This article from Moneyville, in the Toronto Star has some good points to think about
Six ways to make sure you buy the right house
A year ago I wrote the most common mistake home buyers make is buying with their heart instead of their head — usually because they panic while involved in a stressful negotiation for which they are unprepared.
The result is that buyers pay more than they should, or are disappointed later when they find defects in the home or discover the neighbourhood isn’t quite what they thought.
So, here’s an updated list of six ways to prepare yourself:
1. Sell or buy first?
We are still in a seller’s market in the GTA, with the number of buyers exceeding the number of available homes. In this type of market, you should buy your new home first and then sell your existing home. If you sell first, you may find yourself running out of time, with no home to move into, as the closing date nears. This leads to panic buying.
In a buyer’s market, sell your home first as you won’t have as much trouble finding a new one.
2. Research, research, research
Check police websites for neighbourhood crime statistics. Ask at City Hall if new developments are planned or whether a new large employer is relocating to the area. Jobs mean demand.
Walk any neighbourhood you are interested in and talk to people. You will learn the demographics of the area and its facilities. What schools are in the area and is there a waiting list to get in? Are there activities nearby for children, including parks, libraries and community centres? You also get a sense of the friendliness of the community and whether there are surprises that no one is going to advertise — vandalism, former grow houses, or the neighbour from hell.
3. Find the right agent
Do not go into an open house alone, thinking you can save commission. The agent is working for the seller and their job is to get the seller the most money possible. While focusing on saving a few dollars negotiating commission, you will invariably give away important information about yourself, which will hurt you later.
Start by asking family and friends for a buyer agent referral. Then study the agent’s own website. Do they offer information that will assist you with your search? Do they have a team of professionals they can share with you? When you interview them, ask them about their knowledge of the area; in particular, is it known for sewage backups, termites, flooding or mould. Ask for their own success rate when working with buyers, especially in bidding wars, and then call those buyers yourself.
4. How much can you afford?
You should never live just to pay your mortgage, or else the rest of your life will suffer. Meet with a mortgage broker in advance to determine how much you can safely borrow, based on your income and family needs. Buyers should also realize the lender will do an appraisal and if the lender believes you paid more than the house is worth, they will not give you the full amount of the loan you expect. So, be very careful about stretching yourself to the limit when you make an offer.
5. Choose a home inspector carefully
The home inspection is becoming even more important, as it is one of the only ways for a buyer to check against unwanted surprises after closing.
Ask for references and call these references yourself, especially the ones who bought older homes, where problems are more likely to occur later. There are now additional inspections that test specifically for mould or termites. There are video cameras that can tell you the condition of your sewage system and scanners that can look behind walls. If it is an older home, it is worth this extra investment.
Remember, most inspection firms have a limitation of liability clause, which states that if they miss something that costs you money, they are not responsible. Ask the company if they have ever been sued by a buyer.
6. Title insurance is a must
Title insurance can be arranged through your lawyer. You will be protected against unpaid taxes or water bills by the seller, as well as problems that are not known at closing. This includes problems where part of the home or swimming pool is in fact on your neighbour’s property.
However, it is a mistake to believe title insurance will protect you against everything. For example, it won’t compensate you if you thought your lot was 50 feet and a later survey showed it was only 48 feet. That is why you should always ask for an up-to-date survey on the property.
Next week: Five more important things to look for when buying a house.
Mark Weisleder is a lawyer, author and speaker to the real estate industry. Contact Mark at email@example.com
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