A non-bumpy way to buy
Buying a home is a learning process. This blog post hopes to give you a head start of what to expect, what to do to avoid pitfalls, how to make your journey along the learning curve as non-bumpy as possible when buying your first home.
Credit for good behaviour
We are all human. It happens; we miss a credit card payment. That is a black mark on your credit history report. Lenders hate to see miss payments and punish you for your lapses.
The most important thing about your credit is keeping it clean. Pay your bills on time.
If you are a young first time home buyer, it is important to establish credit. Having no credit is almost as bad as having bad credit. Get a credit card or two and pay them off every month.
Also don’t go out and buy a new car or other expensive things. Don’t take on any more debt than you have to. Lenders look hard at your ability to service debt
Buying a home, especially your first one is a lot of work. It’s not like TV. You will not go out for an hour and look at 3 homes and buy the best one, having the whole thing wrapped up in an hour. Last year, clients I worked with saw an average of about 16 homes before they found the one that worked. One client saw 42 homes, put offers in on three before he was successful. That took a lot of time. There was a lot of learning.
Expect an inspection report to show some flaws
Now that we are back to a more balanced market, having your purchase subject to inspection is back on again. That’s good. Having your home inspected is a very important part of the process. Don’t get alarmed when the home inspection report reveals what seems like a hundred different items that need addressing. Few things in life are perfect and the same holds true with any home you plan on buying, no matter how well the home was maintained. Deal with the big things with an amendment. Accept the little things as normal.
There are no good deals
In the information age, the internet age, we all have access to information of what homes are worth. A home seller will often have a pretty good idea of what his home is worth well before interviewing three agents. Home buyers too after seeing a double digit number of homes will know what is priced right and what is under or over valued. When a “good deal” comes up, it will often attract the interest of several buyers and this go will over asking price.
Not every real estate market is the same
That means what you read in the news about Toronto or Auckland or Istanbul might not have any relevance to Waterloo. It also means that different neighbourhoods, price ranges and styles of homes are different markets. Do not make assumptions based on your limited knowledge.
Buying from the seller’s agent
Some people think they can save money buying directly from the seller’s agent. Perhaps they think that the seller will only have to pay half of the commission. Or maybe they think they can negotiate some of the the seller’s agent’s commission off of the price. Maybe they can. But as a buyer you are putting yourself at a real disadvantage if you are trying to do this. You really really need an agent on your side and the seller’s agent will always have a stronger relationship with the seller than he or she has with you, a relative stranger who is looking for a good deal.
You don’t want to be house poor
Some people want to go out and buy their “forever house”. Although, in a perfect world this is a great idea and it makes perfect economic sense, in reality they often end up “house poor”. Don’t do it. Buy a home that matches your present lifestyle or better yet, think of what your life will look like in five years and buy a home to match that future you.