Five signs you are ready to take the home-buying plunge

It may seem obvious, with today’s low interest rates, high rents and a strong housing market: If you’ve got the money, buy now.

But how to know when you are truly ready to make the leap? Not everyone who would like to buy is actually prepared, financially and emotionally. Real estate experts have recognized signs that indicate when someone is, and meeting those criteria can make the difference between frustration and success.

You’re taking financial steps

The first sign, of course, is the financial foundation upon which a potential buyer can build.

“If they have already started saving toward a down payment, that is a great sign,” said Jeffrey Baker, a real estate agent with Sutton Group in Montreal. “They have either been saving aggressively over a certain length of time and given themselves a target for the amount that will be their down payment. Or they will have had a meeting with a financial adviser or bank, who has shown them the amount they can realistically spend.”

They also should meet with a mortgage broker and gain pre-approval. Although, as Austin Keitner of Keller Williams Realty in Toronto pointed out, “pre-approval doesn’t mean they’re actually looking at your credit rating but asking questions about your income, expenses and getting to know your ratios a little bit.”

A buyer may not get the final approval if his or her credit rating is not up to snuff. But, nonetheless, “if they don’t have that done by the time they are talking to me, I encourage them to do that. Especially in this market, you want to be ready. You want to be able to act fast,” Mr. Keitner said.

You are plotting your spending

Ability to budget is key. “A well-educated first-time buyer needs to know their budgets to know where they stand,” said Russell Westcott, vice-president of Vancouver-based Real Estate Investment Network.

The move itself as well as the fees and taxes and the costs of properly maintaining a house can add considerable amounts to the down-payment and mortgage. Apartment dwellers might not think about these expenses. Whether it’s a lawn mower or a new roof, Mr. Westcott said, “they have to figure out how much their housing expenses are going to be.”

Does the new house need renovations? “As a general rule, renovation projects will take three times longer than you thought they would,” Mr. Baker said, “and cost at least twice as much as you had budgeted.”

You know what you want

Is it a condo, a townhouse or a big, fully detached home? You should decide that before you start browsing the listings.

“Until you have looked at your budget, and talked to your mortgage broker, you can’t really even determine what type of property you should be looking at,” Mr. Westcott said. “And, does it fit with your lifestyle?”

Knowing the neighbourhood where you want to be is another part of that process. It may be trendy or offer great views, but does it mean a longer commute to work, for example, or have the services – schools, supermarkets and transport links – you need?

“The buyer should ideally know what community they want to be in,” said Mr. Keitner, who has on occasion been asked by clients whether they can lease a property for a year, instead of buying it outright, to see whether it’s the right fit for them.

Otherwise, your location choice might come back to bite. “If you end up leaving the house after a couple of years, you’re going to lose money on it,” he said. “Because after your moving costs, legal costs and so on, its sale is not going to compensate you through market growth.”

You know what you actually need

For Mr. Westcott, the fourth sign that new home buyers are ready to make a serious commitment is when they have “put the focus on what they need, not what they want. Three bedrooms, two bathrooms and an attached garage – those are needs,” he said. “A want would be high-end fixtures, granite countertops or a wine cellar.”

Would-be buyers are sometimes seduced by the “bling,” he added, “and all of a sudden the budget gets thrown out the window.”

Conversely, ignoring properties that meet all your needs but not your whims will only make the already complicated process of buying a new home more challenging.

You have tempered your expectations

The final sign you are ready to take the big step is when you realize that, as Mr. Keitner put it, “there is no such thing as a perfect house. I’ve never really seen a eureka moment where it’s, ‘Oh my God, this is the place where I need to live.’” Rather, he said, the home you buy and make your own becomes the home you love.

“You have to be prepared, as a first-time homebuyer, to temper your expectations,” Mr. Westcott agreed. “You are not going to get what you want and, if you are young, you’re not going to get the style and the quality of living that your parents have.”

What’s more, Mr. Keitner said, “there’s a risk that if people don’t act on properties that they can make work, prices continue to go up. So a decision based on emotion, rather than practicalities, can cost tens of thousands of dollars.”

However, losing a home that, in retrospect, would have been the right buy is also part of the education of home buying.

“My experience with first-time buyers,” Mr. Baker said, “is that they have to live the experience of a place getting away from them to realize that sometimes the market won’t wait for them.”

