Ten Mistakes Buyers make when purchasing a home

There are a lot of different reasons why a home purchase doesn't go through.  Whatever that reason is it inevitably leads to a great deal of heartbreak and angst on the part of the Buyers (and to be honest on the Realtor as well).  So what can be done to help mitigate the emotional devastation that an offer that crashes and burns can bring?

Here are 10 major mistakes that Buyers make and some ways to avoid them:

1. Making an offer without getting pre qualified.  Taking the time to talk to your bank about how much you can afford to borrow will give you an idea of what your price range is going to be.  Don't be afraid of the questions they are going to ask about your income, debts, etc.  It is better to be up front about these things and get over any hurdles BEFORE you fall in love with the house of your dreams.  I don't want you to be crushed when you have already started emotionally moving in to a home, go through the negotiations on it, THEN find out you can't afford it.
2. Not getting a your team together.  Even though your Realtor (ME!) will be the quarterback for you, you need to make sure that you have thought of the other specialists that are a part of the transaction.  Trying to save a bit of money today can cost you a whole lot later.  A qualified home inspector will be able to detect issues that you may not, especially as he is not emotionally invested in the house!  Imagine moving in to a home and then finding out in the first heavy rain storm that the basement becomes a pool!  You should also have a lawyer in mind that when the time comes (we have an unconditional offer) will take all the other docs and get them organized so that title can transfer into your name.
3. Limiting your search to open houses, ads and the internet.  Much of what you see on the public side of MLS or in print advertising could already be sold.  Agents have access to the member side of MLS which give us a real-time look at the properties that meet your wish list.  This allows us to be on top of new listings as they come out and get you into them a lot faster.
4. Choosing an agent who is not committed to forming a strong relationship with you.  This is such a crucial mistake that I can't stress it enough.  Your agent needs to be dedicated to your needs - before, during and after the sale.  A good agent wants to be your agent for ever ... I want to not only help you find this house for you, your next house, your kid's house, and your friend's homes as well.  I tend to like my clients and invest in them for life!
5. Thinking there is only one perfect house for them.  I know you have your dream house in your head, but let's be honest, house hunting is in most cases a series of compromises.  Not every house built is on the market at the same time you are looking, and you need to keep an open mind when looking.  I am going to try and find everything you want in the homes that are available but it is important to have a set of priorities for your wish list.
6. Not considering the long term.  It is important to not only think about your life and lifestyle today, but also 3, 5, 10 years down the road.  Where are you going, where is the community that you are looking in going?  
7. Not sitting down and having a meeting before starting you home search.  To often Buyers look at  homes on the internet then rush out to look at a bunch and make a buying decision.  Sitting down with me beforehand to talk about 5 & 6 can really help streamline the process and make the balance of the buy go a bit easier.
8. Not knowing your total costs involved.  This should be part of the meeting we talked about in #7.  There is more to a home purchase than the down payment.  Legal fees, closing costs, moving bills, utilities, insurance, HOA or Condo fees (or both) all are things you need to consider and account for in your bank account.
9. Not following through on due diligence.  Make a list of non-home related things that are important to you: schools, transit, crime rates, etc.; then BEFORE we make an offer make sure that we have answered these questions to your satisfaction.
10. Not taking into account adequate insurance.  Make sure that your insurance policy is appropriate for the home.  With Condos especially you need to make sure that you are carrying proper policies that protect your property and you the best way you can.

Dealing with these 10 issues will put you on a much better and less stressful path to happy home ownership.  Give me a call at 780-919-7653 or email me and we can make arrangements to sit down, have a chat and plan out your home purchase journey!

Oh ... one last thing ... if you come across someone who is thinking abut buying or selling a home I'd love to help them too!  Just give me a call with their name and contact info and I will be happy to follow up with them!

Larry

New Listing

Just listed this great two storey in Summerside!

$399,700

A 1268 square foot 3 bedroom home with a double detached garage on the back lane.

It is pretty much finished in the basement with only an optional bathroom left to do.

Great floor plan this is definitely a home a family can grow in for many years!

Give me a call at 780-919-7653 to find out more or to schedule a viewing!

Larry

TD: Mortgage Essentials for the Rookie Home buyer

Great article I found from TD Canada Trust!

TORONTO, Sept. 10, 2013 /CNW/ - Buying a home is the biggest purchase most Canadians will ever make, and with the high cost of real estate today, understanding the full financial commitment is critical. TD Canada Trust breaks down three key home financing decisions for first-time homebuyers to consider: down payments (20% is the goal), mortgage options (it's not just about the lowest interest rate possible) and accelerated payments (pay down more than you need to).

"Home ownership is a major goal for many Canadians, and in today's market it is especially important that prospective buyers understand home financing options in order to manage their overall monthly costs, assess the flexibility they will need, and help plan for the future," said Farhaneh Haque, director of mortgage advice at TD Canada Trust.

