Realty Executives of Sudbury Ltd.
Broker (705) 561-8767
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COMMON BUYER MISTAKES
Buyers are beautiful simply because no two buyers are alike. They can be tall, short, fast, slow, late, early, attentive, lethargic, creative, unimaginative, analytical, emotional, first-timers, multiple property buyers - you get the picture. The best part of this is a buyer can be one of those, a buyer can be all of those and a pair of buyers - well that can be interesting!
Buying a home should be an incredibly rewarding experience if done correctly but it is not without its hard work. There is no "one-size fits all approach" to property shopping as everyone will have differences of opinions on almost everything. I've seen it all - "love the kitchen but hate the backyard", "this house is perfect, but the garage isn't big enough for the toys" or the beauty of watching a pair of buyers in a good ole’ fashion Mexican standoff where one likes one property and the other believes the other one is perfect.
The process can be grueling at times, stretched over long periods of time viewing "umpteen" amounts of properties. Sometimes buyers even give up - often to end up buying a house the following weekend....
Because the process of buying varies so drastically, this section is designed to show buyers the common mistakes made that I have seen to help future buyers avoid such circumstances. Be advised I don't quote actual people but the scenarios herein are through years of showing properties to perspective buyers and I don't pull any punches in order to maintain my legal obligation in providing competent, honest and professional advice. They are in no specific order and are simply for your education and enjoyment.
BUYERS NOT KEEPING AN OPEN-MIND
I have a consistent saying I use with clients to help in the buying process - there is no such thing as the perfect property! You will not find a house with absolutely everything you want, personalized exactly how you want it to be and in the perfect location for you. Does the property exist that fits those criteria? It normally does but, the biggest factor is the evil one, it's normally priced well above your budget....
As a buyer, it's imperative to understand the difference between structurally sound in the right spot versus cosmetically pretty. Cosmetics are superficial and can be changed in short order and can be reasonably inexpensive in today's day of Big Box Construction Superstores (I'm sure you can picture an orange apron right now). What can be costly is major component issues - roof, foundation, furnace, structural beams, windows, etc. - and these are the "non-sexy" renovations that don't get you the "wow" factor on resale. Have you ever been shopping for a home and had your heart start pounding because it had new insulation? Exactly.
Don't get caught up in cosmetics or on how well staged the sellers' furniture looks (the furniture isn't staying) and keep an open mind as to what you can do to personalize the home for yourself - chances are you'll personalize any home you buy anyway with new paint, countertops, etc. There are plenty of lending options open to buyers today with "Mortgage Plus Improvements" that can have the work started when you get the keys and tie the costs into your mortgage. So, look for that solid structure with “good bones" in the right area and you'll have the house of your dreams once you turn your own visions into reality.
WIDE SEARCH PARAMETERS
Greater Sudbury is huge. No, a better term is massive. It is a "Community of Communities" (according to the amalgamation notices we received in 2002). There is no specific "best spot" to be in Greater Sudbury, although some locations can be loosely deemed as the areas of higher demand. So where is the ideal location to be in Greater Sudbury? It's the location that best suits your life, your family, your job, your roots and your favourite hobbies. Some clients refuse to look in Lively and others will only buy in Lively. Some clients say "yuck, no way" when we ask about New Sudbury and some say, "I have to be between Lasalle and Kingsway on the north/south and Auger and Attlee on the east/west". Now that's precision (and that is definitely an example of too tight of parameters but at least we can work with that problem)....
The biggest mistake in this section is saying "oh, I'll look at a house anywhere as long as I find the right house." There are very limited people that would actually elect to take a 1.5 hours drive in a snowstorm in winter to get to work because they found the right house. First off, buyers always have a preference of where they would like to be and a second preference would be good to have as well. That should be it. If you want New Sudbury and you're okay with Minnow Lake, don't look at a house in Lo-Ellen. If you want to be in Dowling but Onaping or Levack are ok, don't look at houses in Hanmer.
Keep your search parameter relatively tight and focus on your main preference areas without getting sidetracked by the "pretty lights" that you may see on the MLS® in surrounding areas. There will always be nice places getting listed in the surrounding areas or communities but there's reasoning beyond having a nice house as to why you want or need a specific area - listen to those instincts. A saying I always use with clients and also relates to the Open Mind notes above - you can do anything you want to a house except move it!
PS - (I know you can move a house but it's just not a viable option to do so for most)
NOT GETTING PRE-QUALIFIED BY A LENDER
So, you're on MLS® checking out some listings or you stop in at a Sunday Open House and find the perfect house. It's gorgeous! It's everything you ever wanted! It's right near the kids' school, it has the perfect garage setup, the kitchen is simply stunning and your best friends live only a block away! You book the appointment to view it again and you simply fall in love with the place! It's a must have! Race back to the office and write that offer! It was accepted - you're buying your dream home and couldn't be happier! Then the call comes in from the bank during your conditional period.... you don’t qualify for a mortgage that high.
