Viewing Homes

This section gives you some advice on making the most of your viewing experience. When you separate emotion from facts, and the condition of the house, you will be in a better position to purchase a home that meets both your needs, and your budget. You can avoid any costly errors that could lead to future problems.


How to Avoid the Most Common Buyer Errors

Shopping for a new home is an emotional experience. It is also time consuming and comes with a myriad of details. Some buyers, however, get caught up in the excitement of buying a new home and tend to overlook some items. Their home purchase turns into an expensive process. These errors generally fall into three areas:

Paying too much
Losing a dream home to another buyer
Buying the wrong home
When you have a systematic plan before you shop, you will be sure to avoid these costly errors. Here are some tips on making the most of your home purchase:

Bidding without sufficient information
What price do you offer a seller? Is the seller's asking price too high? Is it a deal? Without research on the market and comparable homes, you could lose thousands of dollars. Before you make that offer, be sure you have researched the market. A Real Estate Professional can offer an unbiased opinion on the value of a home, based on market conditions, condition of the home and neighborhood. Without knowledge of the market, your offer could be too much. Or worse, you could miss out on a great buying opportunity.

Buying a mismatched home
What do you need and want in a home? Sounds simple. Yet, clearly identifying your needs and bringing an objective view to home shopping leaves you in a better position. Sometimes, home buyers buy a home that is too large or too small. Perhaps they did not consider the drive to work, the distance to school, or the many repair jobs waiting for completion. Plan ahead. Use your needs list as a guideline for every home you view.

Unclear title
Before you sign any document, be sure the property you are considering is free of all encumbrances. As part of their services, a Real Estate Professional can supply you with a copy of the title to ensure there are no liens, debts, undisclosed owners, leases or easements.

Outdated survey
Before the purchase is completed, an updated survey is essential. This report will indicate boundaries and structural changes (additions to the house, a new swimming pool, neighbour's new fence which is extending a boundary line, etc.).

Unexpected repairs
For $300 - $500 a professional inspector will conduct a thorough inspection of the home. This way, you will have an idea of the cost of future repairs. Make the final contract subject to a favourable report.

Shopping without pre-approval
It only takes a few hours to get mortgage pre-approval. When you are shopping for a home, this gives you more power. A seller is more likely to consider an offer from a serious buyer.

Remember additional costs
Besides the funds for the purchase of a home, you’ll need funds for items such as loan fees, insurance, legal fees, surveys, inspections, etc.

Rushing the closing
Before you sign, ensure that all documentation clearly reflects your understanding and conditions of the transaction. Has anything been forgotten? Don’t rush. You could lose money, financing or even the sale.


Take Off the Rose Coloured Glasses and Save Money

"A home that meets my needs, at the lowest possible price," is every homebuyer's creed. Yet, when a home buyer goes shopping for a home, two homes compete for their dollar: a home that meets his needs, and a home that fulfills their desires. The goal is to find a home that meets these two criteria. However, in the real world, this rarely happens. Usually, it is a compromise of needs against wants relative to price.

Sometimes, a buyer falls in love with a home for the wrong reasons. Later, they regret the choice because the home does not match their needs. It may be too big, too far away from work or school, or even too large to maintain. In the long term, a dream home ends up being a costly investment.

While it sounds simple, decide what you want in a home before you shop. Take off the rose-colored glasses. As much as possible, look at your needs and the home you are considering, objectively.

How prices are set
Usually, four common strategies are used to price a home. Understanding these techniques can help you get a better deal on your home, while matching your needs.

Greatly overpriced
Every seller wants to get the best price on their home. However, with multiple offers, the battle may be won by inflating the price, anywhere from 10-20% of its true market value. Too high a price could leave the home on the market for months. If it does not sell, it could be considered a "problem." The price may have to be reduced to sell it.

Somewhat overpriced
Homes in this category also tend to sit longer on the market. The reasons: there may be room for negotiation in the price, or the seller is emotionally attached to the home.

Priced at fair market value
These homes tend to sell within a reasonable time, close to the asking price. Competitively priced, they represent a thorough analysis of other homes on the market.

Priced below fair market value
For various reasons (including health, relocation, condition of the home, divorce), a seller may want to sell a home quickly. This type of sale often results in multiple buyers, with the home being sold quickly.

A Real Estate Professional can provide you with a thorough analysis of any home you are considering. This price will be based on market conditions, similar homes in the neighbourhood and condition of the home. At the same time, a Real Estate Professional will work with you to match your needs to the price, in a great neighbourhood.


What is Fair Market Value?

When you are buying or selling a home, naturally, your most important concern is getting the best price. As a seller, you may have lived in your home for years. You have contributed towards the mortgage each month. You have maintained your home. And now, it is only right that you should reap the rewards of your efforts.

