Help me learn to buy a house!
November 1, 2008 12:00 PM Subscribe
How did you learn how to buy a house? First-time homeowner needs some guidance.
For the first time in my life, I will be looking at buying a home (either condo or small house). But the problem is that I have no idea how to approach looking for a home, securing a mortgage, what I should be careful about, etc. Should I even be looking in the current market? These are all questions I can't answer, and I'm not the type to leap before I look, so to speak.
I am hoping that people can share their experiences about how they educated themselves about buying a home, which resources they used, etc. How can I make sure that I know what I am about in doing this, and that I don't get screwed over in the process by banks, shady sellers, or anyone else.
If it makes a difference, I will be looking in the west Toronto area, near Pearson airport. Any local knowledge would certainly be a plus!
For the first time in my life, I will be looking at buying a home (either condo or small house). But the problem is that I have no idea how to approach looking for a home, securing a mortgage, what I should be careful about, etc. Should I even be looking in the current market? These are all questions I can't answer, and I'm not the type to leap before I look, so to speak.
I am hoping that people can share their experiences about how they educated themselves about buying a home, which resources they used, etc. How can I make sure that I know what I am about in doing this, and that I don't get screwed over in the process by banks, shady sellers, or anyone else.
If it makes a difference, I will be looking in the west Toronto area, near Pearson airport. Any local knowledge would certainly be a plus!
When I was looking to buy, I kept saying 'God, I wish there was a book like Home Buying For Dummies because I feel like an idiot trying to figure this out.'
Turns out, it's called 'Buying and Selling a Home for Canadians for Dummies' (though I still feel it should have been called Buying and Selling a home for Canadian Dummies). It's not every detail you'll need to know, but it's a good start on giving you the confidence to ask the right questions.
posted by jacquilynne at 12:42 PM on November 1, 2008
Turns out, it's called 'Buying and Selling a Home for Canadians for Dummies' (though I still feel it should have been called Buying and Selling a home for Canadian Dummies). It's not every detail you'll need to know, but it's a good start on giving you the confidence to ask the right questions.
posted by jacquilynne at 12:42 PM on November 1, 2008
I did tons of research before buying my first house. Homebuying for Dummies was helpful. Also, the threads on ask metafilter.
Ask anyone you know, people at work, friends, etc. about the local market. I asked around until I found a good realtor.
The only thing I really had a problem with and did tons of research on was the mortgage. I called a number of places before I decided on my mortgage.
posted by hazyspring at 1:00 PM on November 1, 2008 [1 favorite]
Ask anyone you know, people at work, friends, etc. about the local market. I asked around until I found a good realtor.
The only thing I really had a problem with and did tons of research on was the mortgage. I called a number of places before I decided on my mortgage.
posted by hazyspring at 1:00 PM on November 1, 2008 [1 favorite]
You learn by doing, and trying to answer every question that comes up through judicious Googling. Your real estate agent should be able to walk you through the process. (But keep in mind the problems with real estate agents, some of which are addressed in answers to this question I asked a while back.)
posted by jayder at 1:03 PM on November 1, 2008
posted by jayder at 1:03 PM on November 1, 2008
Get a real estate agent that you like and trust. Their job is to make it easier for you. My agent walked me through the entire process, from picking a place, fighting for the right price, finding a lawyer, a home inspector, and a mortgage dealer. He told me what I needed to do at each step of the way, and gave me options for each step. And he took me out for dinner to boot! I couldn't have done it without him. And as the buyer, you don't have to pay your real estate agent. Score!
posted by Hildegarde at 1:08 PM on November 1, 2008 [3 favorites]
posted by Hildegarde at 1:08 PM on November 1, 2008 [3 favorites]
And on the mortgage front: get a broker. It's a lot less work. They also cost you nothing, but know what they're doing, which is handy. A mortgage broker presents you with a series of the best mortgage options available, and you just need to tell him/her which you want. I couldn't have gotten a better deal on my own (though I tried). My broker brought all the paperwork to my apartment and explained it all to me, and then set the whole thing up (when the money comes out of my account, etc.) It was painless.
posted by Hildegarde at 1:11 PM on November 1, 2008 [2 favorites]
posted by Hildegarde at 1:11 PM on November 1, 2008 [2 favorites]
A book I liked better than the dummies one was "Home Free" by Howard Turk. It is out of print but available at your local library.
When you say near Pearson are you thinking of Malton? Or Missisauga or Brampton or further out (I'm about 30 mins from Pearson). Look at the flight paths if you are near Pearson (IMHO houses should never have been built in some places). Things to consider beyond the asking price: property taxes - expensive in Peel, so compare, condo fees (I believe the lending institutions factor that monthly cost in and lower the total amount they are willing to lend you), is this a home you plan to live in long term? If not, it may be cheaper to continue to rent, if so, wil the space expand for a SO or children if you see either in the future? Is the neighbourhood walkable? Schools, libraries, shops, thinks you may not need now but maybe would in a few years? Unfortunately no one can accurately predict the Canadian housing market, since we don't know how the US will affect us ... condos are somewhat overbuilt though so my gut feeling is a house is a better investment than a condo. Since you said a small house you will probably be looking at an older house (few homes in the past twenty years seem to be built under 2,000 sq feet). Are you handy or are you willing to learn? Jon Eakes is your friend.