Buying your first house is probably one of the most difficult decisions you will ever make. But understanding the signs of the well-prepared homebuyer will go a long way in ensuring that it’s the right one.

This article was re-posted from Augusta Dwyer of The Globe and Mail.


Easy Home Renovation Ideas


Overhauling your entire home can be costly and time consuming, but it doesn’t have to be. Choosing smaller projects can deliver a great look in less time.

Upadate Your Flooring
Consider the function of your renovated rooms when choosing flooring for the space: a playroom will benefit from a soft floor made from play mats or carpet, for example, while laminate or hardwood flooring will add warmth to living areas.

Update Your Lighting
Consider energy-efficient dimmers and recessed halogen lights in all rooms. Recessed lighting is one of the most widely used and effective fixtures on the market. Paired with ambient lighting, recessed lights brighten a room without taking up floor space. However, recessed or pot light fixtures require more space for installation above the finished ceiling. Be sure to have your contractor or electrician check that you have enough height above the ceiling to accommodate the can part of the fixture (the smaller the can, the more expensive the fixture).

Refresh Kitchen And Bathroom Cabinets With Paint
Painting cabinets, replacing sink fixtures and installing new lighting are all easy ways to update a bathroom or kitchen, says Ty Pennington, host of “Extreme Makeover: Home Edition.”

Replace Kitchen Countertops & Add An Island
Countertop finishes add colour, shine and personality to a kitchen. Available in a plethora of materials and colours, one can easily feel overwhelmed by the many choices. Make sure to speak to your builder, designer or product representative about the pros and cons of the materials you’re interested in before making a decision.

If you’ve got the square footage to spare, an island can also be a practical addition to a kitchen. Family and guests tend to congregate in the kitchen and an island with counter height stools offers a smart seating and dining solution. Make the most of a kitchen island by having as much storage built into it as possible. If a cooktop will be installed, consider adding a 6″ high ledge for a dining surface that will also act as a barrier from hot pots and messy pans.

Install New Trim And Moulding
Inject character into your new basement living area by adding architectural details such as wainscotting, crown moulding and baseboards. Consider overscale crown moulding for living and dining rooms, painted matte white to create a grand, Paris apartment feel.

Add Storage
Built-in storage always looks sophisticated, saves space and can further add to the function of your rooms. Always try to plan for the maximum amount of storage possible: from drawers carved out under the stairs, to built-in shelving and closets — one can simply never have enough.

Cover Radiators
Old radiators look dingy and can make a room look lopsided if they’re on one side of the room only. Covering them and creating a matching faux cover on the other side adds symmetry and elegance to rooms.

Blog post reprinted from an article by Canadian House & Home, a leading Canadian design and decorating magazine.

BIG Changes Approved on How Realtors Charge Fees or Commissions

G+G-R.E.CommissionPic1New changes to how Realtors charge fees or commissions may have a big impact in the real estate market.

Last spring, Minister Tracy MacCharles introduced Bill 55, Stronger Protection for Ontario Consumers Act, 2013 in the legislature. Bill 55 sought to strengthen consumer protection in the areas of door-to-door sales, debt settlement services and real estate transactions.

Under the old act, Realtors could either charge a flat fee or a percentage (commission) based on the sale price. But not both. This also determined to a large extent, which brokerage an agent would go to work for.

But now all of that has changed! And personally, I think this change is good for both consumers and brokers alike.

Once again, personally speaking, I have been using a sliding rate scale on commission fees charged to my clients for over the past 7 years. Depending on variables such as loyalty of client (past sales and referrals), would they be buying as well as selling, difficulty of sale (list price, condition, timing of sale etc), I would set a rate that is fair for both sides.

What are some of the changes you might see? Well for one, I think retainer style charges would be considered. What this would entail is that an upfront flat fee of for example, $5,000 plus a commission of 4% when the property is sold might be beneficial to both parties?

In the past (and still currently) the selling agent assumed all of the risk financially when a home was listed. If for some reason the seller changed their mind, or the house didn’t sell then the selling agent would be out pocket for expenses that could run into the thousands of dollars.

Another example might be that only a flat fee for the buyers agent would be offered, while a commission to the selling broker would be payable. Or vice versa? Or maybe even a combination of these two scenarios?

It will be exciting to see how these changes play out in 2014 and beyond.