Advice for First Time Buyers

Confirm funds. Years before you buy, understand the effect of car and loan payments on your buying power.  Work to put yourself in a position of strength.  Understand how credit works and what the lender is looking for.  

Consider teaming up with friends to purchase together.  A good lawyer can draft an agreement.  You'll get more home for less $. 

If you're buying with a loved one, or family, or business partner, be sure to communicate clearly and be on the same page in terms of plans and expectations.  Share this with your trusted advisors so they can help. 

Have an exit strategy (buying your forever home is nice and all, but the average person moves earlier than they generally plan, because, you know, life happens.)  So, think to the future but don't lock in a home that only appeals to a limited number of people.

Further to that, if buying a condo, think about your future plans. Some units are age restricted so when baby comes you may need to sell or face hefty fines.  Build in options, like buying a unit that allows rentals.  You may wish to upgrade to a larger home, or move cities, or travel… having the ability to keep it and rent it gives you more flexibility and leverage.  

Write a letter to the owner when making an offer.  They work, but not always the way you think.  Know your audience.  The investor seller wants to know you have the $$.   The family may want to know how you'll fit into the neighbourhood where they raised their kids, the Mr. or Mrs. Fixit may want to know you're not fussed by small problems found during building inspection.  

Get in early, and stay in.  If you can afford to buy, buy.  And hold.  You won't find your dream house on the first rung of the property ladder.  You'll need to make sacrifices but by getting your foot on the ladder you're way ahead of others your age and you will benefit from leveraging your $ and appreciation on the investment.  It makes the next step up the ladder much easier than waiting to afford the dream home.    

Don't wait too long to buy, prices tend to go up rather than down.  I've seen many people get priced out of the market by waiting to get a perfect property while perfectly good ones come and go.  Now prices are higher than they can achieve, so they are no longer in a position to buy ANY property.  

Find a trusted advisor who is an expert in their field and LISTEN to their advice.  The main ones...  REALTOR, LAWYER, BUILDING INSPECTOR, MORTGAGE BROKER.  Too many advisors and you won't make a good decision...  Just because dad is handy with a hammer doesn't make him a building inspector, and just because uncle Joe owns 3 houses doesn't make him a market expert.  

Generally speaking, mortgage brokers have more flexibility and more motivation to work for you than the clerk at the bank.  Banks have limited in house products they can sell, and so not every buyer fits in to their strict criteria.  Mortgage brokers have more options to shop around and find you the right fit.  

Consider your lifestyle and job opportunities when selecting a location, location, location.

REALTORS.  A good fit is important!  A bad fit WILL be expensive in the sense that you might make a costly mistake with them.   A good realtor isn't expensive, they bring value.  To me, it's important to find an agent who you trust and will give good guidance.  Someone who is patient, is knowledgeable, and is willing to take the time to help you make an educated decision.  In many cases the seller pays compensation to the buyer's agent so the services of a realtor could be FREE.   

Keep future development in the city in mind.  That quiet street might become a thoroughfare if there's a lot of development planned 'down the road'.  Look at the city's OCP (official community plan) for an idea of what the future might hold.   

Understand the costs.  In BC we have property transfer tax.  There are lawyers, building inspections, other inspections, appraisals and mortgage costs, etc.  As mentioned above, understand how realtors are compensated, there may be circumstances where you are asked to make up the difference if the seller is not providing compensation. 

Look under that throw rug.  A building inspection is a visual inspection, they don't move furniture and they don't open up walls.   Trust your instincts, trust your nose.  

Google the address.  I had a client buy a home that had been in the news because the seller had a laboratory in his home and there was a hazardous material scare.  It turned out to be no big deal, but it can be good to know if there was a fire, or murder, or some such thing.  

Check into government programs to help.  Look to the bank of mom and dad if possible.  When I got married, we asked for $ for down payment instead of gifts.  It helped us get our first home.  Don’t be shy to ask for help. 

Recognizing the difference between some cosmetic upgrades and a major home renovation/remediation project can be difficult but that’s why it’s important to have expert advice.  I find that it's often actually cheaper in the long-term to buy that fully renovated place rather than fixing that “upper”.  Also, saving for much needed upgrades and repairs is much harder than mortgaging a better place right from the start.