10 Tips to minimize the cost of your new home

Buying a home is typically the biggest investment people make in their lifetime and with that comes a certain amount of stress. The decision can be stressful itself, with many emotions involved and not all of them around the issue of money! Armed with a good realtor and some useful insights, the home buying process can be made less stressful and even more enjoyable. Here are some tips to help you make the process as effective as possible.

1. Prepare properly before you start

Buying a home is an daunting task for even the hardiest individuals. That's why most people hire a real estate agent. A good agent has knowledge and experience that come from years of working with buyers and sellers. On top of that, the best realtors have a network of other professionals that can help you like home stagers, movers and home cleaners.

Since most sellers have an agent working for them, it doesn't make sense to be without one on the buying side, as you'll be at a distinct disadvantage.

Make sure you know who your agent is representing. While it's not against the rules for an agent to represent both a buyer and seller, it puts them in a natural conflict that's better to avoid. The best agents will not represent both sides for that reason. Agents have the responsibility to be open and honest with their clients so make sure you ask whether your agent is representing you, the seller or both.

Make sure you get your mortgage pre-approved because then you know exactly how much you can afford in advance. This also ensures the seller that you're a serious prospect, which puts them at ease, especially if you're bidding against other buyers. Make sure your mortgage provider gives you a firm, written agreement so that you won't have an unexpected surprise when you finally get ready to finalize the deal. Mortgage brokers are great at helping you find the best rate, so make sure you ask Jill about a mortgage broker.

A professional home inspection is one of the best investments you can make before you make an offer on the home you're considering. Professional inspectors know what problems to look for and can identify things that are easily overlooked by someone without that experience or specialized training. Not only will this investment save you heartaches down the road, but having a written report can be a powerful negotiating tool to bring down the asking price.

Typical inspections cover foundation, electrical, heating, plumbing, floors, wall, ceiling, attic, roof, siding, trim, porches, patios, decks, garage and drainage. When you hire an inspector, make sure you accompany him or her on the tour so you can learn a lot about the home you're thinking of buying. Once you have the evaluation, the decision to proceed is yours. The inspector will only give you a professional opinion on the home's condition, not advice as to whether you should buy or not.

When you're in the shopping phase, you're likely to fall in love with more than one home. So make sure you have a written list of the key the features you "need" along with the ones you "desire" before you begin looking at anything.

Do you choose the four bedroom home, the one with the big garage or the one with the big patio for entertaining? Is a big kitchen more important to you than a den or do you prefer a big family room with a fireplace? You need to have a clear idea of your priorities before you get started. Armed with those lists, your realtor will be much more effective in finding what you're looking for.


2. Location. Location. Location

Nothing generally affects the resale value of a home more than location. The most beautiful home in the wrong location will be difficult to sell when you want to move on at some point down the road.

Look at the surrounding neighborhood. Every neighborhood has its own unique character, so take time to ensure you'll feel comfortable in the one you're thinking of choosing. Explore it carefully. Do the neighbors take care of their yards and homes? What are the fences like? What is parking like? Are there lots of young children around, or is it an older community? What are the traffic patterns like? Are there sounds that may be an issue, like regular trains or is the neighborhood in the flight path of a major airport? What are the smells like? Talk to people around the neighborhood and ask them what they like best about the area, and what bothers them the most.

Next, take a look at the homes on the market in the area. Extremely large homes surrounded by smaller ones tend to appreciate less than a large home among other large homes. Conversely, the smallest home in the neighborhood tends to be "pulled up" by the other homes on the block. But remember... it might take longer to sell a smaller home when it comes time to do so because many people are unwilling to pay extra for the neighborhood.


3. Shop with your head more than your heart

Never let a seller know that you are exceptionally interested because that will reduce your power to bargain. Your seller may even see the chance to squeeze a little more money out of you even after you've made a good offer to begin with. Keep a low, conservative profile when viewing homes, no matter how much you might want it.

Don't forget the purpose of your "Needs" and "Desires" list. Shopping for a home is an emotional experience, but your heart will cost you money. Using your head on the other hand, will save it instead.


4. Don't ignore the red flags

Let's face it: no home is perfect. When you're evaluating a home, make sure you know what problems you consider acceptable and which ones take the home off your list. Some problems such as peeling paint, worn carpeting and ugly wallpaper are cosmetic and can actually be used during negotiations to lower the asking price. You can use those savings to renovate. On the other hand, water damage, rot, bad plumbing, cracks in the foundation or ancient electrical systems are a different story.

Never let yourself be blinded by a home's favorable attributes when it has serious problems. That's a sure formula for spending way more money down the road than you planned.


5. Keep an eye on the future

Often you'll find yourself in a situation where you might need to stretch your budget slightly to get advantages that will help you down the road. For example, for a little more money you might find a home with space for a home-based business, so if that's something you plan to do, it may be well worth the extra investment. Likewise if it will allow you to build an addition, or if you're planning a family and the home is well structured for additional living space down the road, it may be worth it. These kind of renovations will probably cost you less than having to relocate because your home falls short of your needs at that time.

When it comes to finances, don't forget to factor mortgage insurance, appraisal fees, inspection fees, title insurance, transfer taxes and other costs to know what you're really paying for that new home.

The law now requires sellers to make complete disclosure of known material defects. Make sure you get it in writing and take time to consider how these defects may affect your budget.


6. Always get a written comparative analysis

Make sure to ask your real estate agent to give you a written comparative market analysis. This will show you the sale prices of comparable properties in the neighborhood as well as those of the surrounding area that are on the market.

This comparative analysis will help you know how the asking price compares to other homes in the neighborhood and surrounding areas. Also, you can use the comparative market analysis to show the seller why you believe your offer is a reasonable one.


7. Learn as much as you can about the seller’s situation

The more you know about the seller the better. The seller probably has a deadline or a reason why they are selling. Where they transferred to another city? Did they lose their job or retire and have to downsize? Are they growing their family and need a bigger place? Find out as much information as you can so you can negotiate the best deal possible.


8. Don't be afraid of the negotiation process

Some people love to haggle over price while others are uncomfortable with the process and prefer to be given a hard-and-fast price. If you don't like to haggle, you should reconsider. Your home is a huge investment and you can shave many thousands of dollars off the price by negotiating. Those thousands are exponential when you add in the amortization of your mortgage! Negotiation is the key to getting a the best possible home for the least amount of money, so you should be prepared to play the game. A good realto will help you with this process, so you'll find it less challenging than you think with someone like Jill by your side.


9. Don’t be pressured, but move fast when ready

During negotiations, don't let the seller pressure you into a quick close. This may be a sign that there's something wrong that you should know about, but don't. Therefore, take proper precautions as this could be worth money.

Once you've made up you mind to buy a home, be prepared to make decisions quickly because good properties move fast. If you find the right home today but aren't ready to buy until tomorrow, there's a good chance you may already be too late.


10. Avoid bidding wars

A common tactic by some reators working for the seller is to scare a hesitant buyer with the threat that another serious buyer is ready to make an offer. Don't let yourself fall for this trap! Being able to walk away is a very powerful negotiating strategy. If the seller uses that tactic, let the other side know that you might be interested if that happens before you walk away. Chances are, if there isn't another buyer, "the other deal" will fall through and the seller's agent will come calling. But if there really is another buyer, whoever wins the war also ends up overpaying so a bidding war will only make you pay too much.


Ready to make a move? Get the finest personalized care, dedication and results. Contact Jill at jillpenn@intergate.ca or by calling (604) 290-5647.