Did you ever drop a scoop of your favourite ice cream off your cone onto the gravel when you were a little kid and it was just devastating? At that moment, it was absolutely traumatic. Well multiply that by about one million and that's the feeling you have when you find out you're approved for $300K and you can't get financing for that $400K house you just fell in love with. Even if you have the itch to still continue looking, how do you think the $300K homes are going to look compared to your $400K dream home you just lost? Not a chance - it's over before it started.
The solution to this couldn't be any easier or any cheaper (FREE). Simply sit down with a lender for 15-30 minutes and give them your personal details and financial details. Never hold anything back cause they will find out about it and often at a real bad time in the process. They will give you a pre-approval that will give you your maximum purchase amount that you're "good up to" (key wording here). The other bonus to this is they give you a Rate Guarantee for 90-120 days (depending on lender) which secures that rate for you in case rates go up during your shopping process. If rates go down, you'll automatically get the lower rate. And all this is no-charge, zero, nothing with no obligation whatsoever* (see note below) and gives you a perfect roadmap of what your max value can be, what your payments will look like and targets the right homes for you to view.
Once my buyers are pre-approved, for instance at the $300K noted above, we shouldn't start at the $300K mark. This is like a speed limit - it's a maximum you can spend. Nothing says you can't go lower and it would be financially irresponsible to not start in the lower brackets first and work our way up. Like I mentioned above, once you see $300K, how is $230K going to look in comparison! Always start at about 70% of your maximum and work your way up. You'll end up finding a sweet spot in a price range that suits your needs, your tastes, your location and your wallet without having to “lower” your price (and expectations) after exhausting all options at your maximum budget.
*NOTE - There is never any obligation to go with a lender that gave you a pre-approval. BUT, getting a pre-approval may create a small blemish on your credit score, so be cautious not to "over shop" lenders and damage your credit. I have access to excellent lenders that have tons of products at their fingertips – you can CLICK HERE FOR MY CURRENT LIST OF RECOMMENDED PROFESSIONALS or contact me at firstname.lastname@example.org for a few recommendations.
OVER-STRETCHING YOUR BUDGET
Although the governments have been placing increasing pressure on mortgage qualifications, and rates often fluctuate, it is important to know what you can afford at this moment in time. Often, buyers, and more importantly first-time buyers, underestimate the costs associated with operating a home. There are plenty of costs beyond the mortgage payment and taxes that are basically the essence of what you're being qualified with. I have bought/sold over numerous properties and have put together a "what to expect" section for buyers that you can check out here when you're done reviewing this section.
Treat your pre-qualified number as a speed limit. The bank has advised you the MAXIMUM you can spend - this doesn't mean you have to spend it. The mistake buyers make in this part is getting pre-qualified for, let's say, $250,000. Excited, they start looking at listings on our MLS® search page up to $275,000. This is headed for disappointment before it even begins and, even once we grind the seller down to a $250,000 sale price, the buyer soon realizes after six months of ownership that the costs are more than they expected.
I always stress two important suggestions:
1) As I mentioned above in the “pre-qualifying” section, you do NOT have to spend every penny you're qualified for. I recommend starting at 70% of your qualified value to view homes and we'll increase the value in increments until we find the right home for you. It's impossible to search lower price points after you've seen the higher ones, but it's easy to move up in price when it's still within the qualified parameters.
2) Ask me, ask your friends, ask your family and ask your co-workers what their home costs are per month to operate. A lot of people don't take things like gas for their car into the equation when they're moving farther away from work! Take the higher numbers you run into and add 20%. Then ask yourself, if that's just what the home costs to operate, what can you afford to tack on as mortgage payment plus taxes and still live the same lifestyle you are now.
The last thing Iever want to hear is that a buyer cannot afford the home I helped them purchase. I would much rather hear from you in six months saying it's even cheaper than you had expected and you're able to make an additional pre-payment every month on your mortgage or put money away for your future home upgrade!
"My Uncle So-&-So Knows Lots About Houses"
When it comes to purchasing a house, family often wants to be involved and supply their input every chance they get. We are not saying family isn't important - I graciously work with the entire family and they can be highly beneficial when making huge decisions. But what I'm talking about here is a qualified and thorough home inspection of your future home.
I have seen numerous occasions where "Uncle So-&-So" comes to do the "home inspection" (reads as "walk thru with hmmms and ahhhhs"). They don't arrive with the proper tools to inspect the furnace, they don't have a ladder to get up to take pictures of the attic, they've done plumbing at camp using whatever 60's materials were on hand and don’t see an issue with the cast iron/lead piping, they don't test every plug or take the cover off the panel to look for double-tapped breakers and so on. I've had deals collapse on perfectly good homes where the family "walk-thru" finds what they believe is an issue but it actually isn't and, far worse, I've begged clients to have a formal inspection on a property where "Uncle So-&-So" says "really cute place. Love the paint colour!"
Your home is a huge investment and deserves the proper third-party, unbiased and thorough analysis that a CERTIFIED home inspector will provide you in a detailed report and I always encourage attending the inspection to ask questions. At $1000 or less for the standard home inspection, you'll spend more on the new flat screen for the rec room that won't help you discover the foundation wall has heaved until you try to hang it up. Save your investment with a home inspection from one of the Preferred Professionals on my list here and ask for the TV for Christmas!
