The purchase of a house is one of life’s biggest investments. For many buyers, this process can turn out more expensive than it should because many of them will dive in, head first, and fall into traps such as:
- Paying too much for the property they want;
- Losing their dream property to the hands of another buyer;
- And, worse, buying a house that does not correspond to their needs.
A systematic buying approach will help you avoid these frequent traps, save you money and purchase the house that really suits you.
Here are the 9 most common and costly traps, how to recognize and solve them.
Is the asking price fair, too high or under market value? What kind or negotiation margin should you expect? If you haven’t done any research on the market to assess the value of similar comparable properties, you will make an offer blindly.
Without this market knowledge, you could easily offer too much or miss an opportunity to make a competitive offer on well-priced a house.
More than one buyer, dazzled and excited by a property, rushed to buy it… only to realize a few weeks or months later that he or she is the owner of a home too big, too small, too far from work or which requires more maintenance that one has time or means to address.
It is essential to clearly define your needs and wants in order of priority. Remember these criteria during viewings and when comes time to make a decision.
Is the property which meets all your criteria being offered for sale by the rightful owners? Do the debts on the property exceed its value or the price you are willing to pay for it? Are the property titles (this property’s history of sales) clear?
The last thing you want to discover is that the property is not free of liens or priorities, that there are other owners not involved or perhaps that leases were already granted.
Make sure to have professionals at your side who will be able to fulfill those verifications.
Is your certificate of location, also known as survey and prepared by a land surveyor, up to date or was the property modified by the extension of a deck, the installation of a pool or a heat-pump? Are there non-conformities which you will be required to rectify once you buy? Are there privileges or servitudes (easements) which could limit the use you intend to make of the property or which could engage obligations towards a third party?
If this document is not the exact reproduction of the actual reality or that it includes anomalies, it will not be accepted by the lender or the Notary. Will you know how to recognize these hick-ups?
Make sure your Promise to Purchase is conditional upon a building inspection. Consider hiring an independent inspector who will objectively examine the property and produce a full inspection report. It should detail all the property’s elements and repairs to be anticipated. Sometimes, you may also need to consult experts in different fields.
Bear in mind that there doesn’t exist a property which will not require maintenance ($) or regular renovations ($$). That is part and parcel of being an owner.
A ‘guaranteed’ pre-qualified mortgage is fast and easy to get. And it’s free. When you’re pre-approved for a mortgage, you take the stress away while you shop and you feel more secure knowing that you will be ready to move when you unearth the desired property and that your Promise to Purchase will be considered more seriously than without your pre-qualification.
Knowing what you can afford and how much a lender will offer helps you better target your search and potentially avoid falling in love with a property which is out of your reach… and impossible to forget!
If a seller does not comply strictly to the contract by neglecting to do repairs he/she promised to do, or by changing the nature of the contract in any way, this can lead to the postponement of the closing as well as all the inconveniences and costs caused thereby.
Agree upfront on a compensation if, for example, the repairs are not completed as expected. Prepare a list of items both parties agreed on and follow up closely on each of the items.
Make sure you identified and found all the costs resulting from a sale – small or big – as early in the process as you can. When a transaction is concluded, sometimes unexpected fees suddenly “appear” after the total amount has been established: discharges, contributions, etc.
At this step in the process, it is crucial you take your time and review the documentation a few days before the closing. Make sure the documents reflect your understanding of the transaction perfectly, that nothing was added or removed. Is the interest rate exact? Has everything been covered? If you rush through it on closing day, you might find yourself tied up at the last minute with no solution at hand, and end up compromising the terms of the agreement, the financing or the transaction itself.