McClelland Minute - June 14, 2009

Straight Talk to Buyers

There are three main steps to buying your first home – finance, search, and diligence.  Start by working with your bank on what you can afford, taking into account other debt and the extent of the new commitment you are about to undertake including principal, interest, taxes, energy costs, and day to day maintenance.  Know your limits and stick to it.  Don’t waste time by looking at property you can’t afford or in area you really don’t want to live. 

Bring a Realtor into the equation to assist you in the search, not only to give professional advice on what to look for in a home, but when you are ready, to provide support in negotiations and any problems that may arise between the date of accepted offer and possession.  Don’t confuse activity with results. A competent Realtor can narrow down the shopping list extensively once he or she has shown you through the first three or four homes. Seeing every three bedroom bi-level in the city is really not necessary.

One of the best aspects about the way the Multiple Listing Service works is that buyers don’t need to work with the same agent the seller does; you are free to choose whoever you feel will give you the best service.  Better yet, having your own agent doesn’t even cost you as the seller has already directed his Realtor to compensate the brokerage that will represent you. Don’t be afraid to interview several Realtors before starting your search.

Buying a house is one of life’s biggest commitments, so be prepared to conduct an appropriate level of diligence.  Before making an offer, ask your Realtor to give you his or her opinion; in addition to the properties you have both seen, he or she should be able to actually show you the details on several recently completed sales of comparable properties.  The bank may require an independent appraisal before agreeing to provide mortgage funds.  Both of these snapshots in time help to ensure that what you have agreed to pay is reasonably close to the current market value.

If it is an owner occupied home, ask if a property condition disclosure statement is available.  Make the offer conditional to having the right to bring in a home inspector and any other tradespeople as indicated.  I believe this is particularly important on older homes where age or deferred maintenance can lead to some nasty surprises.  Don’t sweat the small stuff; concentrate on big ticket items like furnaces, wiring, plumbing, etc. And folks, remember that used appliances, are just that, used, so don’t be surprised if they quit working after you own them.

New construction isn’t without its problems either.  If you have retained a general contractor or Ready-To-Move firm to build your home, or you are buying one that is in the process of being built already, you should still have it professionally inspected at several key stages.  Ascertain what kind of warranty program is in place to fix problems that arise after possession.  Budget for aspects you will be expected to complete yourself – landscaping, decks, fencing, etc.

As for price, well if it is too good to be true, then it likely is.  I have heard several stories recently of builders saying they can get the job done at a cost per square foot well below normal, only to add on a number of items once they have the buyer deep into the contract.  This shady practice is like selling a car then saying the steering wheel and tires are optional. The agreement should be very clear on the design that will be built, to what specification, and the allowances that are in place for floorcoverings, etc.  If in doubt, ask a Realtor to facilitate contract discussions for you.

Vern McClelland is associate broker with RE/MAX of Lloydminster.  If you have questions or comments on this article or other real estate matters, he can be reached at 780.808.2700 or through the McClelland Group website www.mcclelland.ca

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