3 Signs You're About to Make an Offer on the Wrong House

Talk about making a huge mistake.

Today's housing market is a difficult one for buyers. Not only are home prices still sky-high, but real estate inventory is extremely limited. That means buyers are increasingly having to make compromises to purchase a place of their own.

It's one thing to be flexible in the course of your house hunting. That could mean agreeing to a home that's slightly smaller than what you were hoping for, or buying a home that needs a few more updates than you wanted to make. 

But there is such a thing as compromising too much when buying a home. And if these signs apply to you, it means you may not want to make an offer on a property you're looking at.

1. You're stretching your budget to make a purchase happen

You might set a home-buying budget of $350,000 only to find a truly ideal property where the seller won't budge at $360,000. In that situation, you might make the case that paying a touch extra for a home is worth it. 

But if your initial budget is $350,000, you shouldn't be willing to stretch that to $400,000 or $425,000. Doing so could mean signing up for a world of financial stress.

As a general rule, your monthly housing costs, including your mortgage payment, property taxes, and insurance, should not exceed 30% of your take-home pay. If going beyond your original home-buying budget means surpassing that 30% mark, you'd be well-served to pass on the home you're looking at and hold out for one that's more affordable.

2. You're signing up for a world of repairs

It's common to buy a home that needs some work. But there's a difference between having to make some minor fixes and cosmetic changes versus having to gut your home, upgrade all of its electrical wiring, and replace major appliances. If you're looking at the latter scenario, you may end up signing up for more work -- and more expenses -- than you can manage.

3. You're not in the neighborhood you want

If you buy a home with an outdated kitchen, you can always remodel it when your finances allow for it. And if you buy a home that only has one bathroom, you might be able to add another in a year or two so your family can be more comfortable. 

But if you buy a home in a neighborhood you're not a fan of, no amount of renovations will change that. And so if being in a neighborhood that's walkable, for example, is important to you, then that's something you may not want to compromise on. Similarly, if you have kids and want to live close to a playground, you probably shouldn't make an offer on a house where the nearest park is three miles away.

In today's tight housing market, a willingness to be flexible is important. But don't take that flexibility to too much of an extreme. Otherwise, you might sorely regret your home purchase.