Lack of knowledge leads to big regrets for Ontario's first-time homebuyers
Ontario may be home to one of the hottest real estate markets in the country, but that doesn’t mean residents are particularly real estate-savvy.
In fact, according to the Real Estate Council of Ontario (RECO), Ontario’s real estate regulator, a sizable number of Ontario residents know little to nothing about the process of buying and selling a home. A study by RECO found that 32 per cent of first-time homebuyers did not feel prepared or knowledgeable about buying a home.
Granted there are worse things to be ill-informed about – forgetting your partner’s birthday is likely to be a much bigger pain than forgetting the formula for closing costs – but buying or selling a home is probably the biggest transaction you’ll ever participate in, and it pays to know what you’re doing.
Horror stories about the real estate market abound: houses are commanding tens of thousands over asking price, and dozens of offers are being made on sub-par abodes, prompting a kind of panic in which even the most knowledgeable buyers are not immune.
Kelvin Kucey, a deputy registrar of regulatory compliance with the RECO, readily admits that he and his wife got caught up in the hysteria in 2012 as multiple offers quickly became the new vernacular in Toronto real estate. Their rushed purchase meant overpaying for their home and doing so without the safeguard of a home inspection.
“And even to this day there are problems with the house that we’ve now had to ante up to repair because there were shortfalls in the construction,” says Kucey. “With that it was getting caught up in the buying process, the pressure to buy and not taking the cool heads approach that were promoting right now in our Be Home Smart campaign.”
RECO’s Be Home Smart campaign launched this month to help calm consumers frenzied by the highly competitive housing market. According to the Ontario regulator’s latest study, approximately 38 per cent of buyers are willing to go 20 per cent over their budget to get the house of their dreams. And given that the average single family home in Toronto is $1.2 million, that’s a hefty overage. Of those people, about 20 per cent are blindly offering more than they’ve budgeted without knowing if they can get the financing to do so.
But going over budget isn’t one of the biggest regrets Ontarians have about the process, according to RECO’s 2014 survey. Forty-one per cent of Ontario homeowners and 45 per cent of first-time buyers wished they had done things differently when buying their homes. Their biggest regrets? Not having a better grasp of the buying and selling process, not viewing more houses, skipping the home inspection and not doing a better job of researching and interviewing realtors.
Contracts are seldom compelling reading and that is evident in these survey results, which show that 43 per cent said there were sections of the real estate contract that they didn’t fully understand.
The survey also showed 36 per cent of Ontario homeowners mistakenly think that after a real estate contract is signed, a buyer or seller has a trial period during which they can cancel it. An additional 33 per cent said they were unsure if this was true.
“It’s spooky when you look at that stat – 69 per cent of people have no idea what they’re doing when they’re signing those deals,” says Kucey. “The only thing that has a cooling off period with regards to real estate purchasing is a brand new condo when you’re purchasing from the developer. Everything else is binding.”
When it comes to who can represent the buyer and the seller, did you know that a single realtor can act on behalf of both sides in a transaction so long as both parties agree in writing? Neither did 58 per cent of Ontario respondents.
Finally, over half incorrectly believe you get your deposit back right away if a deal doesn’t go through, when, in fact, the money can only be returned if both the buyer and seller agree, or by a court order.
To learn more about the buying and selling process or how to stay cool in a hyper competitive housing market visit www.reco.on.ca.