House hunting is fun! Actually making the decision about which house you should buy can often be overwhelming, especially for a first-time buyer. After all, you’ve been saving up for years and maybe even skipped out on vacations for this. It’s natural to be nervous and make a few mistakes along the way. But with some research and a team of real estate professionals, you can avoid the more costly mistakes and find the right home for you. So what are those costly mistakes, you ask? Keep these in mind when you’re on the hunt.
The “Perfect” Home
We all have a picture of the perfect home in our head. No one actually revels in the idea of ripping out carpet and painting over weird wall colours. It’s always the finished look that sticks in our heads. Unless you’re a DIY-addict and watch HGTV OnDemand, why wouldn’t you want a move-in ready home? But it’s important to look past the quick fixes when house hunting. Dismissing a property because of cosmetic details might cost you a great house. Although it’s important to have a list of needs, getting stuck on the little things is not effective either.
The Hidden Costs
Whether you’re buying a freehold home or a condo, buying a property is not just about the purchase price and the down payment. Don’t make Closing costs an after thought because you might be in for an unpleasant surprise. Remember, your lender approves you up to a maximum amount. The maximum amount shouldn’t be your target amount. In other words, don’t start with properties at the top of your budget. It’s a good idea to give yourself some wiggle room and look at properties that are a bit below the top of your budget. Closing costs are typically between 1.5% – 4% of the home’s purchase price. This generally includes land transfer tax, lawyer fees and title insurance, as well as home inspection fee. Also remember that the cost of owning property doesn’t end there. Once you’re moved in to your house, you’ll have to budget for maintenance expenses.
What You Need, What You Want, and What You Can Afford
During a first meeting with my buyer clients, before going house hunting, I like to get a picture of their expectations. I ask about the type of neighbourhoods they’d like to live in, the type of property they prefer (number of bedrooms, etc.), whether access to public transit is important, their timeline and of course the budget. I recommend they create a list of wants and needs. So when you are starting your home search, it helps to list off what you’re looking for in your house, whether it’s a new-renovated kitchen, a finished basement or a two-car garage. Keep in mind that you may be describing your dream home, and your first home may not necessarily check-off all the boxes. Also, depending on the neighbourhood you choose to look in, your budget might not allow for everything on your list. Let your realtor know which items are the deal breakers, so they can show you your best options.
Priced Out of the Market
Getting priced out of the market means that the house prices appreciate faster than you can save. If you can afford a $400,000 home this year, but prices increase 10% next year, you will need to save an additional $40,000 just to be able to purchase that same home. If you’ve been watching the real estate market, especially in urban centres, you know that prices have been going up. I don’t advise anyone to jump into homeownership unless they can truly afford to not only own but maintain a home. But on the other had, by waiting too long they might miss out on an opportunity.
The Fear of Commitment
The decision making process is different for everyone. Some buyers will make up their mind about a property the minute they walk through the front door. For others, it’s not that easy. If you’re someone who has a difficult time making a decision, consider whether the property checks off most of the boxes on your list. If there are things it lacks, are you willing to live without them? Often it helps to take a second look, so ask your agent to book another appointment to view the property. Also if you saw it in the evening the first time, this time see it during the day to get a different perspective of the neighbourhood. The second look will remind you what you liked about the house. If you’re still unsure, don’t force it and keep looking. But keep in mind that the real estate market is a fickle one. That house might not be available when you change your mind. So if the time and the home are right, make an offer.