Buying a home is probably the biggest purchase of your life. It’s a time when you’ll want to get things right and not miss any important details. Use this list to make sure you are doing what you need to be doing to protect yourself and your family from costly surprises in the future.
Mistake #1: Making an offer on a home without being pre-approved
Before you start house-hunting, get your mortgage pre-approved by a mortgage broker. That way, you’ll lock in your interest rate so you won’t be affected if the rates go up. Any offer you make will be more appealing because the banks have already vetted you. That’s a big advantage in this seller’s market because you’ll be competitive in a multiple-offer situation.
Mistake #2: Opting out of a home inspection
With a building inspection, you’ll know exactly what you are buying in terms of the structure and health of the building. You’ll want to know what type of repairs are needed to be done immediately and which repairs can be put off until a future date. Most importantly, you’ll want to watch for issues that significantly reduce the value of the property before you buy.
Mistake #3: Limiting your search
You can’t go by listings alone. Especially in this strong seller’s market where, by the time a home is listed in newspapers or on the Internet, the seller may have already accepted an offer or sold the property. Your best course of action is to contact a real estate broker. They have up-to-date information that is unavailable to the general public.
Mistake #4: Trying to save money by cutting out the real estate broker
A lot of people think they’ll save money if they buy a property without the help of a real estate broker. They think they’ll negotiate a better deal because they aren’t paying fees. In fact, it doesn’t cost you anything extra to have a real estate broker represent your interests when you buy a property. The seller already has a contract with their listing broker. This contract details the remuneration amount if their real estate broker brings in a buyer. If the listing broker works with both parties, they will keep the whole amount. All broker fees are already in place before a sale begins.
Mistake #5: Not considering your long-term needs
It’s important to think ahead. Will the property suit your needs three-to-five years from now? Can you grow into the home? Will the location grow in popularity and add more equity? Most times, it takes about three-to-five years of appreciation to balance the expenses you paid at the time of sale. Then, there are costs when you sell. So you’ll want to make sure you’re going to stay long enough to recoup all of your costs and build equity.
Mistake #6: Not knowing total cost involved
At the very beginning of your buying journey, ask your real estate broker for an estimate of closing costs. Most buyers, when shopping around, look at the selling price along with the municipal and school taxes. But there are many more costs involved in a property purchase including notary fees, a building inspection, welcome tax, and reimbursements for any house expenses the seller has paid past the day of signing, such as the property taxes and condo fees. Also, consider all of your moving expenses — they can add up. Past that, what are the expenses that will affect your day-to-day living and ultimately your net worth? Do you know your heating costs, insurance, and if there will be future increases to your condo fees?
Mistake #7: Not following through on due diligence
The best time to answer any niggling concerns is before you make an offer. It’s a good idea to find out about the neighborhood crime rate, the quality of nearby schools, property lines, neighbours, environmental conditions, whether or not the property is in a flood zone, etc.
Mistake #8 Thinking there is only one perfect house out there
Buying a home is a process of elimination, not selection. New properties arrive on the market daily so be open to all possibilities. Before you start looking, create your wish list and decide which items are ‘wants’ and which items are ‘needs’. Be prepared to compromise. The goal is to find a property that ticks off as many boxes as possible, not to spend years trying to find perfection.
Jennifer Lynn Walker has specialized in buying and selling residential and multiplex properties since 2003. She’s also the founder of Montreal Real Estate Investor’s Group with 1,300+ members and Jolly Green Homes, a resource-series devoted to helping homeowners build an eco-friendly life. For more, visit: www.montreal-realestate.ca