As a buyer, you want to ensure you are paying fair value for a home. How then, do you get fair market value for your home? In this article we will explain, specific house, present condition and 30 to 90 days, the three factors that influence market value.

In this article, we refer to market value, as it applies to single-family homes only. Evaluation methods are different for condominiums and commercial properties.

The term, "market value," is a broad and confusing term. Consumers shop in a store and pay the price indicated on the price tag. A book is worth $18.95 according to the tag. A car is worth $15,000 because the price tag says it is. We rarely question the value or worth placed on these items. We just pay the price.

At the end of the season, if an item did not sell, its value changes. The $18.95 book did not attract enough buyers. Therefore, the store puts the book on sale to entice people to buy the unsold books.

Initially, the market value of the book was $18.95. However, when new titles arrive on the shelf, or the subject of the book is no longer popular, the market value could drop to $9.95.

Therefore, market value is the price that an item will sell for, within a reasonable time period. When considering real estate, "reasonable" refers to one to three months.

When it comes to determining fair market value on a home, the following definition is helpful:

"Market value is the price at which a particular house, in its current condition, will sell within 30 to 90 days."

Three criteria make up this definition;

1. Specific house
2. Present condition
3. 30 to 90 days

To determine a home's value, most people use an appraisal or comparative market evaluations.

An appraisal, conducted by a certified appraiser, is a professional opinion of a property's market value, based on recent sales of comparable properties, location, square footage, construction quality, floor plan, shopping, schools, transportation, etc. On average, this type of evaluation costs $300 - $500. Lenders require an appraisal as part of the mortgage application process.

A comparative market evaluation (CMA), performed by a Real Estate Professional is a free, informal estimate of market value, based on sales of comparable properties.

Specific house
Market value is limited to your specific house. The location and neighbourhood of your particular home is the starting point for this determination. The exact same house in another city, or another neighbourhood across town, does not matter for your determination.

For example, a house in St. Albert could be worth $375,000. But if the exact same home was located in Edmonton, it may only be valued at $300,000.

Home prices also fluctuate significantly from city to city and from neighbourhood to neighbourhood. Therefore, when considering the market value of your home, it must be compared to similar homes in the same or adjoning neighbourhoods.

Present condition
The second factor in determining market value is the condition of your home. Is it in "showing" condition? Does it need some improvements? The condition of your home determines the number of buyers who may want to view and purchase the property. This relates to the time your home will remain on the market before it sells. Most home buyers want a reasonably priced home, in good condition. They may look less favourably on a home that requires major work.

Some people determine a market value by subtracting the amount of estimated fix-up costs from the selling price. This may not be the best way to evaluate a home. A home in good condition sells for $80,000. A home you may like needs $4,000 in repairs. This may not equate to a market value of $76,000 ($80,000 - $4,000). Why not?

Homes that require work take longer to sell. To attract more buyers, the price may have to be reduced beyond the cost of the repairs. it is all a matter of how much someone is willing to pay for these repairs. Additionally, determining market value for a home that needs some work, is not an exact science. Some Real Estate Professionals suggest subtracting approximately two to three times the amount of the fix-up costs.

30 to 90 days
In most markets, a home will sell within 30 to 90 days. If it does not, the price is probably too high. Even homes that are "perfect" will not sell in this time, if the price is too high.

On the opposite end: if a house sells within a short period, perhaps the asking price was too low or it could be a hot market. When there are housing shortages or fear of rising prices, many homes are purchased within a matter of days of the listing.


Don't Pay Too Much For Your Next Home

Whether you are buying your first home, or your fifth, the process of buying a home is a detailed, time-consuming venture. At the same time, it is an emotional period laden with difficult choices. You want to ensure that the home you purchase meets your family's needs now and in the future.

Each of these decisions often involves money. When you consider all that money it represents, you will want to ensure that you do not pay too much. This article helps you become a savvy buyer, by pointing out some of the pitfalls inherent in the home-buying process. These include such things as knowing what you want before you begin shopping, taking your time to shop, choosing the right Real Estate Professional, and remaining objective while viewing potential homes. With this information, you will be closer to finding your ideal home.

#1 Before you shop, develop a needs vs. wants list

Everyone has a picture of an ideal home. This would include all the features you not only need, but have long desired. However, when it comes time to buying a home, the desires cost more. While it is nice to think about having a beautifully landscaped backyard or a solarium perhaps even some built-in appliances, these are usually considered luxury items, which can add considerably to the price of your home.

That is why it is a good idea to develop a needs and wants lists. With this list, begin with items you really need like adequate space, garage and number of bedrooms. For most people, basic needs should be considered first. After that, you could consider additional desires, if you can manage these benefits financially.

With such a list in your hands, you are less likely to be caught up in the excitement of the pursuit. you will have a good idea of what you want, within you price range, and if you can afford those additional items.

