Home buying tips?

[deejayspinz]

Ok gang,

Looking for a little help here. We are in the market for our next home. This would be the first time buying pre-owned. A few questions around the "rush" of buying. Let me explain - we may be in a situation where we have to jump on a good deal (as in a few days). Right now we are trying to setup a mtg to view the place. What are ppl's experience with this in terms of getting a mortgage rate locked in (wont have a problem with approval) - thinking more about how long this takes (mortgage broker will be used), adding an Inspection clause into the offer (even though there may be multiple offers), negotiating if there are multiple offers etc etc...

Any tips appreciated...

[MacGyver]

Get pre-approved for a mortgage and interest rate before you go house shopping. If you're not pre-approved, and there is a lineup of other interested parties that are, then good luck getting your offer considered. You'll run out of time. Being pre-approved also means you can take your time and shop for the best mortgage rate and terms without pressure.

You may find it easier to make a snap decision about a house if you first make a list of things that you are looking for in a house with a priority for each. My wife and I did this and it helped us immensely. Our list went something like this:

(Priority: 1 Highest, 3 Lowest)
1: NOT A CONDO (we'd rather pay property taxes instead of condo fees)
1: Three Bedrooms minimum
1: Two Bathrooms minimum
3: Master ensuite
2: Large entry foyer
2: Kitchen with a window
1: Garage/workshop
2: Decent sized backyard
1: Natural gas heat and hot water
1: Basement, finished or unfinished, with good ceiling height (we are tall)
2: Close to express bus route or transitway
3: Close to schools, parks
2: Newer house without a lot of work needed after purchase
etc...

In the end, we got everything on the list except the ensuite, which we agreed we could do without. Before buying that house, we got caught up in the thrill of the deal and almost put in an offer on a different house that did not have a garage, which is something that we really wanted.

NEVER buy a house without having it inspected first. A lot of mortgage companies insist on getting an inspection as a condition of mortgage approval. And any seller that does not want you to inspect the place has something to hide, or is just desperate to sell and can probably stand to knock a few grand off the asking price.

[mork]

hmm.. I guess it depend son your market, but if you put a condition of inspection on your offer in SK you might as well not bother with the offer at all. As a seller with a line of people willing to buy the place what benefit would there be to permitting an inspection?

IMHO, If you really want an inspection, it better be a good offer. We sold our place about 4 weeks ago and no offer had an inspection condition and if any of them had we would have discounted it by $20k or more when comparing it to the unconditional offers. Against my initial desires we did accept an offer with a condition subject to financing but we got it down to 24hrs to have the condition removed so that our other buyers would still be around if we needed them (the condition was ultimately removed the next day).

If your market has bidding wars going on I think you'll need to be comfortable going at it without any conditions.

[Dustbunny]

I agree. It's nice if you have the option for an inspection but if it's a seller's market you can't insist. Meanwhile, having someone who is familiar with houses is a big help in that situation.

If this is your first time buying, go to a mortgage broker. They can shop the banks and such for you and get the best rate for you and it means only one hit on the credit bureau instead of several which is a bad thing for your credit rating. It's also much less hassle, so ask people you know if they can recommend someone and get all that set up before you put in an offer. Your interest rate will be guarranteed and keep your eyes on the news as right now the prime rate is dropping and that will follow right to mortgages and means you get the lowest rate up until the thing goes through usually. It also means you may not want to lock your interest rate right now but wait until it goes lower.

