Buying?

8 COSTLY MISTAKES WHEN BUYING YOUR HOME.

Failing to use the services of an experienced REALTOR. Many times buyers avoid using the services of a REALTOR under the mistaken belief that it costs them money – or that they will be able to negotiate a better deal directly with the seller or seller’s agent. This can be an expensive mistake.

If you are negotiating directly with the seller or seller’s agent, you may not be taking advantage of the best deal available in the marketplace today! You can, and should, have your own REALTOR, representing you, the buyer. Your agent is committed to using the experience gained through hundreds of successful negotiations for your benefit – at no charge to you! Your agent will generally be paid from the commission that the seller’s agent is paid by the seller.

Real Estate is a unique business, where an agent with one day’s experience and no sales gets paid the same as an agent with several years experience and hundreds of successful sales. An experienced agent can help you avoid the other costly mistakes outlined here, and make your home buying experience an enjoyable, stress-free one!

Not knowing who the agent is really working for. It is important for buyers to know and understand for whom the agent helping with the house hunting is actually working. The agent may be working as a sub agent – representing the seller’s best interests during negotiations – or as your agent representing your best interests during negotiations. If you are not sure who your agent is working for – ask for clarification. Your REALTOR must fully explain agency. Ask to see the “Working With A Realtor” brochure. When negotiations commence, wouldn’t you want to know whether information you divulge will be used for the seller’s benefit – or yours?

Failing to have a Comparative Market Analysis prepared before offering. Before you make an offer to purchase that special home, you must have a good idea what the market value is to ensure you do not overpay. Your agent can prepare a Comparative Market Analysis showing what similar homes have recently sold for, and the difference between the asking and selling prices. This is the same type of report the seller receives when deciding on an asking price. Wouldn’t you like to have access to the same information as the seller?

Failing to recognize different negotiating styles and strategies. Many buyers think that the way to achieve a fair purchase price is by offering low. This is the strategy of the buyer who is not in possession of all the facts essential to negotiating the best possible deal. Many times that type of strategy will polarize negotiations and lead to inflexibility on the part of the seller – or worse yet – failed negotiations!

If you have chosen your REALTOR wisely, the most effective strategies for this particular situation will be revealed to you. Remember, in the real estate business, an agent with many successfully closed transactions usually costs the same as someone who is inexperienced. That experience could mean a better deal at the negotiating table with a minimum amount of hassle.

Failing to have the home inspected by a competent home inspection company or engineer. Buying a home is a major purchase usually made after spending just half an hour looking at the home. Isn’t it worth ensuring you will not be surprised later with deficiencies costing thousands? Your REALTOR can recommend several reputable companies for you to choose from, and will ensure the appropriate clause is inserted in the offer.

Not knowing and understanding your rights and obligations set out in the Offer To Purchase. It is important to understand completely the terms of the Offer to Purchase. Wrong assumptions, poorly written or missing clauses, and not understanding how the clauses affect the purchase, can lead to increased costs or an unenforceable contract. An experienced REALTOR can thoroughly explain the agreement to you and help you to fulfill your contractual obligations.

Letting emotion blind reason.

Buying a home is an exciting time and is usually an emotional decision. It is important that those emotions be validated by facts and reason. An experienced agent will help to remove the emotion from the negotiating process and provide you with the information you need to make the right decisions.

Failing to take the steps to be financially pre-qualified, and having an interest rate guarantee before looking at homes.

Knowing how much you can comfortably afford will ensure you are looking in the right price range and prevent you from buying a home that will strain you financially and emotionally. Having an interest rate guarantee will protect you in times of fluctuating rates and ensure that your initial projected payments do not suddenly escalate, resulting in extra interest charges. An experienced REALTOR can help you initiate this process and can also recommend alternative sources of financing.

Being aware of these mistakes will help ensure you receive best value for your dollar when the time comes to buy your home!

EXAMPLE OF CURRENT NORTH SHORE COSTS

An Estimation Of Closing Costs On The North Shore.

Approximate Legal Fees and Disbursements $900/1,200*
Survey Certificate (if one is not available) $350
Appraisal (if required by the lender) $250
Inspection fee (not mandatory, but strongly recommended) $300/450

Property Transfer Tax 1% of the first $200,000 plus 2% of the balance of the purchase price

E.g: A $525,000 home would attract PTT at this level
1% of the first $200,000 – $2,000
2% of $325,000 – 6,500 8,500

Other Fees – If your down payment is less than 25% of the purchase price of the home, the lender will require mortgage insurance from CMHC (Canada Mortgage and Housing Corporation)/or other Mortgage insurers. The insurance premium, which is usually added to the mortgage, ranges from 0.5% of the mortgage amount to 3.25% depending on the size of down payment.

Property Tax Adjustment – In addition to the above costs, you may be required to have cash on hand to repay the vendors for taxes they have paid in advance (depending on possession date and how the vendors paid their taxes). A good rule of thumb is to have enough money on hand to pay six months of taxes. e.g. $500,000 home – approx $2,400.

Insurance – You will have to arrange insurance a few days before possession. The annual rate for a basic policy is approximately(detached) $800/1,200.

*These figures are an estimate only. They are subject to change and it is recommended that you consult your lawyer for confirmation of your total costs.

I have not tallied the above as you should determine which will apply to your purchase.