#2 Get pre-approved prior to shopping

Visit your financial or lending institution prior to home buying. Quickly, you will know the amount of mortgage you will qualify for. Be sure to get a mortgage commitment in writing. Most importantly, this tells sellers that you are a serious prospect. Depending upon market conditions, a seller may lean towards an unconditional offer. you will have less negotiating power if you have to wait for mortgage approval.

Banks and financial institutions have developed many programs especially for home buyers, be that first-time buyers or those with equity in their homes. When you review your needs and objectives with a lending officer, you will be one step closer to purchasing your home.

#3 Choose your winning team

Buying a home is a complicated process with many people involved. From choosing the right mortgage, to finding a home inspector, to viewing available properties, there are many steps involved for even the hardiest person. With a Real Estate Professional on your side, you will have access to these services, already in place and highly recommended. A good agent has the knowledge and experience developed from many years of helping both buyers and sellers. During this time they have developed a network of people, from lenders, lawyers, home inspectors and movers, to assist both home buyers and sellers.

#4 Communicate clearly with your Real Estate Professional

Spending time with your Real Estate Professional will reap huge dividends. When you have a clear picture of the type of home you are looking for, your Real Estate Professional can come closer to finding the home you want. You will not waste time looking at homes that do not match your needs.

#5 it is still true - location, location, location

You have heard it so many times, that it is probably starting to sound like a broken record. That is because it is true! A home is not a stand alone item. Rather the value of a home is greatly affected by the surrounding homes. do not let your emotions determine your purchase. Think resale. The desirability and resale value of your home depends largely on location more than any other factor. People want a desirable community that includes character, quality of schools, access to work, major transportation arteries, recreational facilities, etc.

On your viewing trips, take a careful look and ask the following questions: How does this home compare to others in the neighbourhood? Are yards fenced? Are there many children playing in the streets? Are front and backyards and the exterior of the homes properly maintained?

Walk around the neighbourhood and get a feel for the people living in the area. You may want to speak with a few neighbors to get their comments. If you like the community, carefully examine the home you like. Generally speaking, extremely large homes surrounded by smaller homes tend to appreciate less than a large home among other large homes. Alternatively, the smallest home in the neighbourhood tends to stand out by the other homes on the block. Sometimes, it could take a bit longer to sell a smaller home, as some people are reluctant to pay extra for the neighbourhood.

Additional factors that affect the property value of a home include traffic, sounds, smells, zoning bylaws. Be objective. do not rely too heavily on your emotions. Be sure you are completely satisfied with the neighbourhood. If you choose a neighbourhood with problems, you likely will not get as much as you hoped when it comes time to sell.

#6 Use your Real Estate Professional's knowledge of the community

Your Real Estate Professional is trained in all aspects of Real Estate, including understanding supply and demand, economics and the neighbourhoods of the city in which they practice. As they regularly view homes as they are placed on the market, they are at the heartbeat of knowledge and information about housing trends and prices. They can save you time and money, by narrowing your prospects to only those that meet your requirements. It is a very time consuming process to view every home available that meets your needs. A Real Estate Professional can do much of the work for you, by reviewing your needs, reviewing the properties and then hopefully, advising you of a potential match. A comprehensive knowledge of the available homes in your neighbourhood is one of your Real Estate Professional's strongest assets. With the aid of computerized systems, a Real Estate Professional is notified within hours when a home becomes available.

#7 Check your emotions, and shop with your head

When people purchase a home on emotion, without an objective view of the property, problems may develop later. Shopping for a home is an emotional process. It could be costly. Using your head, along with asking for an objective opinion (from your Real Estate Professional) could help you avoid costly errors.

#8 Pay attention to "red flags"

When evaluating a home, be sure you know the difference between acceptable and unacceptable problems. Cosmetic items like peeling paint, worn carpeting, unattractive wallpaper can be easily remedied. You could use these as negotiating items, as there will be costs involved in updating the home.

Major problems, however, are clearly "red flags." Look for items such as major foundation cracks, water damage, outdated electrical systems and inadequate plumbing. These items could cost you dearly in the future.

#9 Hiring a home inspector is a wise investment

A home inspection is an inexpensive way to gain peace of mind and guard your pocket book. A proper inspection will cover all areas of the house including foundation, electrical, heating, plumbing, floors, walls, ceilings, attic, roof, siding and trim, porches, patios, decks, garage and drainage. A professional inspector can give you an objective view of the property, with a written report, indicating the present condition and items that will need repair.