As for tips for looking:
- do a 10 things you want list for sure
- do a 10 things you don't want list (this might include things like busy street, close/far from schools, public transportation or whatever you know would make you unhappy)
- know your districts. Educate yourself as far as which ones are up and coming and which are on the downward trend (selling mostly to be rented can be a bad thing as it's generally better to have actual home owners next door). Know if there are any plans in the works for major projects, road expansions, or anything else that may mean land values drop or a lot of hassle to contend with. You city planning folks and reading the newspaper about potential expansions etc. can help find those things out (as well as seeing a lot of for sale signs in one area can be a tip off that people are leaving for a reason)
- pay attention to the neighbour's yards to see if there are any tip offs to things you don't want around or that can indicate who you might be dealing with as there is nothing worse than not being happy with the neighbours because of noise or mess or whatever
- take someone with you who has some experience. While you are captured by basic layouts etc. they can be looking for the detail (how old is the furnace, what condition are walls and such in, any signs of flooding or seepage, spotting potential headaches and good points, checking basic structural things they may know about)
- listen to your gut. If something is not right, pay attention to what your instincts are telling you and don't get caught up in a sales pitch or panic buy (but on the same tact, know your stuff so you can make a decision fast if you need to and feel as comfortable as possible)
- only deal with a Realtor you trust. Don't stay with one if you feel you are being sold a bill of goods, being bullied, or anything else. They should be working for you and happy to take you out and show you the good and bad in a house. Also, save yourself and them some time by being clear about what the deal breakers would be for you (in location, features or whatever) so you don't waste time
- don't get too freaked out by things not being quite right. Here again, an experienced person can help as they know how much paint costs, what it takes to replace a countertop or appliances etc. so you know what the potential of a place is
- look at the layout, not the furniture. Do not get mixed up by staging or mess. Keep your eye on the things which will be there when the place is empty. If it's a mess, write in carpet cleaning or whatever to be done as part of the deal.
- if you have furniture, make sure it will fit. Nothing worse (believe me it happened to me) than having to give something up because it's just too big to get in the doors. Imagine where your things will fit, if they are bigger or smaller than what is there etc. so you don't have any rude surprises
- know what your insurance is going to require. For instance many existing homes have 60 amp service, galvanized pipes, aluminum wiring and they are fine now because the insurance was already in place before the rules came in so they have never been changed. A new owner means a new policy coming in and they will insist those things are changed or there is no insurance and you have to fix them right now and that can be expensive on top of moving and all. Again, it's part of ensuring you don't get any rude surprises or that you at least know you need some cash after (which you can work into your mortgage if you want)
- study the MLS so you have realistic expectations of what you will be able to afford and what you get for your money.

[deejayspinz]

Gang,

Thanks very much for all the tips. Great info here. Keep'em coming!.

We saw the place and are now balancing out likes and dislikes against each other... We are pretty picky about things -to the point at which the house is facing, sun tracking, other houses blocking the sun etc... Although not our top priority, it is an important one...

Any thoughts on basement cracks? The basement in this one looks like it had a fresh painting on the floor (concrete paint).. There are a number of fine cracks that go through and across the basement. They are not big ones (only 1-2 mm wide) and it does not appear that they tried to cover them up. No musty smells or signs of flooding - but its hard to tell with the new paint. Inspection is a definate requirement here as I am not the pro...

[jimmyswats]

We were in a similar situation in November. We decided it was a good idea to do a home inspection before offers were being accepted. Best $400 we ever spent. We were able to register a firm offer right at offer time, which scared away the competition and we got below asking price.

It is our first home, so not much other info I can share.

J.

[Chigu]

Check out the CMHC website for some home buying tips as well. Each person has something different that they value. I wanted a nice backyard (for bbq's) and also make sure that the 4 car driveway was actually able to fit 4 cars (NO SIDEWALK!!).

In our offer we had conditions such as a home inspection, and financing to be completed within 5 days of the offer. We bought in February, and got a great deal on the place. In the end, I don't care if there is a bidding war, I wouldn't want to be pressured into buying a home that I am uncomfortable with regardless of market conditions.

[pkguy]

Here's a good tip I wished I'd been warned about when we bought our first house. Visit the house on a sunny day and see how bright and light it is inside WITHOUT any of the lights turned on. That first house we bought whicih we truly loved had one big problem, the kitchen/family room area was always just dark enough even on the sunniest of days that you had to turn on some lights. Often you'll go thru an open house and see the lights inside turned on,, turn them off.

[Dustbunny]

Any thoughts on basement cracks? The basement in this one looks like it had a fresh painting on the floor (concrete paint).. There are a number of fine cracks that go through and across the basement. They are not big ones (only 1-2 mm wide) and it does not appear that they tried to cover them up. No musty smells or signs of flooding - but its hard to tell with the new paint. Inspection is a definate requirement here as I am not the pro...

Usually you only need to worry about cracks which have one side higher/lower than the other side. Concrete cracks when it's settling and curing but it's those uneven cracks which can be a problem.

[MacGyver]

Our home inspector noticed that the furnace that was installed might have been one that was prone to having a cracked heat exchanger. On her advice, we got in an HVAC contractor who had a closer look. She was right. We were able to knock down the asking price by a couple of grand for that alone. A cracked heat exchanger means red tagging and loss of gas service until it's fixed. We elected to put in a new furnace instead of the existing owners so we didn't end up with something cheap.