BUYING A CONDO OR A HOME IS COMPLICATED TODAY
Most buyers do not do enough research prior to starting their home search. Buying a home is probably the most expensive decision you will ever make in your lifetime. It can be extremely stressful if you do not have the right team of people behind you to look after your best interests.
It is very important to have a buyer's information session, especially for the first time buyer to completely understand what is involved from a legal standpoint to mortgage insurance. Home inspections and condo document reviews can be a very crucial part of the the buying process.
There are many things a buyer needs to be prepared for these days, with drug houses, grow ops, asbestos, and water and flood damage properties are sold some times by unrepresented sellers to hide latent or patent defects. We have identified some important points to watch out for when buying a home.
Dealing with a trusted salesperson who has lots of experience in the marketplace can save you a lot of money and stress in the long run. We have a team of people who can help you, guide and protect your best interest every step of the way.
While this is not a comprehensive list of everything that needs to be followed when deciding to purchase real estate, it is a list of important items for buyers to take under serious consideration.
1. USING AN EXPERIENCED REALTOR® As members of the Canadian Real Estate Association (CREA®), each REALTOR® adheres to a strict code of ethics and provides a wide variety of beneficial services for buyers and sellers.
2. There is a lot of historical information available for older properties, any good Realtor® can access that information for you. Getting comparable sales in an area or doing a CMA (competitive Market analysis), in other words, make sure that your REALTOR® compares the property you are purchasing with other homes in the area that have recently sold. Note: It is more important to examine recent sales rather than the current active or expired listing inventory, because they show what buyers are ACTUALLY willing to pay in the current marketplace. It is still important to see what other homes are listed for or have been listed but did not sell, while keeping your focus on what similar properties have recently sold for.
3. Never buy a home without a home inspection even if its new. Never buy a condo without a document review or financial analysis. Many times buyers will choose to purchase a home without having the home inspected by a qualified professional. If an inspection is performed and flaws are identified, you can generally ask the seller to repair or fix any problem items that are discovered or get a reduction from the negotiated the price of the home. If it is a defect that cannot be resolved and falls within the parameters of the property inspection condition agreed upon at the time the contract was negotiated, you can choose to walk away from the property.
4. Get Loyalty from the Realtor (Buyer Relationship Agreement) with your REALTOR®. Exclusive Buyer Representation Agreement binds the Realtor® to certain obligations and duties that are attached to it. It is important to understand that agency issues can play a big role in the purchase or sale of a home. By having your real estate associate work with you under contract (Buyer Brokerage Agreement), the duties and services they will provide as your REALTOR® are clearly established in writing. Make certain that the real estate professional you hire demonstrates, and communicates to you, a good and clear understanding of agency and it's implications.
5. Large deposit gets attention!. Often, buyers offer smaller deposit when negotiating the purchase of a home. Your visible strength is your deposit and the price. Unfortunately, to the seller, it shows less motivation on your part to complete the purchase of the home. A larger deposit shows your sincerity and your intent to complete the purchase, and can be a factor in the negotiation of the purchase price.
6. Time is of the essence!!. With most real estate contracts, there are important dates and timelines that must be strictly followed. i.e. How quickly can the home inspection be completed, when to review the title, how quickly your financing approval must be obtained, when the contract has to be communicated to the other party and more. A good real estate associate, acting on your behalf, will follow these guidelines and make sure that you meet each and every deadline. However, it is also good practice for you, as the buyer, to make note of the deadlines to ensure you are enabling the process in moving forward in a timely manner.
7. Mortgage rates vary, depending on which lender you talk to! Buyers usually only think to approach their bank to apply for a mortgage, but a mortgage broker can source multiple lenders thus making it an easier process for you to explore all available options. Before authorizing your credit being pulled or signing other documents with a lender, be sure to find out the interest rates, closing costs and any hidden fees associated with the mortgage they are offering you. You can also request that the lender reduce part of the closing costs and ask if any of the fees are negotiable. Many times lenders' fees are not set in stone and can be negotiated or removed from the cost of the loan (you can ask your mortgage broker to negotiate this on your behalf). For example, some lenders will waive the cost of a credit report or appraisal fee to encourage you to do business with them. The important point is for you, as a purchaser, to ASK if any of the costs for the loan can be eliminated or discounted.
