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Home Buyer Advice


Yes, you should buy a home for your family

Owning the roof over your head does more than keep out the rain. It can make families happier, healthier and wealthier, according to a new study done by Canada Mortgage and Housing Corporation.

The study looked at 326 households nationwide that had moved into Habitat for Humanity Homes. It was the largest survey ever conducted of these homebuyers and found 86 per cent reported being happier since their move. Seventy per cent cited benefits that include fewer bouts of cold and flu, reduced asthma symptoms, and less stress. More than 30 per cent reported a drop in visits to a doctor and one in four said they missed fewer days of work due to illness. It's natural for such benefits to occur in people previously enduring cramped rooms, apartments tainted by mould, places with humidity or heating system problems, or unsafe neighbourhoods.

Children's performance in school improved, with most families reporting higher grades, increased confidence, improved behaviour, and better attendance. Joining in sports rose to 61 per cent, from 50 per cent, while participation in music and arts jumped to 30 per cent from 18 per cent. Some kids did better from having more space to study. Families, as a whole, benefitted from the security, stability and sense of control that comes with homeownership. Almost 60 per cent of families reported being financially better off after their big move.

Not every low income household is eligible for a Habitat for Humanity residence. These buyers are predominantly working families with children. They are also required to contribute 500 hours of sweat equity toward purchase of a home. Their experience, however, illustrates how much lives are changed through better accommodation and having a share and a say in housing choices. Moving people into their own homes doesn't just serve the needy. Promoting healthier, happier, more accomplished families benefits society as a whole. Your family deserves such opportunities.

Make sure you buy the right home

When homes are moving fast, buyers and sellers are keen to get deals signed, sealed and delivered so that they can enjoy their new home and start their new lives. Since a home is life's biggest investment, it probably comes as no surprise that this is an emotionally charged decision. One study found that 80 per cent of prospective homebuyers know if a house is right for them the moment they step inside. While that initial feeling is important, buyers should keep in mind that there are several other factors to consider before making a final decision. Here are five important steps for prospective buyers to take before making any decisions:

  • Talk to the neighbours. The best way to get an idea of what it would be like to live in a particular neighbourhood is to talk to someone who already lives there. Chat with neighbours about the community, schools, commute and any potential surprises that you should know about.
  • Work with a local Realtor. Look for a Realtor who works in the area and knows the ins and outs of the community. Asking friends, family and colleagues for references is a great place to start. Another way to find a Realtor active in the area is to go to open houses in the neighbourhood.
  • Know what you can afford. Start by figuring out your Gross Debt Service (GDS) Ratio. This ratio is a calculation of the maximum housing payment that you can afford, including your mortgage, property taxes, heating and cooling costs and condo fees. To figure out your GDS Ratio, add up your gross monthly income and multiply by 32 per cent. This figure should never exceed 32 per cent of your gross monthly income.
  • Get a home inspection. In Ontario, a home inspection reports on the condition of the roof, structure, foundation, drainage, heating, cooling, plumbing, insulation, walls, doors and electrical system. The cost of a home inspection can vary so do your research and make sure to choose a qualified home inspector who will also inform you of the scope and limitations of the inspection.
  • Check with the city. Visit your local building department and find out if any new developments are planned. Check to see how many owners have applied to build homes or additions that are larger than the bylaw permits. This can give an indication of the neighbourhood's future.
Though your initial feeling about a property is a powerful force, follow these five steps to help ensure that you are not faced with unwelcome surprises. When it comes to making a home buying decision, do your homework and be sure to enlist a real estate professional to guide you through the process.

Plan Ahead

  1. Decide how much you can afford. Use this mortgage calculator to find out the maximum purchase price you qualify for.
  2. Plan how you will save for your down payment.
  3. Protect your credit score by paying all bills and debts in full and on time.
  4. Set up a loan to pay for your home even before you start to look. This is called a pre-approved mortgage.
  5. Check interest rates. But remember that interest rates can go up and down.
  6. Know all the costs, for example appraisal, legal, home inspection and real estate fees.
  7. Find out how much you can borrow. Your bank looks at:
    • how much you make each month and how much you can spend on mortgage payments
    • how much the house is worth and how much you can pay in cash (your down payment)
    • what it will cost to run your home – including taxes, heating and insurance
    Don't forget the HST. If you're buying a new home that costs more than $400,000, you'll have to pay HST in Ontario. You normally don't pay HST on resale homes. HST does apply to monthly maintenance fees for condos, as well as to legal advice, moving services, and home inspections. Buyers normally don't pay the fees for real estate services - the seller usually pays - but if you do end up involved in paying any of these then there will be HST.
Get advice: Talk to your lawyer, a real estate agent or a mortgage broker. They can advise you on all aspects of buying a home, including all of the costs.

RECO's top ten pitfalls

Here are the most common buying and selling hazards, and how to avoid them:

