How to Avoid Costly Mistakes
1) Buying too much house and overstretching your finances. It is always nice to have bigger and better but one has to be able to sleep at night and pay your bills. Here is a great savings technique – In advance of starting the buying process, try paying what your future (higher) mortgage payments would be and save the difference over your current rent or mortgage. This will help you test if you can live under those terms (and it will help you save more for your down payment!)
2) Waiting too long to talk to a lender. Make sure you talk to a mortgage broker first, before you fall in love with something as maybe you can or cannot afford it; or, maybe you find out the banks will not lend to you at all!
3) Bypassing property inspections, title documents and property boundaries. Having more information is always better than less. Even if you feel you may lose out on a property, it is always better to get a full understanding of a property before making a potentially costly mistake. (Going in subject free on a home works best if you have already done your due diligence in advance of making the offer and not going in blind.)
4) Do market research: Compare to other sales in the area and consider the resale value. Work with a professional that can walk you through a proper comparative market analysis (CMA) so you become familiar with the market. Know what you’re getting (like apples to apples). Sometimes things may not be obvious to a buyer and would be accounted for by an experienced agent. For example, is the property on a commercial lane? Or, are you looking at a shorter, wider or longer lot than the home that just sold across the street?
5) Budget: Factor in ongoing operating and maintenance costs. All buildings need to be looked after at some point. Better to plan for new roofs and hot water tanks, as eventually it costs you money.
6) Waiting for “The right time to buy.” If you’re a first time buyer “now” is always the best time to buy. Get started on building up equity in your home, rather than paying rent. Trying to “time” the market is very difficult to do and the home you wanted before may not be available when “the time is right.”
7) Buying before you have sold. Many people have a hard time trusting that they will be able to find something after they have sold. In some cases you can get bridge financing but it can be costly maintaining two properties! You are not the first person that has had to sell first and then find somewhere else to live second. Give yourself time and you should be able to work things out.
8) Listening to too many people. – Everyone has an opinion and their opinion may not always be right for you and your circumstances. A professional typically gives advice based on experience and knowledge, so it is good to listen to them! Think about this…do you tell your dentist how to drill your teeth? True professionals should have their clients’ best interest in mind. If you feel the person you are working with is not giving you good advice, it may be time to find another professional.
9) Failing to allow enough time for moving between properties: vacating on completion and occupying on possession. Time can sneak up on you. When moving out of a property, it is expected it will be left in a reasonably clean condition. Make sure when writing up your offer of Contract for Purchase and Sale…you have these dates spaced out with ample time to sort, donate/discard, pack, clean, and vacate with your goods, then the reverse happens on the other side moving in and unpacking, especially if you are selling and buying back to back!
10) Selecting a home which does not properly meet your families’ needs. What people want and what people need are sometimes two different things all together. If you expect to have children in the future, or say, have a 14 year old child, do not buy into a “age 19 plus” building. Or, in my case, I would love to ride my bike to work but it would be challenging to get my clients around!