Whether you are buying your first home, or your
fifth, the process of buying a home is a detailed,
time-consuming venture. At the same time, it’s an
emotional period laden with difficult choices. You
want to ensure that the home you purchase meets your
family’s needs now, and in the future.
Each of these decisions often involves money. When
you consider all that money represents, you’ll want
to ensure that you don’t pay too much. This article
helps you become a savvy buyer, by pointing out some
of the pitfalls inherent in the home-buying process.
These include such things as knowing what you want
before you begin shopping, taking your time to shop,
choosing the right realtor, and remaining objective
while viewing potential homes. With this
information, you’ll be closer to finding your ideal
#1 Before you shop, develop
a needs vs. wants list
Everyone has a picture of an ideal home. This would
include all the features you not only need, but have
long desired. However, when it comes time to buying
a home, the desires cost more. While it’s nice to
think about having a beautifully landscaped
backyard, or a solarium, perhaps even some built-in
appliances, these are usually considered luxury
items, which can add considerably to the price of
That’s why it’s a good idea to develop a needs and
wants lists. With this list, begin with items you
really need like adequate space, garage and number
of bedrooms. For most people, basic needs should be
considered first. After that, you could consider
additional desires, if you can manage these benefits
With such a list in your hands, you’re less likely
to be caught up in the excitement of the pursuit.
You’ll have a good idea of what you want, within you
price range, and if you can afford those additional
#2 Get pre-approved prior to
Visit your financial or lending institution prior to
home buying. Quickly, you’ll know the amount of
mortgage you’ll receive. Be sure to get a mortgage
commitment in writing. Most importantly, you’ll tell
sellers that you are a serious prospect. Depending
upon market conditions, a seller may lean towards an
unconditional offer. You’ll have less negotiating
power if you have to wait for mortgage approval.
Banks and financial institutions have developed many
programs especially for home buyers, be that
first-time buyers or those with equity in their
homes. When you review your needs and objectives
with a lending officer, you’ll be one step closer to
purchasing your home.
#3 Choose your winning team
Buying a home is a complicated process, with many
people involved. From choosing the right mortgage,
to finding a home inspector, to viewing available
properties, there are many steps involved for even
the hardiest person. With a professional realtor on
your side, you’ll have access to these services,
already in place, and highly recommended. A good
agent has the knowledge and experience developed
from many years of helping both buyers and sellers.
During this time they have developed a network of
people, from lenders, lawyers, home inspectors and
movers, to assist both home buyers and sellers.
#4 Communicate clearly with your Realtor
Spending time with your Realtor will reap huge
dividends. When you have a clear picture of the type
of home you’re looking for, your Realtor can come
closer to finding the home you want. You won’t waste
time looking at homes that don’t match your needs.
#5 It’s still true – location, location, location
You’ve heard it so many times, that it’s probably
starting to sound like a broken record. That’s
because it’s true! A home is not a stand alone item.
Rather the value of a home is greatly affected by
the surrounding homes. Don’t let your emotions
determine your purchase. Think resale. The
desirability and resale value of your home depends
largely on location more than any other factor.
People want a desirable community that includes
character, quality of schools, access to work, major
transportation arteries, recreational facilities,
On your viewing trips, take a careful look and ask
the following questions: How does this home compare
to others in the neighborhood? Are yards fenced? Are
there many children playing in the streets? Are
front and backyards and the exterior of the homes
Walk around the neighborhood and get a feel for the
people living in the area. You may want to speak
with a few neighbors to get their comments. If you
like the community, carefully examine the home you
like. Generally speaking, extremely large homes
surrounded by smaller homes tend to appreciate less
than a large home among other large homes.
Alternatively, the smallest home in the neighborhood
tends to stand out by the other homes on the block.
Sometimes, it could take a bit longer to sell a
smaller home, as some people are reluctant to pay
extra for the neighborhood.
Additional factors that affect the property value of
a home include traffic, sounds, smells, zoning
bylaws. Be objective. Don’t rely too heavily on your
emotions. Be sure you are completely satisfied with
the neighborhood. If you choose a neighborhood with
problems, you likely won’t get as much as you hoped
with it comes time to sell.
#6 Use your Realtors’
knowledge of the community
Your Realtor is trained in all aspects of Real
Estate, including understanding supply and demand,
economics and the neighborhoods of the city in which
they practice. As they regularly view homes as they
are placed on the market, they are at the heartbeat
of knowledge and information about housing trends
and prices. They can save you time and money, by
narrowing your prospects to only those that meet
your requirements. It is a very time consuming
process to view every home available that meets your
needs. A professional Realtor can do much of the
work for you, by reviewing your needs, reviewing the
properties and then hopefully, advising you of a
potential match. A comprehensive knowledge of the
available homes in your neighborhood is one of your
Realtor’s strongest assets. With the aid of
computerized systems, a Realtor is notified within
hours when a home becomes available.
#7 Check your emotions, and shop with your head
When people purchase a home on emotion, without an
objective view of the property, problems may develop
later. Shopping for a home is an emotional process.
It could be costly. Using your head, along with
asking for an objective opinion (from your Realtor)
could help you avoid costly errors.
#8 Pay attention to “red flags”
When evaluating a home, be sure you know the
difference between acceptable and unacceptable
problems. Cosmetic items like peeling paint, worn
carpeting, unattractive wallpaper can be easily
remedied. You could use these as negotiating items,
as there will be costs involved in updating the
Major problems, however, are clearly “red flags.”