  1. Allowing emotions to overtake common sense
    When you fall in love with a property it can be hard to walk away. Know your budget and don't overpay. Don't forgo a home inspection just to win a bidding war.
  2. Hiring the first salesperson you meet
    Ontario has over 60,000 brokers and salespersons, with a broad range of approaches to the buying and selling process. Meet with a few different representatives before settling on one, and make sure you feel comfortable with them and their approach to the process. Also be sure to get references and contact them to learn about their experience with the salesperson.
  3. Not making your expectations clear with your real estate professional
    It's important that you and your representative have a mutual understanding about what you're looking for, and what services the brokerage will be responsible for. Make sure you talk to your broker or salesperson about the services you expect them to provide, and get it in writing.
  4. Failing to read and understand forms and contracts
    It can be tempting to speed the process along by signing forms that you haven't read. But taking the time to understand what you're signing can avoid a lot of problems later on. For example, you don't want to find out that you're on the hook for a six month listing agreement to sell your home if you only want your house on the market for three months. In addition, a holdover clause could mean that if you sell your property during a specified period without the assistance of the broker or salesperson, you would still owe them commission. Make sure all the blanks on the form are filled in before you sign it, and make sure you get a copy of whatever you sign.
  5. Assuming everything is included
    Don't assume that the furnace, dishwasher or other items are included with the property. The seller may want to take the dishwasher with them to their new home, and the furnace might be under a rental contract that you'll be required to take over. Before making an offer, detail all items, known as chattels, in writing. Your offer can also include a clause stating that the seller will pay out any outstanding leases on the home's major systems.
  6. Forgetting about what's within the walls
    Granite countertops and new hardwood floors are appealing, but the insulation, wiring and plumbing are just as important when you're evaluating a property. Ask your real estate representative to look into the age of the home's systems and if there have been any upgrades. If extensive renovations have been done, your real estate professional can determine if the appropriate permits were issued.
  7. Forgetting about what's outside the walls
    When you buy a house you're also buying a place in a community. Some places are lively, others are quiet. Some places are filled with kids while others are not. Visit the neighbourhood at different times of the day to see if it fits your lifestyle. Talk to the neighbours about the community and the locations of various amenities like grocery stores and banks.
  8. Not doing your research
    If you're concerned about buying a home with a troubled past, a simple Internet search for the address can go a long way. This is also something you can ask the neighbours about.
  9. Making verbal agreements
    Verbal agreements aren't a problem, until they're a problem. Putting everything in writing forces both parties to be clear about their expectations and provides a record that can prevent disputes later on.
  10. Underestimating closing costs
    From land transfer taxes to title insurance to a home inspection, the costs of a real estate transaction can add up quickly. Take the time to include estimates and other expenses in the full cost of buying or selling a property.
While all of these tips are essential, the most important advice is to work with a registered real estate professional. Registered brokers and salespersons provide a great deal of knowledge and expertise about the buying and selling process, along with specific knowledge about neighbourhoods and local issues. They can also provide crucial help in avoiding these hazards.

Why use an agent rather than doing it yourself ?

  • It will cost you nothing because the seller pays the commission.
  • It will save you time to deal with one agent who can coordinate viewing appointments on your behalf with all of the other agents involved.
  • You will get valuable advice on the real value of the property you want to buy instead of relying only on asking prices and misleading feelings and impressions. Your agent can tell you what similar properties in the area actually sold for in the past, not just what sellers are currently asking.
  • You will have an experienced professional negotiator on your side when it comes to making an offer. The listing agent acts for the seller, not for you, and has a strong interest in having you pay as much as possible.
  • Your agent will handle all the paperwork, check it thoroughly, and be responsibe for errors and omissions. Your agent knows the procedures and will make sure they are properly followed to serve your interests.
  • Real estate is possibly your biggest investment other than your health or reputation. Is it smart to be your own doctor or lawyer ?
  • Your agent has access to mortgage specialists who may be able to save you money and can often make an otherwise impossible situation come together financially.
  • Thinking of buying a condominium unit? It can be complicated. You should bave an agent to help, especially if you do not have good personal knowledge about the building.

In short, there are many advantages to engaging a realtor to act on your behalf, and no real disadvantages. Doing it yourself is time consuming and not without risk. Imagined savings are often lost, and more, through a weakened negotiating position. An investment of the kind you are contemplating deserves the best you can give it. Get professional assistance, and consider our advice on choosing a realtor or contact Dot.

Be sure to read our page on agency before you engage an agent, so you will appreciate the role of a Buyers' Agency Agreement. See the list of common mistakes made by both buyers and sellers of real estate, and take a look at Dot's services page to see how Dot can help you with your real estate needs.

CREA (the Canadian Real Estate Association) has advice and help for you. We thought the mortgage calculator hosted by the FCAC (Financial Consumer Agency of Canada) was quite hard to find on their site. Webmasters generally do not like deep linking, but if you are struggling to find it, we located it for you, here . If you can't find it using that link because they have moved it, let us know so we can fix the link. This is a good set of tools and sound advice that will help any potential home buyer be better prepared. Please use them. We think they are so good that we have put a copy right here for your convenience:

What if I want to buy a FSBO (For Sale By Owner) property ?

All the more reason to have an agent.

With a FSBO property you have no assurance that the asking price has any sound basis in fact. Your agent is equipped to determine the real market value of the property and advise you from a detached and professional perspective.

Most sellers are willing to entertain any offer no matter where it comes from, and will gladly pay your agent a reasonable commission to get your offer. You may feel you would be able to get a lower price if no commission were involved, but this is not necessarily the case. Most FSBO owners are normal and reasonable people, but there is a greater than average probability that you will be dealing with a strong minded and agressive person. A good realtor will earn her commission by negotiating strongly on your behalf and getting you a better deal than you could on your own.

If your seller is not a professional there should be someone involved in the transaction who can handle the paperwork and procedures properly. This often makes a FSBO sale considerably more work than normal for a buyer's agent. You really do not want to take that burden on yourself, or rely on someone without your interests at heart to carry it for you, or incur extra legal fees to handle all the issues that could easily arise.

If you are still in any doubt, you should take a look at our advice for sellers and give some thought to how and why a FSBO property gets onto the market.


Site owner: Dot Turner, Sales Representative, Team Realty K W Inc, Brokerage 519-741-1400

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