When I came to this great country 33 years ago one of my dreams was to own my own house. I thought it would take forever, yet I managed to buy my first 3 bedroom town home in Thornhill within the first few years.
Was that my dream home? No not really.
I realized a long time ago that dreams come in different sizes and different budgets.
I live in a very different home today, in Central North York and the lesson I learned, which by the way, I teach all the time, is that it takes you a few homes or condos to get to your ultimate dream home. The key is, you have to start somewhere and you have to have a plan.
This is where I help. If you are paying $1,800 or more per month for rent, you are paying your Landlord's mortgage payment, instead of your own. You could be able to buy your own first condo or even a house.
Yes, you need a down payment. Yes, there are land Transfer costs which in Toronto are crazy high. Yes, you need to have a steady income, but most of all you need a dream.... and a plan.
December 2011 capped off the second-best year on record for the Toronto RealEstate Board (TREB) Total sales for 2011 amounted to 89,347 – up four per cent in comparison to 2010. Extremely low inventory together with record low interest rates have helped sustain the current demand for real estate.
Throughout this feverish buying activity, one common element has been historic levels of low inventory. Simply put not enough homes for the move up buyer to comfortably choose from. The other side of the coin is a reminder that if your home is worth more than $400,000 in the Toronto market, only six out of 100 of the prospective buyers can afford to purchase it. And do not forget that price, location and condition are still the most influencing factors in any Real Estate transaction. Well if it is time to make your Real Estate move, do you sell first and worry about whether or not you will find a new home before you have to give up yours. Or do you buy first and worry that you may end up having to carry two homes for a while, with the potential stress of two mortgages and other related financial burdens.
This has always been one of the more challenging Real Estate dilemmas, compounded lately by the current levels of activity. To have sold your home and then find yourself bidding against other anxious purchasers competing in a multiple offer situation, for the home your family have told you not to even think about losing. Or to have spent far more than you ever intended or budgeted for on your new dream home first, not including the zillions of dollars for renovations and decorating, and no one has even come to see your old home yet, let alone make you an offer.
There are no easy answers but if you break down the decision process into two parts, the management of the decision becomes a little easier. Which of the two evils will be easier for you to live with, or put another way which option will provide your psyche with a greater level of comfort?
If you sell your home first and cannot find another, you could put everything into storage and perhaps take that long vacation you have always promised yourself. You could move in with the in-laws (perish the thought) or more realistically you could find a place to rent short or long term until you find or wait for possession of your new home. No question, a second move will not be convenient nor will it be cost efficient. However, the cost of a second move and or rental could be substantially lower than carrying two homes for an extended period of time.
If you buy first and budget is a concern, you will need to be cognizant of what I call the “differential”. That is the dollar difference between what you expect to receive from the sale of your home and the actual amount you ultimately do receive. For example, you hope to sell your home for $500,000 but the market only delivers $450,000. The “differential” is $50,000 plus the additional amount required to finance the new home. Your new home cost you $600,000 which at your original expectation would have been an upgrade of only $100,000, but is now actually $150,000.
At the time of setting the price at which you will offer your home for sale, you would need to establish your best and worst case scenarios. Remember to factor in all the costs associated with selling the home as well as the amount needed for improvements at your new home. If you can live with the worst case scenario from an emotional and financial point of view, you may find that your level of comfort is with buying first. Furthermore, with appropriate marketing who is to say that you could not achieve more than you expect for the sale of your current home. Like most investments, there is a relative relationship between risk and reward.
If I were faced with a difficult medical situation my expectation of my physician would be that he or she provide me with the best advice, guidance, care and support to help me through that challenging time. So should you expect the same level of advice, guidance, care and support from your Realtor to help you determine which would be your best move.
There is no question. Every property should undergo a building inspection by a qualified Building Inspector and preferably prior to the real estate transaction becoming firm.
The start to this New Year has brought with it the same feverish buying activities that were experienced at the beginning of the previous eight years. In many cases multiple offers are the order of the day and in order to be successful building inspection conditions are often being removed.
Under such circumstances, consider having the property inspected prior to submitting your offer. This has become common practice, and should be accepted by most Vendors. The risk is that you may be out of pocket by several hundred dollars if your offer was not accepted. A small price to pay particularly when purchasing a very old home.
There are really three major reasons for doing a building inspection on any home you are considering purchasing.
The most obvious reason is to obtain a general report of the physical condition of the home and its major components. The second is to try and identify any major problem or condition that would require a substantial amount of money to remedy and therefor affect the value of the property. And finally, the building inspection, if suitably conducted, provides a refresher course for some and an important lesson for others, on how to properly maintain a home. The inspection takes anywhere from two and a half to five hours depending on the size of the house. A written summary is usually provided including cost estimates for repair and maintenance items. It is strongly recommended that the purchaser(s) attend for the duration of the inspection as it is a valuable learning experience.
There is no such thing as a perfect house. Even brand new homes will require some attention. Testimony to this is the thirty and ninety-day inspections that Builders normally afford new home buyers to correct faults and blemishes in workmanship. The typical inspection will reveal an estimated average of two to three percent of the value of the average home in deficiencies, mostly minor repairs and maintenance items.
Building inspections are not infallible. On reviewing the fine print in most contracts, you will likely accept amongst others, a clause denying liability on things that cannot be seen. e.g. If the basement is finished and the inspector cannot examine the interior wall surface of the foundation, he likely will not guarantee that there are not any leaks.
This is when the experience and intuitiveness of the Inspector becomes paramount. A misdiagnosis is less likely with a thoroughly trained and experienced inspector.
There are unfortunately no Governing Authorities for building inspectors. There are self managed associations but they are unregulated. Virtually anyone could take a couple of courses hang out a shingle and call himself a Building Inspector. Ask your realtor for at least three inspectors, interview them and then make your decision.
Part of a good building inspection report includes estimates and tips on maintenance. I keep hearing that preventative medicine is gaining momentum. Well so should preventative maintenance be practiced on one of your largest single investments. Recently one of the major building inspection companies published a report suggesting that considering the life cycle of every major component of a house, a reasonable annual estimate of the cost of normal maintenance is 1% of the value of the house. One year you might need to re-do the shingles on the roof; a few years later you may need a new Furnace and or Air-conditioning unit. Throw in that unexpected repair and you average 1% per year regardless of whether the house is valued at $300,000 or $800,000. If those Southern facing wooden window frames are starting to crack, have them professionally painted in the spring or summer. If you don’t and let the cracks deteriorate until the wood rots, you could end up having to replace the windows.
Your home is a large investment. The building inspection is the report card and insurance policy against the investment becoming the proverbial “Money Pit”