I was at a business event discussing real estate marketing, and my discussion partner posed the question of the top few things someone should think about when they want to buy real estate. Here is what we came up
with:
1) Rent or Buy?
First of all, I guess you should ask yourself if you really want to buy property or continue to rent. Consider that over time, real estate is typically a good investment—for the long term. Those individuals who purchased in 2006 or the first half of 2007 and had to sell a year or two down the road lost money. Conversely, those who purchased at the bottom of the cycle could potentially make their money back, but remember the closing costs when you sell. If you’re thinking that you only want a place for a couple of years, continuing to rent might be the best option. No, you’re not creating equity, but unless you plan to try to sell your home yourself, you save the money you would have spent to pay a Realtor to sell your home.
Also, home-ownership comes with other costs that you might not factor in, like home insurance (which increased quite a bit since the 2013 floods), taxes, repairs and ongoing maintenance, and utilities. Can you afford that $500 gas and electric bill in the winter months? What about the water and sewage costs in the summer when the sprinklers are going? What happens if your furnace breaks down—do you have the funds set aside to pay for repairs? Renting suddenly sounds easier and cheaper!
2) How Much Can You Afford?
Once you have decided that you do want to buy, go to your bank or mortgage broker and get pre-approved for a mortgage. Getting pre-approved is very different than being pre-qualified. Pre-qualifying really just tells you the amount you might expect to get IF you are approved for a mortgage, but in no way does it guarantee that you will actually be approved. Pre-approval means that the lender has done a credit analysis and verified your employment situation, and has given you a letter stating that you have a certain number of dollars guaranteed at a specific interest rate. However, this approval is often guaranteed for only a few months, so once you do have that pre-approval, your next step is to get shopping.
3) What Do You Need versus Want?
Define your NEEDS in a home versus your wants. Needs include type of home—do you want a condo because you live downtown, or do you have children and pets so perhaps NEED a yard? Do you have individuals in the family with special needs or mobility issues, so perhaps need wider doorways or ramps? Do you need to be close to schools because transportation might be difficult? Do you have a home-office, so need that extra bedroom or main-floor den/office space? Most condos do not allow you to run a business, so a single-family home would be necessary. Do you play a musical instrument? Condos also have noise restrictions, and if you have frequent gatherings of individuals, the parking could be an issue, not to mention the noise impacting neighbours.
You need to decide what area of town you want to live in. If you work downtown (and we all know what a headache commuting is), and you don’t need a single-family home, there are many apartment-style and townhouse condominiums, and for first-time buyers, a condo is a great place to start because they are more affordable (providing the condo fees aren’t too high).
4) Explore!
You should go to a million open houses. Well…maybe a million is a slight exaggeration, but the more properties you can see, the better informed you become. You can go to a lot of weekend open houses (but don’t feel compelled to work with the agent there), and also drive, cycle, or walk around neighbourhoods that you think you might like so that you can explore them and discover their positives and also their draw-backs.
5) Choose a Realtor
Once you have this information, you’re armed with a lot of knowledge – we applaud your initiative! Now it’s time to work with a Coldwell Banker Realtor™ to seriously investigate some properties. (Check out How Do You Choose a Real Estate Agent for some tips!). We can set you up on a search from the MLS system so that you can see when properties are listed that conform to your needs list (so that you don’t waste a bunch of time looking at listings that just won’t work). We can return with you to some of the properties you saw at an open house, as well as visiting many more that you see in the MLS listings that we send you. When you decide on a home, we can help you craft a solid offer that makes sense.
Don’t delay – call Coldwell Banker Complete Real Estate at 403-686-1455.
