Now that the Halloween season is upon us, it is a good time to remind buyers how they can avoid mistakes when buying a home that will lead to nightmares later. Here are 7 ways to prepare so that you don’t have a horror story to share.
1. Make sure your lender has done their appraisal of your home
Just because you are pre-approved for financing, it does not mean you will get your money on closing. There are always more lender conditions to satisfy, whether it is income verification, proof of down payment and a satisfactory appraisal of your home, to make sure you didn’t overpay. Make sure you satisfy all requirements before you waive any finance condition. I have seen many cases where lenders have refused to advance money on the closing date because of incomplete information or problems with the home’s appraisal. This can cause delays in closing, extra moving expenses and in worst case scenarios, a default in the deal where the buyer forfeits their deposit.
2. Visit the neighbourhood on foot
No seller will tell you about a neighbour from hell or problems with other homes on the street. They may also not disclose problems with their own homes or whether there had been a suicide or murder on the property. When you are doing your home inspection, have someone talk to your potential new neighbours and ask them directly if they saw any repair trucks at the home you are interested in, and whether there may be some strange people living nearby. It also helps to work with a real estate agent who is familiar with that neighbourhood as well, to avoid any surprises after closing.
3. Choose a home inspector carefully
The home inspection is a critical part of the process, so do your research. Make sure the company is registered before retaining them. The Ontario Association of Home Inspectors is a self-regulating body that defines qualifications for home inspectors, and grants the designation RHI, or Registered Home Inspector, to qualified practitioners in Ontario. Most inspection firms have a limitation of liability clause, which states that if they miss something that costs you money, they are not responsible. Ask the inspection company if they have ever been sued by a buyer. Also ask them whether they carry insurance in case they do get sued. Remember that home inspectors cannot see behind walls. In older homes especially, it is worth considering paying extra to check for moisture behind the walls, termites and drainage issues.
4. Go to City Hall
Visit your local building department and find out if any new developments are planned. New
development may increase property values but also increase traffic. Check to see how many owners have applied for minor variances, to either build homes or additions that are larger than the by-law permits. This gives an indication of the future direction of this neighbourhood.
5. Include everything you expect to receive on closing
There is no such thing as too much detail. Insert clearly everything you expect to receive on closing, including window coverings, drapes, mirrors, closet organizers, TV brackets, garage door openers and even 2 sets of keys and FOBs in a condominium. If the seller wants to remove the chandelier, make sure they install a cheaper fixture before closing, so you do not enter a dark house when you move in.
6. Basement apartments must be legal
If the home contains a basement apartment and the income is important to you, make sure that it legally complies with zoning and the fire code by-laws. If it doesn’t, then all it takes is one complaint from a neighbour and you may be forced to spend thousands of dollars to make it comply after you buy.
7. Check about your insurance premium early
Find an insurance agent right away and if possible, check what it will cost to obtain insurance as soon as you sign your agreement and before you waive any conditions. An insurance agent can check the history of claims in the neighbourhood and can let you know about claims for sewage back-ups or vandalism. If it has old knob and tube wiring, or the place used to be a grow house, you will have difficulty arranging insurance. This is important information that any buyer should have before deciding to waive their conditions and complete the deal.
By following these steps, you can avoid horrors after closing.