Home buying mistakes to avoid at all costs

Home buying is back in a big way, with sales numbers rising across the country.

Residential sales in Greater Vancouver were up by nearly 38 per cent in October from the same time last year. In the Greater Toronto Area, sales climbed more than 19 per cent in October from a year ago. Calgary also reported an 18 per cent increase in October sales from a year ago.

“The very segment of the Canadian economy that was supposed to be its biggest risk this year has turned out to be a rare source of strength: housing,” BMO chief economist Douglas Porter states in BMO Capital Markets’ latest weekly financial digest. “Early reports from all the major cities suggest that October home sales posted double-digit gains from year-ago levels, following strong increases in previous months.”

BMO senior economist Benjamin Reitzes sums up the jump in home sales this way: “Canada’s real estate market looks like it has its mojo back.” Existing home sales are expected to rise 12 per cent year to year in October, he said in the same paper, “continuing the firming momentum established in the summer months”.

While buyers might be feeling renewed confidence when it comes to the biggest expense of their lives, they still need to take all the proper steps to make sure their dream purchase doesn’t turn into a disaster.

One of the most common mistakes buyers make is letting their emotions overtake common sense, according to the Real Estate Council of Ontario (RECO), which recently released its Top 10 Home Buying and Selling Pitfalls to coincide with Financial Literacy Month. When you fall in love with a property it can be hard to walk away, the organization says, but it’s crucial to know your budget and to stick to it. It’s no fun being house poor.

Another common slip? Underestimating all the costs that accompany such a major transaction. Closing costs can include land transfer taxes, title insurance and attorney fees. Then there are moving expenses. It all adds up and the grand total can push people past their financial comfort zone.

Whatever you do, don’t forgo a home inspection just to win a bidding war or to keep costs low.

“Someone without any knowledge of construction won’t know what is behind what you see, and it’s all about what you can’t see with your own eyes,” says Vancouver realtor Mel Montgomery. “A home is an emotional buy. You have to safeguard yourself. Just because a house has quartz countertops doesn’t mean anything. Someone may have put in good quality hinges and doors, but maybe there’s something really structurally wrong.”

What’s outside the home is just as important as the property itself; all too often people get so focused on a home’s layout and square footage that they forget about the bigger picture.

“If you’re a couple who plan to have children and are moving into a new neighbourhood, researching the schools and the walk will become important for quality of life later on,” Montgomery says.

Other common pitfalls, according to RECO:

Assuming everything is included
Keep in mind that things like the furnace, dishwasher or washing machine and dryer may not be included in the deal. “Before making an offer, detail all items, known as chattels, in writing,” RECO suggests.

Failing to read and understand all contracts and forms
As with any legal transaction, it’s vital to read the fine print. If it’s all just Greek to you, ask questions and have the details explained. Make sure all the blanks are filled in before you sign anything, and make sure you get copies.

Making verbal agreements
“Verbal agreements aren’t a problem until they’re a problem,” RECO states. “Putting everything in writing forces both parties to be clear about their expectations and provides a record that can prevent disputes later on.”