Know your neighbours before you buy

Sometimes one of the selling points a seller gives me about their home is "the neighbours are great." It's something that many of us take for granted and don't pay attention to when we buy a home. It most definitely can blight the enjoyment of your home when you realize that you are in the wrong neighbourhood or living next door to a disruptive or nosey neighbour. There is not much you can do about it once you buy the home, so you are best to do your investigative work before hand.

Your realtor can give you an overview of the neighbourhood, telling you about nearby amenities and a general feel for the demographic of the area. For example, you may be looking for more mature residents to be the majority, or alternatively, more young families. You may want a condo complex with only a few tenants, or you may be looking for the exact opposite with a neighbourhood known for auxiliary apartments and renters. The realtor will also make you aware of upcoming zoning changes or new construction of highways or housing that may affect the enjoyment of your home and the resale value.

Some neighbourhoods and complexes have their own websites now, where you can learn about events and get some information about the atmosphere. Be sure to check the local police station website or in person to find out about traffic problems, and crime statistics and compare to other neighbourhoods. Make sure to ask for an analysis of the statistics, as some of the most exclusive neighbourhoods in major cities suffer from high crime rates, from auto theft, not violent crimes, so a quick explanation may calm your fears, especially if you drive an old clunker that no one would want to steal!

Of course, there is nothing better than first hand information so I always ask my clients to do a drive by of any property they are interested in, and at various times of day. They can get a feel for traffic issues, and the neighbourhood character and they may even stop and ask a few questions of people as they rake their lawns or walk their dogs. People love to talk about their homes, so don't be surprised if you have to turn off the car and settle in for a long chat as you may learn a lot from the people in the neighbourhood.

Scott McGillivray’s Tips on Winning a Bidding War

With over a decade of investing in real estate under my belt, I’ve learned a few things about the buying and bidding process. Whether you are a first time buyer, looking for a bigger home, or downsizing, investing in real estate is a smart decision – but only if you do it wisely. Bidding wars, unfortunately, may be here to stay, so here’s some advice that may help you to secure your next property.

1. Crunch the Numbers
   One of the most important elements in the process of buying a home, particularly if you enter a bidding war, is getting pre-approved by your bank or mortgage company so you know exactly what you can carry - and how high you can go in your offer.
2. Do your Homework
   Buying a property is the most expensive financial decision most people will ever make in their lifetime so spending time to research the neighbourhood is so critical. There is so much emphasis on house inspections, and there should be, but the same amount of care should also be spent checking out local schools, transportation links, parks, crime rates, medical offices, family activities, seniors programs, daycares and even future housing developments.
3. Nail the Timing
   I try to get into properties on a Wednesday so I can put in an offer on Thursday and avoid the weekend open house competition - or before they are on MLS. By beating out the weekend competition, I might not have to enter into a bidding war. There’s no law that states that you can’t make an offer before the official offer date and a good agent should send you properties as soon as they are available and preferably before they go public.
4. Pick the Right Agent
   Having an agent who has your best interest in mind is key to winning a bidding war. Your job as a buyer is not to seal the deal, it’s your agent’s job and they need to know what your limit it is – and respect it. If your agent tries to up sell you on the price and encourage you to go beyond your budget, it’s time to find a new agent.
5. Keep your offer clean
   Surprisingly, not everyone is after top dollar when it comes to selling their home. I’ve put in a lot successful offers that may not have been the highest, but they were the cleanest. A clean offer with pre-approved financing, especially in a multiple offer scenario, shows the seller that you are serious. Conditional sales and offers that are contingent on financing just don’t fly when there are other offers on the table.

What is Knob & Tube Wiring?

Knob and tube wiring is usually found in homes built about 50 years ago that have not had the wiring updated. Knob and tube wiring gets its name from the insulator knobs used to keep the wires isolated from objects and the ceramic tubes used to line holes through wooden floor joists. You may find it with older 60 amp services.

Although the actual wire used may be no different from that used today for the most part, it consists of only a hot (black) and neutral (white) wire with no ground wire. Both wires must run separately to fixtures as opposed to those used now which are contained within one plastic sheathing.

Knob and tube wiring can be safe and functional. Hire a qualified electrician to inspect the wiring to determine its safety. With proper documentation from a certified electrician many insurance companies will readily insure your home. While I have safely owned many homes with knob and tube, there are some issues to be concerned about, such as, the fact that there is no ground wire, which may be an issue for today’s lifestyle, high electricity usage and technology. Also, there are potential fire hazards with the break down of the insulation around the knob and tube wiring that comes with age, and should the black and white wires make contact.

