If you’re buying a home personal taste, future plans, desired location, and available budget all play a huge part in the homes you select to view, and eventually the one you choose to make an offer on.
The real estate industry has a defined pattern:
- Decide to buy a house
- Find a house you like and make an offer
- Negotiate on price and sign the deal with two conditions
- Mortgage Approval
- Home Inspection
What an absolute backwards way of doing things! With this system you could find the home that is perfect for you, invest a lot of your personal time and emotion, plus the seller’s time and emotion, and the real estate agents time all to have it break down at the last two stages.
Personally, I believe that every house for sale should be pre-assessed and pre-inspected with that information available on the listing. But chances are, the real estate process isn’t changing anytime soon, so what can you do to prepare yourself now to buy a home?
#1: Get Pre-Approved for a Mortgage and search accordingly
Exactly how much money will the bank loan to you? Let’s say it’s $300,000.00, most people would then think hey I’m good to look at any home listed for that amount, or maybe even a little over that, because almost everyone stretches to the max amount they can get away with. The budgeting guru’s can educate you far better then I as to why this is such a bad idea, the purpose of this article is how to prepare you as it relates to the home.
In addition to life expenses, there will be short term home expenses. Your home inspector will ALWAYS find something. I would say that unless you are looking at a new home (under 10 years), the average house in our area has $20,000 – $30,000 in short-term repairs / replacements, if you are looking at older homes (pre 1980) that number easily goes up.
Unfortunately, it is the less expensive homes that usually require the most repairs. In extreme examples the price to fix everything is more then the cost of the house. But for the average home, take the amount you received the pre-approval for and then deduct $30,000. For our $300,000 example that means the max amount you should be looking at are homes in the $270,000 range.
No one will tell you this because the more money you spend, the more they make.
Or maybe you think, oh well I will still look at the top end of my pre-approval because the seller should be responsible for fixing everything the home inspection finds. Good luck with that! The seller is already playing their own budget game. They know how much they owe on the house, how much the new house they are moving into is, and how much money they are paying to the realtors (for those of you who have not sold a home before, the seller pays the commission of both the buyer and the seller’s realtor). Now on top of that you’re about to tell them to fix $30,000 in items. ROFL
#2: Spend time before buying a home and ask for information.
I can not count how many clients tell me during the home inspection that they are looking forward to actually seeing what they are buying. In some cases, I’ve heard that Clients were rushed in and out of the home within 10 minutes. That may be enough time if you don’t like the house, but if you like what you see, stop. Ask your Realtor for more time, if it’s the last of the 5 houses you had planned for that day and you are simply out of time make an appointment to come back.
Once you have the time really look at the house. Look past the new paint, the new flooring and the staging that is often completed when people are selling. Ensure you see EVERY space in the house.
Pro-tip #1: the best clues to home condition are in the areas no one pays attention to. That includes the crawlspace! Sure, your home inspector will take a look, but why not save the time and money if you can. You don’t even need to go in it. Just open the hatch. Most of the time if everything looks dry and doesn’t have any special smells it’s probably okay. You may be told “oh all crawlspaces have a smell” Let me assure you, they don’t. If they are dry and well vented there is no smell. Also, look in closets. Particularly the ceiling and walls adjacent the floor. People seldom paint closets, so if there has been a leak, this is often where you’ll find the only visual evidence.
Use your nose!
Often people light candles or place diffusers to make the home smell nice while selling. There is a difference between creating atmosphere and masking. Pro-tip #2: If it doesn’t belong, there is probably a reason. Look for bounce sheets in the registers and other aroma sources in odd places. It’s one thing to put a diffuser in the kitchen or bathroom, it’s entirely different to put one in the basement utility room.
Finally, look around for general home maintenance. It is hard to cover up a history of poor maintenance with a one time “house is for sale” flurry of activity.
What are the known "big ticket" items?
If you still are happy with the home, ask for more information about the typical big-ticket items.
- How old is the roof? How old is the furnace? For both of these anything around 15-20 years, anticipate that your home inspector may find issues.
- How old is the hot water tank? Most insurance companies require replacement every 10 years.
- What type of plumbing is there? Any reports of Poly-B should be discussed with your insurance agency.
- For mobile homes only, find out if any electrical work has been performed and if so confirm the unit has a “SILVER LABEL”
- For homes with a wood burning stove, or furnace. Find out if the unit has been inspected by a WETT Certified Inspector and obtain the paperwork if it has been.
The details you can't afford to miss in Paperwork
Have there been any additions to the home? If so ensure that a Building Permit was issued. A word of caution though if the home you are looking at is in the Kitimat-Stikine district there is no Building Official for this area. So, while the permit may be pulled it is not a guarantee that a construction standard has been met.
For those of you purchasing a home 10 years and under. Ensure that the home has a full Home Warranty. Be aware of potential owner/builder exemption. More information about this can be located on the BC Housing website here.
Has the home been assessed recently? If so, what is the value of the assessment compared to the value the home is being sold for?
Finally, ask to see the Disclosure Statement. Anything regarding the history of the home such as fires or flooding should be located here.
At last, with all this information gathered you can make your decision as to whether you want to move forward with making an offer on the home. It’s not a guarantee, but the chance of something being found during your home inspection that you weren’t already aware of or haven’t budgeted for now that you’ve done all this is far less likely.
To find out more about what to expect during your home inspection. Click here.