Home prices in Toronto have almost tripled since 1996 making it very expensive to move worsened by transaction fees like HST, land transfer taxes and real estate commissions. The smart consumer does their homework before buying a house and will not fall in love before buying to the point where they lose objectivity. When this happens, buyers usually throw due diligence out the window and pay more than they should, forego inspection conditions and don`t consider their future needs potentially costing tens of thousands of dollars. So what smart things should consumers do that can save a ton of money in the long run?
Consider properties that have been for sale for awhile – the market moves properties so quickly that buyers fall into the trap thinking that if a house has been for sale longer than normal there must be something wrong with it. Well here’s a news flash – the only thing wrong with houses that are lingering is usually the asking price. These properties offer the best deals because they allow you to negotiate with the seller rather than compete with many other buyers who want the same house.
Perform a home inspection – The phrase "an ounce of prevention is worth a pound of cure" could not be more appropriate. If the seller provides a pre-list home inspection from a reputable company, then call the inspector and discuss the inspection with him/her in detail. If the seller does not provide one then do one yourself before the date set to review offers. Do not ever waive your right to a home inspection even if you believe there is nothing wrong with the house. An example of what can go wrong; we sold a house to a buyer conditional on a home inspection. The house was immaculate so the buyer was leaning towards foregoing the home inspection. Instead, we encouraged the buyer to go through with it before finalizing the Agreement. Murphy's Law was in full swing on inspection day delivering heavy rains. Does it surprise you that we found a very wet basement, unbeknownst even to the seller, that could have led to litigation if it had not been dealt with beforehand? In this case the seller acted honorably, took responsibility and incurred the cost to fix the problem. If there is no time to do a home inspection, before you submit your offer, you may be better off to pass on the house.
Check out who your neighbours are – one of the biggest reasons people move is they don’t get along with their neighbours. Moving is very expensive so before you buy a house, knock on a few of the neighbouring houses and ask questions. Are there tenanted properties nearby with rowdy tenants, does a hoarder live next door, does the neighbour keep the exterior neat and tidy, do they have noisy dogs, do they play loud music, are they co-operative with sharing the mutual drive? Poke around before you buy, you would be amazed what people tell you that could help you avoid making a huge mistake.
Check the noise level between semi detached homes – have you bought a semi detached house only to find out, after you move in, that you can hear a pin drop from the attached house? Not a pleasant surprise right? When you visit a semi detached property with your agent, make sure you turn down the music that is sometimes turned on to camouflage this problem. It isn’t the listing agent’s responsibility to point this out to you but your own agent’s if he/she is looking after your interest and doing their job properly.
Buy in a down market - although the Toronto real estate market has been on an upswing since 1996, there have been a few periods of pause along the way. In particular; the fall of 2008 during the US financial crisis, the fall of 2010 after expansion of the HST and the fall of 2012 after mortgage rule changes, presented buying opportunities for those who didn’t have the stomach to buy in a bidding war environment. But instead of taking advantage of these opportunities, most buyers believed the doom and gloom spewed by the media and remained on the side line missing out on opportunities to buy a house without competition from other buyers.
Think more long term - It has become expensive to move so we try to educate our clients to think more long term about their home purchase. The smart consumer looks at a house with eyes to the future. Will we be expanding our family? Will I need a home office? Will my elderly parents move in with us in the near future? Today, just the transaction costs to move could range from $50,000 to $100,000 or more so we encourage our clients to spend a little more, as long as their financial situation allows it, if it buys them more years in the house. Consider buying a house with a finished basement or a small fourth bedroom which could buy a few more years saving you an enormous amount of money in the long run. Also consider a house with land that allows you to add on when your needs change so you can invest the would be moving costs into a renovation instead.
The most practical advice we can give the home buyer is to remain level headed, perform due diligence and think more long term assuredly saving you many headaches and tens of thousands of dollars in the long term.