In recent years some home insurance companies have begun to refuse to insure homes with knob and tube wiring, however, there are companies that continue to offer regular priced policies for homes with knob and tube, and others who ask a premium for this insurance. If you have any qualms about the safety of your knob and tube wiring, you can hire an electrician to update your home wiring. Be sure to get a quote, and expect to pay more to update a two- or three-story home, than you would for a bungalow. Keep the receipt to show prospective buyers when it comes time to sell.

If you intend to purchase a home in an area where knob and tube wiring was used then ask your realtor for advice on securing insurance and peace of mind. Your realtor may recommend the use of a condition in your offer to purchase that allows you the buyer to satisfy yourself that the house is insurable. That way you won’t be stuck struggling to find insurance right before closing.          

Do I Really Need a Home Inspection?

A professional home inspector reviews the operating systems and structure of a home of any age—even new homes—and leaves a written report for the client to keep as a reference guide. Typically, the home inspector will comment on the condition of the foundation, heating and cooling systems, electrical service, roof, plumbing, and other significant structural factors and will outline costs of repair or replacement where needed, as well as comment on the condition of the property compared to others of the same age. The few hours that you spend with your inspector are the best time to learn the ins and outs of taking care of your property, and you should keep the reference book for as long as you live there.

With rising home prices and a subsequent rise in the use of home inspectors, in recent years, the field has actually become more specialized to suit specific needs of certain markets or properties. For example, some offers to purchase may require the services of a swimming pool inspector, termite inspector, electrician to inspect wiring, or a water-quality inspection for a property with a well.

Inspection costs will vary based on the size of the home, but you can expect to pay in the area of three to five hundred dollars for a typical home inspection of a single family residence. In many cases, it's the buyer who pays the cost of the home inspection, and most agree that it's a small price to pay for peace of mind. However, some home sellers are using pre-listing home inspection reports as a marketing tool. A home inspection report can also give you additional negotiating power if it unearths some significant problems that must be remedied, but may not have been visible.

Your real estate professional can advise you on how to incorporate a home inspection as a condition of buying a property. Your offer can be conditional upon a professional home inspection being conducted and a satisfactory report being received by you the home buyer. If the inspection report indicates some big expenses, or problems you don't want to deal with, your offer can either be terminated or possibly re-negotiated to help cover the cost of any major remedies. Your realtor will advise you of any risks associated with renegotiating the deal and will protect you during the process so that the seller cannot accept an offer from another buyer

The Other Costs Associated with Buying a Home

Purchasing a home can be a very exciting and stressful time. Buyers, particularly first time buyers, need to be aware that there are a host of costs associated with buying a home above and beyond than the actual purchase price. It helps to know what those costs are in advance rather than get an unexpected surprise when closing that can add to an already stressful experience.

Agent’s Commission Your real estate agent receives a commission when you sell -- usually a percentage of the sale price -- as does the buyer’s agent. A typical total commission expense may be between 2.6 and 6% of the selling price, but rates are negotiable. Generally, this covers the commission for both the buyers' and sellers’ realtor, and the cost for both is paid by the seller.

Closing Costs These costs generally refer to legal fees, property tax and utility adjustment costs and, in some provinces, land transfer taxes.

Legal Fees The monies used to pay your lawyer for the legal transactions associated with the purchase of your home. Such transactions include: reviewing the terms of the offer, conducting a title search on the property, preparing and signing a mortgage, registering a new title, conveyance, obtaining relevant documentation and determining appropriate adjustment costs.

There are many types of lawyers and it is prudent and in your best interest to hire a real estate lawyer or notary who specializes in home conveyance to handle your home/property purchase transaction. You should budget at least $800 to $1200, or more if you need documents to be drafted by your lawyer.

Property Taxes and Utility Adjustment In the sale of contract there will be an adjustment date (the day the buyer assumes all responsibility for paying property taxes, etc.) Usually, the adjustment date is the same day as the possession date. Likewise, any prepaid utilities, condo fees or assessments need to be reviewed. Your lawyer will work out exactly how much is owed and adjust as part of the conveyance or statement of adjustment.

Your Statement of Adjustment This document will show the net result for the purchase of the home, taking into account the purchase price, deposit, real estate commissions, legal fees, property purchase tax, property taxes and all other adjustments.

Land Transfer Tax In some provinces this tax is levied when a property changes ownership. It varies with the purchase price of the property. In B.C. it's called the Property Transfer Tax and there is an exemption available (on properties under a certain price point, plus other restrictions) to first time home buyers via The First Time Home Buyers Program.

Other Costs Costs other than closing costs can include but are not limited to the following:

Property Survey Some banks require a survey in order to approve a mortgage on a house. This is undertaken to verify the location of a property's boundaries, measurements and structures and identify any easements, rights of way or encroachments on your or adjacent properties. Title insurance is often an alternative to a property survey. The fee for having a survey done depends on the size and particulars of the property but can cost upwards of $1000.