#10 Be cautious with fixer uppers

Some people may be inclined towards purchasing a home that needs some work. This could be a challenge and an opportunity to make money. Sometimes, a fixer-upper can be purchased below market value, and sufficient repairs made to bring it to a good sale condition with a profit realized. However not all fixer uppers will bring in the profits you might expect. It depends upon the price of the home, the amount of repairs needed and the market conditions at the time of sale. If the home is not priced low enough, you may not recover your investment of time, trouble and money. Before you purchase what looks like a quick way to profit, carefully consider the condition of the home and ALL the repairs that need to be made. Get several estimate, complete a comprehensive budget and be sure to consult with your Real Estate Professional. He or she can give you an idea of what you can reasonably expect to recover when the home is put back on the market.

#11 Consider your future needs

Take a look at your lifestyle now and in the future. Will you need extra space for a home office, a child or perhaps a child moving back home? Perhaps it may be easier and less expensive if you purchase a home that can meet these needs now, rather than moving up to a larger home a few years later.

#12 Proceed quickly

When you are ready to buy, move fairly quickly. That is because good properties usually sell fast. This is especially true when there is a shortage of homes available. However, when you work with a Real Estate Professional, you have access to the most current technology. As part of the Real Estate Professional network, a Real Estate Professional has access to properties within hours of when they are listed. Technology works to your advantage. When a Real Estate Professional knows your needs, they will notify you when properties that meet your criteria become available. Many Real Estate Professionals now have personalized web sites which allow you to sign on a client, and receive notification of these listings via email. You save time and effort, and you can view only those homes that come closest to your needs.

#13 Clarify relationships

In any real estate transaction, be very clear about who is working for who, and what the relationship represents. Many people believe that the agent they are working with automatically represents them and their interests. Yet, without specific disclosures this is not true. Unless otherwise stated, the agent represents the seller in transactions for the sale of a home. This agent, as part of his or her fiduciary duty, must ensure his loyalty protects the seller's position throughout the entire process.

#14 Ask for a written CMA

A Comparative Market Analysis (CMA) is an analysis of comparable homes in the neighbourhood. It shows you the sale prices of comparable homes in the neighbourhood, along with asking prices of other homes in the area currently on the market. A Real Estate Professional can request this report for any home and neighbourhood in Canada. Ask for this report in writing. With this valuable document, you will have the appropriate evidence for either a too-high asking price, or one that is a bargain.

#15 Investigate the seller's situation

Knowing about the seller's reasons for moving could work to your advantage during negotiations. For instance, a seller who has been transferred to another city, may be more motivated to sell rather than someone who is still shopping for a new home. A vacant house, a house that has been on the market for several months and reduced in price, could also be indications of a motivated seller.

#16 Keep personal information to yourself

Conversely, information could be used to your detriment. Information about your mortgage, size of down payment, move-in deadline, or circumstances for buying, could be negotiating factors. While you want your Real Estate Professional to know these details, do not reveal any of this information to the seller.

#17 During negotiations, keep your emotions in tact

In certain situations, emotion could cost you money. If you let the seller know how interested you are in the property, this might be seen as a financial opportunity. Recognizing that you are highly motivated, you could be an easier target for a higher price. If you absolutely love the home, keep it to yourself. This is a definite advantage of working with a Real Estate Professional. Trained to be non-emotional, he or she can ensure you get the best price.

#18 Ensure the deal is right before you sign

While you definitely want to move quickly, once you have made the decision to purchase, you do not want to cave in to pressure for a quick close. Someone who is trying to pressure you into buying a home, is doing so for a reason. This could involve money, or a multitude of other reasons.

#19 Exercise your negotiating skills

Even if you prefer not to haggle, it is worth it, especially when it is your home and your future. Most people expect to haggle over the price. That is often why the price is set a bit higher than the actual selling price. There is always room for negotiation. If you want to get the best home possible for the least amount of money, then negotiation is the only way to get a good deal.

#20 Avoid bidding wars

In some cases, the seller's Real Estate Professional may use scare tactics to rush the sale or increase the price. Falling for this trap could cost you money. If there is another buyer, or some other reason this pressure is being applied, whoever wins also loses because they overpay. If there really is not another buyer, then it is likely that the deal with fall through. Be sure the other side is aware, that if this is the case, you might be interested if this happens.

#21 Insist on a written disclosure of all known defects

Legally, sellers must disclose all known material defects of a property. Ask for this in writing. Also be sure to consider the ramifications of these defects. Will it be costly down the road? Are they "serious" defects?

#22 Be aware of your hidden costs

There is more to a home than simply the mortgage. You will be responsible for other items including mortgage insurance, appraisal fees, legal fees, inspection fees, transfer taxes, title insurance, inspections, etc. Your Real Estate Professional can give you a good idea of the costs associated with buying a home that are beyond the final negotiated price of your home.

Congratulations! You are on your way to getting the home you want at the best price. Armed with the information contained in this article, you are less likely to be swayed by emotion, high pressure, or time constraints. In addition, it is a time-tested principle - a Real Estate Professional, working for your interests, is your best route to the home you want. A truly sharp and professional agent uses all of the suggestions outlined in this article.

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