact depends on the mistake. Skipping rate comparison can cost $30,000 or more over the life of a loan. Waiving an inspection can lead to $5,000–$30,000 in hidden repairs. Overbidding in a competitive market can cost $15,000–$25,000 above fair value. Cumulatively, avoidable mistakes can cost first-time buyers well into six figures. ### Is it a mistake to buy a house without a real estate agent? Not necessarily, but it increases risk — especially for first-time buyers. An experienced buyer's agent helps with pricing analysis, negotiation, contract review, and navigating contingencies. If you choose to go without one, make sure you understand [who pays real estate agent commission](https://www.opendoor.com/articles/who-pays-real-estate-agent-commission) and what responsibilities shift to you. ### How do I know if I'm ready to buy my first home? You're generally ready when you have stable income, minimal high-interest debt, enough savings for a down payment plus 3–6 months of reserves, and a pre-approval letter in hand. Review [how much it costs to buy a house](https://www.opendoor.com/articles/how-much-does-it-cost-to-buy-a-house) to make sure you've accounted for every expense beyond the listing price. ### What credit score do I need to buy a home? Most conventional loans require a minimum credit score of 620, while FHA loans may accept scores as low as 580 with a 3.5% down payment. However, higher credit scores unlock better interest rates — which is why rate shopping matters so much. Check your score several months before you plan to buy so you have time to improve it. ### Should I buy the most expensive home I'm approved for? No. Lender approval reflects the maximum amount you can borrow — not the maximum you can comfortably afford. A good rule of thumb is to keep your total monthly housing cost (mortgage, taxes, insurance, and maintenance) below 28% of your gross income. ### What hidden costs should first-time buyers prepare for? Beyond closing costs, plan for homeowners insurance, property taxes (which can increase), HOA fees, maintenance and repairs (budget roughly 1% of the home's value per year), moving expenses, and any immediate upgrades the home needs. Our guide on [how much to save for a house](https://www.opendoor.com/articles/how-much-to-save-for-house) breaks down the full picture. ### How long does it take to buy a house from start to finish? The typical home-buying process takes [3 to 6 months](https://www.opendoor.com/articles/briefs/how-long-does-it-take-to-buy-a-house), including time for pre-approval, house hunting, making an offer, inspections, appraisal, and closing. Rushing the timeline is itself a common mistake — give yourself enough room to make informed decisions at every step. --- *Originally published at [https://www.opendoor.com/articles/briefs/mistakes-to-avoid-buyers-market](https://www.opendoor.com/articles/briefs/mistakes-to-avoid-buyers-market)*