Title Insurance In lieu of a survey, many lenders will accept title insurance, which basically insures the title of the property against any disagreement about property lines, or even against fraud. The cost of the insurance usually depends on the size and /or value of the property. Your mortgage broker or lender can provide you with the details.

Interest Adjustments This covers any interest accrued between the closing date of the purchase and the first regular payment date of the mortgage.

GST/HST-GST and sales taxes This will depend on the type of property being purchased and the province or territory you live in. Always ask if either or both of these taxes apply before signing an offer to purchase. Likewise, expect that real estate agents, lawyers, appraisers, building inspectors, surveyors, and anyone else you hire to help you sell your home will charge GST or HST on top of their service fees.

Home Inspection It is a good idea to have an inspection done before completing the purchase to evaluate the structural and mechanical condition of the property. This can save you lots of money in future repairs, determine the sale price and if you even want to purchase the home/property. On average home inspectors charge approximately $100/ hour. The amount of hours it takes to inspect a property depends upon size and age. A condo could take a few hours, whereas an older larger house could take upwards of six hours.

Appraisal Fees Often purchasers want to ensure they are paying a reasonable market price for the home they are purchasing. You may want to condition your offer subject to a satisfactory appraisal by a member of the Appraisal Institute of Canada. Appraisal fees are based on the type of home and can run between $300 and $500.

Mortgage Life Insurance Special insurance coverage to cover the cost of discharging your mortgage in the event of death or severe illness. It is available from most lenders and sometimes is a condition of your mortgage.

Home Owners Insurance As soon as you have an accepted offer on any property, make sure you can arrange homeowners insurance including personal liability and Named-Perils (fire, theft, water damage). Often, depending on the type of property you are purchasing, this is a condition that would have to be met in order for the deal to become firm. Some properties, including those that may have formerly housed marijuana grow operations, may not qualify for standard insurance without meeting certain conditions, or undergoing remediation. Find out BEFORE you remove subjects.

Service Charges Fees and installation charges to hook up utilities such as electricity, gas, telephone and cable services (which you would also be familiar if you previously rented).

Moving Costs Though it may sound obvious, purchasers sometimes do not consider moving expenses a cost of buying a home. Moving costs will depend and vary based on the distance of the move, the amount of furniture and goods to be transported and the time of year/month in which you are moving. Get several movers in to give you an estimate before choosing one. Friends rarely help friends move! Also take into consideration the time and effort it takes to pack up your present home. Do you plan on hiring people to pack on your behalf? If not, you need to factor your time into the equation.

Appliances Be careful in your deal that you check to see whether the appliances are included in the purchase agreement. If not, you will need to go out and buy them.

Landscaping, Fencing, Decks, Etc. If purchasing a newly constructed home, keep in mind that there will likely be a need to landscape and fence the yard in the first year or two. If purchasing an older property, maintenance is something to factor into your equation.

Annual Maintenance Homes, like other possessions, require care and maintenance to maintain their value. You need to plan for future painting, and replacement items like roof shingles, appliances and furnaces, depending on the age of the home you are buying.

Other incidentals include an alarm system, re-keying locks, acclimatizing your pets.

Nothing can be more stressful than buying a home and trying to move when you are strapped for cash. Selling your home is also an expensive endeavour. You also need to take into consideration that you are also spending a good deal of your time in the process. The phrase "Time is money” certainly applies! Remember, anything you pass off to someone else will cost you money; anything you don’t will cost you time.

The Wish-List

There’s a difference between what you need and what you want. We all need a place to eat, sleep and call home, but when the time comes to buy that place, there’s a lot to consider. In a dream world we could envision our perfect home and magically make it happen. But this is reality, and in reality we all have budgets and other parameters we must work within, which is why I encourage all of my clients to start with a wish-list. It helps you determine exactly what you need, want, and must-have. It lays down a blueprint for your house hunt and it keeps you in check.
Here are some suggestions to help get you started building your wish-list:
• Make a list of all the things you love and don’t want to give up in the place you’re currently – a kitchen island, a soaker tub, a fireplace – whatever gives you pleasure and makes your house feel like home.
• A wish-list can also be referred to as a “change-list” – meaning, these are all the things about my current living space that must change. So take note of all the things in your current space that you are not happy with and highlight anything that frustrates you to no end.
• Consider how long you’re going to be in this home and what you envision happening in your life during that period. If you’re finally going to get that pet dog you’ve always wanted, then you’ll have to consider that when choosing the property.
• Identify which items you must have now, and which items can be added over time. Maybe you really want a deck in your backyard and you’ve just seen a great house that has everything but. A deck is something you can add on down the road.
• Consider your wish-list a constantly changing thing. Trust me – once you start looking at properties, you’ll be adding and dropping things from your list. That’s the best part about house hunting – every place you see gives you a better sense of what you’re really looking for.