PURCHASING A HOME BASED ON YOUR CURRENT FURNITURE
So, you hit up one of the big furniture chains on their Black Friday sale and bought that awesome sectional couch you wanted for the apartment. A few months later and, after exciting life changes, you find yourself shopping for a house! You've found the perfect house in your ideal location, it's only at 80% of your pre-qualified rate, you've done all the math on the expenses, BUT you realize that new sectional won't fit down the basement stairs. Deflated, you decide to keep looking and settle for something less perfect, a little outside your preferred area and at 95% of your pre-qualified budget BUT, great news, the couch will fit down the stairs!
Some might think I'm joking but, unfortunately, this has happened. If the house you're looking at is $300,000 and you spent $1,500 on the couch, in the scenario above, you are basing an enormous financial decision on 0.5% of the purchase price of the perfect home. Would it not be more reasonable to sell the couch and get a new one? See if one of your buddies wants to trade for their set? Or even just donate it but don't let such a small value determine the outcome of such a large investment!
BUYING WAY TOO MUCH / NOT ENOUGH HOUSE
Do you really need four bedrooms? Is the formal dining room a necessity more than just Easter dinner? Do you need the basement finished upon moving in or can it be done later?
In today's day and age, costs of home ownership have been increasing steadily every year. With Sudbury's winters, heating costs on that empty bedroom or rarely used finished basement can definitely fit in the "waste" column. Don't forget, you also pay property taxes on finished space in the house, so add the annual taxes for that basement and bedroom you’re barely using.
Some growing family readers might be saying "what about us? We do need that!" And I completely understand and you're the exact opposite in this circumstance. Buying, selling and moving can be a very costly venture, so it is imperative as part of the future family planning to ensure your home will accommodate your future family needs. It's also important to view your young children as teens and adults. As everyone gets older, your home should be able to accommodate the growth in the family.
THE AGENT ON THE SIGN CAN GET ME A BETTER PRICE
Wrong. Complete misconception. The agent on the sign owes all their LOYALTY TO THE SELLER. Unless you're under a Buyer Representation Agreement with that specific agent, you had better be extremely cautious about revealing anything to the listing agent. The listing agent is obligated to share ALL information you provide to the seller as their fiduciary duty is to the seller, not you.
If you do decide to proceed with the listing agent, the situation then falls under Multiple Representation where the agent now represents both parties. In this circumstance, the agent cannot discuss prices to offer or what to accept or any other personal details about the parties involved. Now you're basically head-to-head negotiating the price with the seller who thinks their property is worth more than it probably is. How will you get a better deal? Sure, some agents give commission breaks on "double-enders" but, in a lot of cases, the seller will realize this benefit more than the buyer will.
The best thing you can do as a buyer is have your own representation. Someone in your corner that has only your best interests at heart, that will protect you throughout the process and will work hard to make sure you pay the right price for your future home.
CHASING OPEN HOUSE SIGNS
You’ve decided it’s time to buy a home over coffee one morning and decide to hit up some Open Houses. Why not? It’s free to look! But it can also be pointless to chase those wonderful free treks through other people’s homes while loading up on Country Style coffees.
Rarely do houses sell due to an Open House. Quite often, Open Houses are a two-prong strategy used by agents by:
-Trying to create interest and new activity on a stale listing and/or
- An opportunity to pick up new buyer clients.
So you’re running around checking out whatever is “open” between 2-4pm in your area and you end up seeing houses from $200-450K price ranges, burning expensive gas and wasting a beautiful Sunday afternoon looking at properties that have been on the market for too long or talking with agents that just want your name and phone number on a sign-in sheet. There’s a lot of better ways to spend a Sunday afternoon!
What serious, pre-qualified buyers that have signed a Buyer Representation Agreement are doing on a Sunday afternoon is sitting on their deck having a cold beer and BBQing. They have me hard at work on the backend searching for their perfect home, getting them brand new listings daily that fit their precise search parameters and scheduling appointments to view the qualifying properties before they sell by next Sunday. That’s what I'm here for!
NOT WORKING WITH AN EXPERIENCED BROKER
I’ve seen all kinds of buyers trying to do it on their own, I’ve received plenty of requests from buyers to view my listings with us cause their agent is at camp and I’ve seen a lot of frustrated buyers coming to ask for my help and expertise after they’ve run the gauntlet of open houses and private sales. Why start such an exciting step and massive financial decision in your life under such daunting terms?
With me, you have a highly experienced Broker at the ready when the right property comes up for you. I'm ready to get started without any pressure or obligation – I know you’ll continue to work with me due to my loyalty to my clients, the passion to my career and the service levels I bring being second to none. Whether you’re looking to buy now, buy later, buy privately or even thinking of buying, there’s a right way to go about it. If you want to get started the right way in finding the right place at the right pace for you, contact me at email@example.com to see how we can help.