Tips to avoid surprises when buying a new home
What can I do to protect myself as a first-time homebuyer? November is Financial Literacy Month and buying a home is an extremely important and expensive transaction. While it may be tempting to do whatever it takes to get the home you want, you have to be sure you are providing yourself enough flexibility that you won’t be left in a tight spot later on. If you miss key steps during the buying process, it can lead to losing your dream home and possibly large sums of money, such as your deposit.
Tips to consider to help you in your home buying journey: Know your tolerance for risk: When a buyer signs off on an offer and declines to include financing and home inspection conditions, they put themselves at risk. In most cases, it is a risk that should not be taken on.
Before making a decision on whether to waive certain conditions, ask yourself: Can you afford to fix a major issue with the home that an initial home inspection may have detected? Or potentially lose your deposit if your lender denies your financing?
If not, then waiving financing and home inspection conditions are not the way to go. These conditions offer you added protection as a buyer. In a heated housing market, many sellers are looking for higher bids without conditions, but as a buyer, it is important to be sure that you are making an informed decision before making a higher offer on a home. Read and understand everything you sign: For instance, be aware of closing dates — thinking a closing date is 60 days away instead of the actual 45 days can put a buyer in a difficult financing situation. The dates will be written into the Agreement of Purchase and Sale that buyers sign.
Though a real-estate representative should highlight any changes, including a closing date, a buyer must take extra care to carefully read and understand what is being agreed to.
An educated consumer is an empowered consumer. If there is anything in an Agreement of Purchase and Sale that isn’t clear or you need further clarification, ask your realestate representative or real-estate lawyer to help you.
The same goes for the representation agreement that you sign with your real-estate brokerage, including details such as how long you are committed to working with that brokerage.
Don’t sign off on anything until you’ve thoroughly read and understand what you’re signing. That way you won’t run into any surprises later on.
The home-buying process can be daunting, but if you come in with a plan and are ready to ask a lot of questions, you will avoid any unwanted surprises. RECO launched its #BeHomeSmart consumer education campaign in September to help educate Ontarians about what they need to know before they buy or sell a home. For more information, you can visit reco.on.ca Joseph Richer is registrar of the Real Estate Council of Ontario (RECO). He oversees and enforces all rules governing real estate professionals in Ontario. Email questions to askjoe@reco.on.ca. Find more tips at reco.on.ca Twitter: @RECOhelps YouTube: youtube.com/ RECOhelps