8. Insist the seller provide a Real Property Report (RPR) with municipal compliance. You want to ensure that the seller provides you with a RPR, a survey of the land and buildings you are purchasing, which reflects the current placement of structures on the parcel you are purchasing.
9. Sometimes the best option is title insurance. Discuss what coverage you need, in terms of title insurance, with your real estate lawyer. There are different levels of title insurance coverage that can cover you from a myriad of potential issues, such as identity fraud, development completed without proper permits, encroachments, etc. Ask your lawyer for advice as to whether you should purchase this type of coverage, as usually you can only purchase this type of insurance at the point of purchasing the property.
10. If purchasing a condominium, have the documents read by a professional company. Be sure to have a Condominium Document Condition subject to your satisfaction in the contract and that you have them read by a professional. Consult a professional to review the documents and provide you with an analysis of the health of the condominium corporation before purchasing any property with this type of ownership.
11. Always sit down and write down your needs and wants with your partner (if applicable) Take your time before you purchase. It is always a good idea to look at several homes before making a final decision. Don't feel as though you have to buy the first home you looked at. Try to identify the areas that are of interest to you and know why? Comparing the one you are interested in with others that are similar, can help you determine the value of the home you would like to purchase.
ARE YOU BUYING A CONDO
There are so many things to watch for when buying a condo. The following are just a few things to look out for.....
Condominium ownership is a very new alternative to traditional property ownership. The ability for a group of people to each own their own units, but share common expenses, and still live in harmony, has created some huge benefits for buyers. However, if you didn't know at least some of the benefits, then you likely wouldn't be considering purchasing a condo in the first place, so we will put the discussion of benefits aside for now... The items that most of our clients want to know about are the red flags. What items should you look a little more into before purchasing a condo in a particular building, complex or development? What things may be the warning signs of existing, past or future problems? They are not necessarily problems in their own right, but should trigger a little more research.
Low Condo Fees – The fees may not include very many of the items they normally would or should. You may be expected to pay a special assessment fee more often than not.
High Condo Fees – A problem may exist that the condo board is trying to pay for.
Low Reserve Fund –There may not be enough money to cover necessary future major repairs and improvements.
Special Assessments – This is a lump sum of money assessed to each unit owner that is required to either top up a low reserve fund or to fix a major issue that the condo has. Unresolved Issues in the Meeting Minutes – If the most recent meeting minutes indicate that the Corporation is waiting for a quote on something, then that 'something' is still broken.
Registered Size Does Not Match the Listed Size – You may not be getting all of the square footage you thought you paid for. Sometimes registered size includes the parking area, or balcony, or a storage area.
Not All Documents Are Available – This could be a result of poor management, or non-compliance with the Condo Act.
Post Tension Cables– If not cared for under the lawful requirements, this style of construction can cost a fortune to repair (typically causes higher fees). This can also have resale implications, if CMHC/Genworth decides not to insure a building because it is not complying with the rules around post tension cable maintenance.
Age Restricted Buildings – This limits who you can re-sell your unit to (or rent to). Plus, some lenders will not provide certain types of mortgages for these buildings. Any Stains or Signs of Water – This one is pretty obvious. Lots of Units for Sale – Why does everyone want to sell? Operating Deficit – If there is more money going out than coming in, eventually you will run out of money.
Low Owner Occupancy– Lots of units are likely rented, and tenants don't take care of their property as well as owners (and sometimes don't follow the by-laws). Monopolized Ownership – The one person who owns most of the units has most of the voting power. Unresponsive Board – If they neglect to return calls, what else do they neglect? Do your homework and get all the information available on a complex. This is always your best security when buying a condo.