7 Things Buyers Should Know Before They Buy a Home
Reprinted from Jeff Stern REM article October 3, 2019 – MREA member and my Realtor colleague.
Here are what many home buyers wish they had known ahead of time but often learn too late.
- About some online house pictures…
What one sees online and what one sees in person are sometimes two vastly different things. It’s a bit like supermodels who, in the pages of a magazine, shimmer with perfection, but in real life, are unrecognizable in the real-world grocery store garb of hasty ponytails and make up-less faces.
House photos get a similar treatment; wide-angle lenses can make rooms look more spacious than they are and the place is scrubbed within an inch of its life for staged for photos.
The surprising amount of “presentation” can feel like a gut punch when you walk in with high expectations. What looked like an enormous eat-in kitchen is revealed to be so small, in fact, one must side-step around the table. It can feel like deception. Knowing ahead of time won’t change that fact, but it will reduce the disappointment and frustration of the process.
2. Deciding ahead of time what you need or want in a home.
House hunting is, as buyers soon discover, like the endless scroll – if you don’t know what you’re looking for, you can go on searching forever.
A common mistake most people make is not planning what they need and what they want in that house – not just for now, but for the future. Sometimes, more detailed planning goes into a weekend grocery shop than into the buying of a house.
Listing aspects of a home, including lifestyle aspects like a place to work out or play guitar, that you (a) must have, and (b) want to have, will carry you farther than looking online, browsing and hoping to stumble upon “the one”. Trust me… seeing more pictures, more open houses and more privately shown houses doesn’t help focus your search. It will often contribute to more confusion.
3. Getting mortgage approval BEFORE looking at houses.
Here’s a painful way to shop: look at houses blindly in “your” price range. Accidentally and unexpectedly fall in love with that perfect home, then talk to the bank and realize you need to be shopping thousands of dollars below that price. Your pre-approved amount and what is realistically within your reach is disappointing.
This is the sour shopping experience of the buyer who does not take the step of getting pre-approved for a mortgage before shopping within the price range they can reasonably afford.
How does getting pre-approved work? It’s not an app or an online calculator. It’s going to a financial institution. Before buying a property, you need to know if the bank will even give you a mortgage.
There are two ways to find out – Go on one of those online bank sites, plug in a few numbers and get Pre-Qualified or to visit the bank and get Pre-Approved. Most people don’t know the difference (some bankers don’t either). Even fewer know that to get Pre-Qualified is a complete waste of your time and of no benefit to you. It could even end up costIng you money!
Pre-Approval is the process of having the bank verify the state of your finances and, based on that, approving or denying your application for a mortgage.
The process requires proof of employment status, proof of income, proof that you have funds to cover the down payment and closing costs. These are the material things any lender will need before forking over the dough.
Pre-Qualification is the process of you telling the bank your state of finances. Based on what you tell them (unverified), they estimate you might possibly be approved for a mortgage, assuming all is proved true during the approval process. For pre-qualification though, they verify nothing.
The key difference is verification. Only with proof and verification can one get a dime of bank money.
Many people have been unpleasantly surprised when they arrived at the bank, ready to finance the dream home they finally found, only to learn they did not in fact qualify for a mortgage at all. I’ve seen several deals fall apart because would-be buyers didn’t know this critical difference and went to the time (and sometimes the expense) all for nothing. Disappointing at minimum, and even worse … an expensive lesson.
If you want to buy a home, do yourself a favor and have your Pre-Approval in place first. Then you know –unless there are changes in your credit or income – that yes, you can indeed buy.
4. Involve parents right from the beginning.
Once you’ve found that perfect-for-you home, do you plan on getting the “final yes” from your parents (or grandparents, or co-signer or whomever)?
The biggest mistake people make with this issue is involving the important people only at that final moment. What inevitably happens is the parent comes in cold, doesn’t know what you’ve seen or what you have experienced and what you have turned down up to this point. They may disapprove of the home you’ve decided on.
If they had been involved from the beginning, however, they would be on the same page with you about what you’d learned and seen until that point. They would know that prices aren’t what they were 20-plus years ago when they bought, and so would not be shocked. They would know what’s available in your price range, and so would not be surprised by what isn’t.
Involve them from the beginning. Invite them to meetings with your real estate agent. Bring them to every showing and open house.
My advice to clients is, if someone is going to influence your buying decision, either have them involved all the way or not at all. It will save disappointment and a load of frustration.
5. Taking your friend’s advice is sometimes a bad idea.
Friends mean well, but there’s a lot they don’t know. And what they don’t know can hurt you.
One condo owner, for example, took her friend’s advice to withhold condo fees until some maintenance issues were addressed. This gave the condo corporation legal leverage against her and she was at risk of losing her condo. Her friend didn’t know what to do at that point. That’s when she called me in a panic.
Having many years of experience, I was able to resolve the issue but at an unnecessary additional cost in legal fees and interest costs that she, not her well-meaning friend, had to cover.
Take non-professional advice with a grain of salt. And, if those friends will be instrumental in your choices, make sure they participate in all the decisions and meetings and showings. Otherwise they end up impeding your buying process rather than helping it.
6. I wish I had hired an independent property inspector.
Two big mistakes for home buyers happen with property inspections. Either the buyer foregoes the inspection to save a few hundred bucks on a purchase, or they “hire” Uncle Bob to “inspect” the house.
Here’s the trouble those buyers wish they could have avoided. Those who did not pay for an inspection sometimes got nasty surprises with big price tags attached to them. An inspection could have warned them about that.
Those who got Uncle Bob to look at the house because he’s a plumber, (who knows things about houses) and because he’s family (and does it for free), often find two things happen. First, Uncle Bob may know plumbing better than anyone, but he knows diddly about structural, electrical systems and heating so he missed something. Again, the new homeowner is the one who will have to pay for his mistake, which can cost thousands of dollars.
Uncle Bob is not insured with Errors and Omissions Insurance or Bonded, so there’s no way to file a claim against that professional, insured inspection agency. You can be stuck with a big price tag. Hopefully you can afford to do that.
The second thing that happens is that those family get-togethers now feel a little more awkward.
All of this is easy to avoid. Hire a professional, certified home inspector.
7. I wish I had made the decision with my brain instead of my heart.
The biggest mistake when deciding on location, many buyers will tell you, is that they followed their heart and not their brain.
City residents thought the idea of living in the country sounded romantic, so they went ahead and bought a rural home without thinking through all of the pesky details (like added costs of commuting, septic tank maintenance, well water testing and maintenance).
Sometimes people move to be close to where they work which can be a bad idea. They may not be considering the area enough for resale or if they end up changing jobs or leaving their workplace for any number of reasons.
Other times people move to be close to someone they love. One client of mine purchased a home in another town to be close to a sibling.
One year later, that sibling’s circumstances led them to move away, and my client was now living in a house and in a town where their only connection and reason for living there had left. That exciting move to be near family ended up being the worst and most expensive thing that could have happened.
The bottom line- when you’re looking to buy a home, involve a knowledgeable real estate professional. Yes, from the beginning. You are not “bothering” an agent by asking to see houses … they WANT to help you! Involve others along the way. Home buying is a team endeavour. Assembling a team of the right people and in the right way will save you a lot of pain, time, money and hassle.
Jeff Stern is an instructor for the Provincial Real Estate Licensing program, a member of the Education Committee and sits on the Professional Standards Investigation and Hearing Committee at MREA. He gives back to the community as chair of the MREA Shelter Foundation. The opinions expressed are those of Jeff Stern and Walter Mota.