The following tips can help first-time homebuyers structure their mortgage so that it works best for them before signing on the dotted line:

1. Down Payment: how much and how to finance?

There are many benefits to a larger down payment. For example, homebuyers with a down payment of greater than 20% do not have to obtain mortgage default insurance, the premium for which is calculated as a percentage of the mortgage and is paid up front or by adding it to the principal portion of the mortgage. So, the larger the mortgage balance, the higher the monthly mortgage payments. Eliminating or decreasing this premium can result in significant savings.

Haque suggested that first time buyers can take advantage of the government's Home Buyers' Plan and use savings in their RSP to bolster the down payment.

"Homebuyers can also consider withdrawing up to $25,000 from an RRSP to put towards the down payment on a first home," said Haque. "While this can be a huge help upfront, among other conditions it must be repaid within 15 years, so make sure to factor in the repayment schedule into the monthly budget."

2. Mortgage Options: fixed or variable interest rate, open or closed term, flexible payment features?

A low interest rate isn't the only factor to consider when choosing a mortgage. A mortgage specialist can help you navigate options like flexible payment features, and discuss monthly payment amounts in the context of your overall cash flow and future home-buying plans.

"Buyers choose a home because it fits their lifestyle needs," said Haque. "A mortgage should pass the same test, and that means weighing the current term options against an overall long-term plan to pay that mortgage down. Once you find the best option for you, look for opportunities to realistically accelerate repayments."

Fixed vs. variable interest rate
With a fixed interest rate mortgage, the interest rate and monthly payments do not change throughout the term of the mortgage and it's clear upfront how much will be paid off at the end of the term. With a variable interest rate mortgage, the interest rate may fluctuate during the term. If interest rates go down, more of the monthly payment is applied to the principal, helping to pay off a mortgage faster. If interest rates rise, more of the monthly payment is applied toward interest. In addition, with a variable interest rate mortgage, you may be required to revise your payment arrangements at certain times.

"This choice usually comes down to whether homeowners are comfortable with the possibility of paying more money toward interest and less to principal some months as a trade-off for potential interest savings other months, or if they prefer the stability of a fixed interest rate mortgage," said Haque.

Open vs. closed mortgage 
With a closed mortgage, a homeowner agrees to a term anywhere from six months to 10 years. There are conditions that limit when a closed mortgage can be renegotiated or refinanced and there may be a prepayment charge for renegotiating early or paying off the mortgage prior to the end of the term. Often negotiated for a shorter term, an open mortgage can be paid off at any time without prepayment charges. While it offers greater flexibility in terms of repayment, the interest rate for an open mortgage may be higher than for a closed mortgage.

Flexible payment features  
Some mortgages offer features that give homeowners added flexibility to react to changes in their financial situation. For instance, flexible mortgage options may allow homeowners to make prepayments on their mortgage when they can and then reduce their monthly mortgage payment or take a payment vacation for a short period of time when they need to.

"Until it's paid off, a mortgage will become a part of a homeowner's life. Homebuyers need to ensure the terms of their mortgage match their plans, now and for the future," said Haque.

3. Accelerated payments: how can a mortgage get paid down faster?

Homebuyers can pay off their mortgage faster and save money on interest by choosing a shorter amortization period or setting up an accelerated weekly or biweekly payment schedule instead of a monthly payment schedule. Prepayments are another way for homebuyers to pay their mortgage faster without locking into a payment schedule that could make it a challenge to manage their monthly cash flow. Many lenders allow mortgage holders to make prepayments up to a percentage of the original mortgage amount each year.

"It's wise for homeowners to strive to be mortgage-free quickly; however it's important they don't stretch themselves too thin with the amount of their payments," said Haque. "Beyond their mortgage, there are ongoing expenses that come with homeownership such as property taxes, utility bills and maintenance. It's important that home buyers budget for these expenses when deciding on the mortgage payment schedule they can afford. They need to be realistic and not put themselves in a position where they're struggling to keep up with payments."

Canadians can ask questions related to broad range of financial advice, including buying a new home, at the TD Helps community: www.tdcanadatrust.com/homeownership.

About TD Canada Trust  
TD Canada Trust offers personal and business banking to more than 11.5 million customers. We provide a wide range of products and services from chequing and savings accounts, to credit cards, mortgages and business banking, to credit protection and travel medical insurance, as well as advice on managing everyday finances. TD Canada Trust makes banking comfortable with award-winning service and convenience through 24/7 mobile, internet, telephone and ATM banking, as well as in over 1,100 branches, with convenient hours to serve customers better. For more information, please visit: www.tdcanadatrust.com. TD Canada Trust is the Canadian retail bank of TD Bank Group, the sixth largest bank in North America.