Look for items such as major foundation cracks,
water damage, outdated electrical systems, and
inadequate plumbing. These items could cost you
dearly in the future.
#9 Hiring a home inspector
is a wise investment
A home inspection is an inexpensive way to gain
peace of mind, and guard your pocket book. A proper
inspection will cover all areas of the house
including foundation, electrical, heating, plumbing,
floors, walls, ceilings, attic, roof, siding and
trim, porches, patios, decks, garage and drainage. A
professional inspector can give you an objective
view of the property, with a written report,
indicating the present condition and items that will
#10 Be cautious with fixer uppers
Some people may be inclined towards purchasing a
home that needs some work. This could be a challenge
and an opportunity to make money. Sometimes, a
fixer-upper can be purchased below market value, and
sufficient repairs made to bring it to a good sale
condition with a profit realized. However not all
fixer uppers will bring in the profits you might
expect. It depends upon the price of the home, the
amount of repairs needed and the market conditions
at the time of sale. If the home is not priced low
enough, you may not recover your investment of time,
trouble and money. Before you purchase what looks
like a quick way to profit, carefully consider the
condition of the home and ALL the repairs that need
to be made. Get several estimates. Complete a
comprehensive budget. Also consult with your
Realtor. He or she can give you an idea of what you
can reasonably, expect to recover when the home is
put back on the market.
#11 Consider your future needs
Take a look at your lifestyle now and in the future.
Will you need extra space for a home office, a
child, or perhaps a child moving back home? Perhaps
it may be easier and less expensive if you purchase
a home that can meet these needs now, rather than
moving up to a larger home a few years later.
#12 Proceed quickly
When you’re ready to buy, move fairly quickly.
That’s because good properties usually sell fast.
This is especially true when there is a shortage of
homes available. However, when you work with a
Realtor, you have access to the most current
technology. As part of the MLS network, a Realtor
has access to properties within hours of when they
are listed. Technology works to your advantage. When
a Realtor knows your needs, they will notify you
when properties that meet your criteria become
available. Many Realtors now have personalized web
sites which allow you to sign on a client, and
receive notification of these listings via email.
You save time and effort, and you can view only
those homes that come closest to your needs.
#13 Clarify relationships
In any real estate transaction, be very clear about
who is working for whom, and what the relationship
represents. Many people believe that the agent they
are working with automatically represents them and
their interests. Yet, without specific disclosures
this is not true. Unless otherwise stated, the agent
represents the seller in transactions for the sale
of a home. This agent, as part of his or her
fiduciary duty, must ensure his loyalty protects the
seller’s position throughout the entire process.
#14 Ask for a written CMA
A Comparative Market Analysis (CMA) is an analysis
of comparable homes in the neighborhood. It shows
you the sale prices of comparable homes in the
neighborhood, along with asking prices of other
homes in the area currently on the market. A Realtor
can request this report for any home and
neighborhood in Canada. Ask for this report in
writing. With this valuable document, you’ll have
the appropriate evidence for either a too-high
asking price, or one that is a bargain.
#15 Investigate the seller’s situation
Knowing about the seller’s reasons for moving could
work to your advantage during negotiations. For
instance, a seller who has been transferred to
another city, may be more motivated to sell rather
than someone who is still shopping for a new home. A
vacant house, a house that has been on the market
for several months and reduced in price, could also
be indications of a motivated seller.
#16 Keep personal information to yourself
Conversely, information could be used to your
detriment. Information about your mortgage, size of
down payment, move-in deadline, or circumstances for
buying, could be negotiating factors. While you want
your Realtor to know these details, don’t reveal any
of this information to the seller.
#17 During negotiations, keep your emotions in tact
In certain situations, emotion could cost you money.
If you let the seller know how interested you are in
the property, this might be seen as a financial
opportunity. Recognizing that you are highly
motivated, you could an easier target for a higher
price. If you absolutely love the home, keep it to
yourself. This is a definite advantage of working
with a professional Realtor. Trained to be
non-emotional, he or she can ensure you get the best
#18 Ensure the deal is right before you sign
While you definitely want to move quickly, once
you’ve made the decision to purchase, you don’t want
to cave in to pressure for a quick close. Someone
who is trying to pressure you into buying a home, is
doing so for a reason. This could involve money, or
a multitude of other reasons.
#19 Exercise your negotiating skills
Even if you prefer not to haggle, it’s worth it,
especially when it’s your home and your future. Most
people expect to haggle over the price. That’s often
why the price is set a big higher than the actual
selling price. There is always room for negotiation.
If you want to get the best home possible for the
least amount of money, then negotiation is the only
way to get a good deal.
#20 Avoid bidding wars
In some cases, the seller’s Realtor may use scare
tactics to rush the sale or increase the price.
Falling for this trap could cost you money. If there
is another buyer, or some other reason this pressure
is being applied, whoever wins also loses because
they overpay. If there really isn’t another buyer,
then it’s likely that the deal with fall through.
#21 Insist on a written disclosure of all known
Legally, sellers must disclose all known material
defects of a property. Ask for this in writing. Also
be sure to consider the ramifications of these
defects. Will it be costly down the road? Are they
#22 Be aware of your hidden costs
There is more to a home than simply the mortgage.
You will be responsible for other items including
mortgage insurance, appraisal fees, legal fees,
inspection fees, transfer taxes, title insurance,
inspections, etc. Your Realtor can give you a good
idea of the costs associated with buying a home that
are beyond the final negotiated price of your home.