Common Buyer Mistakes
Rushing into the transaction. Buyers looking for homes in extremely tight markets may feel pressured to make an immediate offer and, indeed, may have to in order not to lose the home that they’ve decided to buy. Instead, it makes sense to become familiar with the local market and know exactly what your money will buy before you start home-hunting in earnest.
Not asking enough questions. First-time home buyers, by definition, simply don’t have home-buying experience. It may be uncomfortable to ask questions, but ask anyway. Your Buyer Agent can’t answer unasked queries.
Searching in vain for the “ideal” house. Many buyers run themselves and their Buyer Agents ragged as they repeatedly dismiss homes that meet most — but not all — of their specifications. A buyer who turns down a house that meets most criteria — but not all — may lose the best available property, as well as good financing if market conditions change.
First-timers should surely view different homes before making an offer. That way you can better understand the marketplace and know more about local prices. Buyer Agents will often recommend that buyers, and particularly first-time buyers, avoid jumping on the first property they see — but that they don’t drag their feet when the find a house they love, either.
Avoid “Overbuying”. Homes routinely seduce buyers into becoming “house poor,” spending so much for a home that they must forego annual vacations, restaurant meals and other forms of entertainment. Pre-approval through a lender can help determine a reasonable target price range and also identify the mortgage programs that can work best for you.
Waiting to have 20 percent down. That’s an admirable goal, but years in the future for many first-time buyers. Instead — especially in markets with rising values like Toronto — buy now with little down. Consider using your RRSP money towards a down payment, or asking your parents for a loan. After all, by the time you save a big down payment, the home that you want to buy will probably have gone up in price more than the amount that you saved!
Be realistic. It’s tough to ignore a home’s curb appeal, but what about practical matters? Enough space? Off-street parking? Good construction? Low maintenance? How far to work? Boring stuff — but important.
What about zoning? Is the property next door zoned for a 24-hour service station? Fire station? Nuclear test site? Ask the broker about zoning for the property and also the surrounding area.
Ignoring representation. The odds are overwhelming that the seller has a real estate agent on his or her side. What about professional help for you? A Buyer Agent can give you equality at the bargaining table.
Skipping an inspection. A professional home inspection is simply a “must,” whether you are buying an existing home or a new one. Speak with inspectors before you enter the marketplace to see how they work, what they cost and what they recommend.
Don’t under-estimate closing costs. There is more to buying a home than a downpayment. Your agent and lender can help you to determine probable closing expenses — information you need to avoid unwanted financial surprises.