Buying a new property can be an emotionally charged process. It’s important to do some preparation before you start looking. After all, don’t you want to make a good decision that will bring you happiness rather than heartache for years to come?
Here are the eight biggest mistakes that real estate buyers make — usually due to lack of preparation and impatience — and the steps you can take to avoid them.
1. Making an offer without being pre-approved
It’s for good reason that a lot of brokers won’t work with you unless you are pre-approved at a financial institution or an independent mortgage broker. A pre-approval means sellers can have complete confidence that any deal you make won’t fall through due to financing. If you are in a multiple offer situation, this will likely give you the edge.
And there are benefits: You can forecast your finances because you’ll know your downpayment and monthly payment amounts. And most mortgage brokers lock in an interest rate for a period of time so you’re protected if rates go up. Plus, you’ll get final approval of the sale much quicker because the bank already has your paperwork.
2. Not shopping around for the right broker
Just because a real estate broker has a lot of listings doesn’t mean they’ll be a great fit. Sometimes busy brokers have less time for you. Your broker should be available, resourceful, and ready to understand your needs. Make a list of questions and do a short phone interview before you meet with them in person. You should feel comfortable and have confidence they will go to bat for you.
Remember: If you don’t have a broker, the listing broker will end up representing both parties. A dual broker cannot divulge confidential information about one client to another and is acting as intermediary. However, that listing broker’s client is the seller. They have a brokerage contract agreement. It is in your best interest to have a broker who is working exclusively for you.
3. Not sticking to initial goals
Before you start looking, write out exactly what you want in order of preference to create a go-to guide. Knowing your limits — what you can and can’t live without — will help you avoid a disastrous impulse decision. You’ll most likely face compromises. It helps to be clear about your intentions from the start.
4. Thinking there is only one perfect house out there
I always tell my buyers that the house will pick them and not the other way around. Yet, being open to compromise is a must. It's rare that a buyer will be able to tick every box on their list. When you walk into ‘your’ home you should feel it right away. Then, ask the right questions, play devil’s advocate, and make sure it’s really the right fit for you.
5. Not having a home inspection
Trying to save money by not having an inspection could end up costing you a lot. A qualified home inspector will provide a professional report that includes every part of the building’s infrastructure. They will give you a timeline for maintenance and repairs. This is an invaluable service. Make sure your inspector has a professional license and is insured.
6. Not following through on due diligence
Once your offer has been accepted, it’s time to find out as much as you can about the property you want to purchase. Make a list of any concerns you have such as: the neighborhood’s crime rate, schools, right of ways, neighbors, environmental conditions, traffic, etc. When buying a condo, the approval of the condo documents and understanding of how the building is being run is part of your research. Your broker will be able to provide all this information.
7. Not knowing total cost involved
A LOT of people don't realize all the costs involved: a building inspection, land transfer tax, notary costs, adjustment costs at the signing, insurance costs, etc. Another important expense people tend to overlook is the immediate cost of renovations. Replacing a roof can be thousands of dollars.
8. Freaking out at unforseen circumstances
Ask any broker and they’ll likely guarantee that the unexpected will happen. Buying a property is a complicated process. Stay calm and trust that your real estate broker is doing their best to make the deal run as smoothly as possible. Problem solving is a huge part of the job.
Jennifer Walker has been active in Montreal Real Estate since 2003. She founded the Montreal Real Estate Investor’s Group, which has more than 1,110 members. She specializes in buying and selling, eco-friendly homes, and helping real estate investors. For more articles and e-books and to sign up for her newsletter, visit her online at: www.montreal-realestate.ca.