SOURCE TD Canada Trust

You & Your Agent - A love story

You sit at your table nervously sipping your double double waiting for 6 O'clock to come.  Nervously you glance at the door every time the door opens; no, not him.  Two more minutes tick by you begin to give up hope, perhaps this was another wasted meeting, your friend's well intentioned meddling seems to once again left you with nothing but a re-fueled caffeine buzz.  Then, he walks in, your eyes meet across the room as he pokes through the door.  He smiles tiredly as he strides towards you - you glance at the ragged business card on the table - man, it must be ten years old, surely this isn't the same person you friends entrusted with their real estate needs!

"Sorry, I'm late," he says plopping down on the seat opposite, "I was closing another sale and got busy doing up the paperwork. Give me a second to grab a coffee and we can get to work - Jane right?"

He heaves himself up out of the seat again before you can mumble "No, it's Susan"  you wonder how you can make it out the door while his back is turned ....

You would think I made that up, but truthfully I actually witnessed something very similar one day at a Tim's waiting for a client.  We as Realtors are often at odds trying to get from one appointment to another, balancing the needs of one client against the need to give service to the next.  Sometimes it means we run ourselves ragged trying to get from one appointment to the next and we forget the adage "You only get one chance to make a good impression".  So in this case we have an agent who most likely has been referred to this lady by a past client who was given service that she felt was exceptional and wanted her friend to have the same expertise; who then blows it by not taking the time to mentally shift out of his last appointment and refocus his attention to this lady.  She will most likely be polite and have a chat, but honestly I could tell by watching the first bit of the conversation before my clients came that she had already tuned out and was running a script in her head on what she was going to say to her friend who had referred this guy to her.  This is going to probably cost him more business as he has lost this client and the referrals in the future from the past client.

--
So should you avoid getting advice from your friends and family when choosing a Realtor?  Not a chance!  These are the first people you should turn to as they are most likely going to give you honest opinions about their experiences.  Now the guy above is probably a great Realtor - he could be just having a bad day and in the end things might have worked out; but in my experience having either been the frazzled agent, or have them relate these kind of experiences to me in my office, people don't want to work with someone they think is going to add to their stress.

REALTORS this is for you - SLOW DOWN AND CONCENTRATE!  Stress and bad time management are killers and cost you; your clients refer you to their friends and family because they like you and think you are good at what you do, don't disappoint them by treating their friends or family like strangers! 

Once you have a recommendation, conduct and interview - don't go jumping into your car and start looking at homes.  I know you have probably already been looking online (studies show most Buyers have already been looking online up to 9 months before they actually start stepping into houses), but take the time sit down and have a conversation with the agent about what you are looking for, where you are looking and your price range.  Much like a job interview, you want to be sure that the person across the table from you is a good fit for the task at hand. You should be making a judgement on his ability to work with you - does he know the product you want to buy?  He could be a condo expert who made you friends purchase a breeze because that was in his wheel house, but doesn't know very much about acreages.  It could be that he has 6 Buyers on the go right now and you don't feel he can devote the time you need to dealing with your purchase.  Don't be afraid to ask for references!  Ask if they have past clients who would be willing to talk to you (his Mom doesn't count).  Remember as well that this is a two way interview - they will most likely be asking you questions as well and deciding if they can or want to take you on as a client.  Personally, I ask the questions to myself "Does this person have realistic expectations, are they willing to listen and take counsel to change the unrealistic ones, do I like them"?

Be comfortable with your Realtor, here is a quick checklist to use:

• They should be KNOWLEDGEABLE about the market - not just in general, but with the area of it you need to be in.
• They should have the TIME to help you - sometimes the top producer who has closed 12 transactions that month isn't the person you need.  Ask them about the turn around time for calls or emails and who will be getting back to you.
• They should have a level of EXPERIENCE to serve you - I am not saying that you need the person with 30 years in the business, but you need to make sure that the person you are trusting to find you your home and your biggest single investment knows what forms they are using and how to fill them out.  Ask them about their education and how current it is.
• They should have an UNDERSTANDING of your needs - a good Agent listens to you and identifies your needs.  They take the time to understand and identify your goals.  They are honest with you and merge your dreams with reality. Finally, they maximize your time and work within your schedule as best they can.
• They should be someone you have good KARMA with.  I know this is a bit Zen-like ... If you were referred to them, then your friend or family member already senses there is a bot of this, but trust your instincts, if you don't feel some level of comfort, don't be afraid to say so - you need to make sure that this is going to be as stress free as possible and a good Realtor helps do that.

I know that sounds like your Realtor should be some sort of superhuman house hunter crime fighter,  in actuality, he should be someone who is focused on minimizing the trouble spots in a transaction, anticipating the areas of concern and offering constructive help and advice on how to resolve them and guide you on to the next stage of the process.  He isn't an accountant, an inspector or a lawyer, but he should be able to pint you in the right direction to find the other experts you need to move forward.

Thanks for the read and remember, you can reach me at 780-919-7653 or email me!

Larry