President's Choice seem to have good rates and I have heard good things about them (my mortgage is not with them so I do not have first-hand knowledge). They do offer a lot of seminars in buying a home at the Superstores. Other banks and realtors also give infomration away for free. Just use critical thinking about what they are offering. I was happy with my mortgage broker so you may want to consider using one.
posted by saucysault at 1:16 PM on November 1, 2008
When you say near Pearson are you thinking of Malton? Or Missisauga or Brampton or further out (I'm about 30 mins from Pearson). Look at the flight paths if you are near Pearson (IMHO houses should never have been built in some places). Things to consider beyond the asking price: property taxes - expensive in Peel, so compare, condo fees (I believe the lending institutions factor that monthly cost in and lower the total amount they are willing to lend you), is this a home you plan to live in long term? If not, it may be cheaper to continue to rent, if so, wil the space expand for a SO or children if you see either in the future? Is the neighbourhood walkable? Schools, libraries, shops, thinks you may not need now but maybe would in a few years? Unfortunately no one can accurately predict the Canadian housing market, since we don't know how the US will affect us ... condos are somewhat overbuilt though so my gut feeling is a house is a better investment than a condo. Since you said a small house you will probably be looking at an older house (few homes in the past twenty years seem to be built under 2,000 sq feet). Are you handy or are you willing to learn? Jon Eakes is your friend.
President's Choice seem to have good rates and I have heard good things about them (my mortgage is not with them so I do not have first-hand knowledge). They do offer a lot of seminars in buying a home at the Superstores. Other banks and realtors also give infomration away for free. Just use critical thinking about what they are offering. I was happy with my mortgage broker so you may want to consider using one.
posted by saucysault at 1:16 PM on November 1, 2008
When I bought my place, before I even starting looking, I went to a mortgage broker and to my own bank to see what sort of a loan I qualified for. This helped me a lot as I was able to narrow down my options and sellers really like preapproved buyers.
I got a book from the local library on home renovation that had a whole chapter on buying a home and how to assess its condition. It also suggested what sort of questions to ask to help you find out the information you need. Find out the selling prices of similar places in the area and get condo meeting minutes and the budget from the last couple of years. Your realtor should be able to help you. I think it is law (?) in most places that the condo assoc. has to fork these over.
The seller has to divulge any major house things like leaky basement. My seller failed to divulge that the wall behind the bathtub was shored up with plastic bags because it was on the verge of disintegrating. Should have trusted my gut and the knowledge I gained from that book. GAH! Always keep some money back when you buy because you WILL have to fix something.
The one big mistake I made - my realtor. He was from the same company as the seller's realtor. I didn't realize that this would be an issue. Also, the guy had no interest in helping me at all and even lost my $1,000 earnest money check to start the bidding process. Just dropped it in the atrium of the public building where I work. He was also out of town for the bidding process and the signing. I think the only thing that kept me from getting totally screwed was the low amount of money at stake. Find someone who seems to care about getting you into a house you are going to love and be able to afford.
posted by Foam Pants at 2:19 PM on November 1, 2008 [1 favorite]
I got a book from the local library on home renovation that had a whole chapter on buying a home and how to assess its condition. It also suggested what sort of questions to ask to help you find out the information you need. Find out the selling prices of similar places in the area and get condo meeting minutes and the budget from the last couple of years. Your realtor should be able to help you. I think it is law (?) in most places that the condo assoc. has to fork these over.
The seller has to divulge any major house things like leaky basement. My seller failed to divulge that the wall behind the bathtub was shored up with plastic bags because it was on the verge of disintegrating. Should have trusted my gut and the knowledge I gained from that book. GAH! Always keep some money back when you buy because you WILL have to fix something.
The one big mistake I made - my realtor. He was from the same company as the seller's realtor. I didn't realize that this would be an issue. Also, the guy had no interest in helping me at all and even lost my $1,000 earnest money check to start the bidding process. Just dropped it in the atrium of the public building where I work. He was also out of town for the bidding process and the signing. I think the only thing that kept me from getting totally screwed was the low amount of money at stake. Find someone who seems to care about getting you into a house you are going to love and be able to afford.
posted by Foam Pants at 2:19 PM on November 1, 2008 [1 favorite]
Oh, and another thing. I went with the broker. The process was very easy. After that, they sold my loan. All brokers do this. For the first time around, I think the broker was the way to go as the process was scary and they helped in a huge way. The second time I do this, I am going to go with my bank as paying the mortgage will be a better experience.
posted by Foam Pants at 2:21 PM on November 1, 2008 [1 favorite]
posted by Foam Pants at 2:21 PM on November 1, 2008 [1 favorite]
Research, research, research. First, get a mortgage broker (research and shop around first - some of them are a bit shady). Get a realistic, accurate idea of how much you can borrow - the broker should be able to advise you about whether this is a realistic amount that you can afford to pay, as well.
Use the Internet - research homes in your chosen area over and over. Go to open houses to see what the market is, go to auctions to see what houses are actually selling for (as opposed to asking prices). When you find the house for you, be prepared to make a decision fast, because true bargains never last long. Be prepared to spend a little more than you expected (there's always a great house that's just slightly above your budget).
Have fun - it's stressful and time-consuming, but exciting as well. You only get to do it for the first time once.
posted by dg at 2:41 PM on November 1, 2008 [2 favorites]
Use the Internet - research homes in your chosen area over and over. Go to open houses to see what the market is, go to auctions to see what houses are actually selling for (as opposed to asking prices). When you find the house for you, be prepared to make a decision fast, because true bargains never last long. Be prepared to spend a little more than you expected (there's always a great house that's just slightly above your budget).
Have fun - it's stressful and time-consuming, but exciting as well. You only get to do it for the first time once.
posted by dg at 2:41 PM on November 1, 2008 [2 favorites]
Some advice says get a recommended realtor referred by someone you know or something like that. I prefer my brother's advice: "The realtor is not your friend. He's a salesman." Watch him/her like a hawk. They just want to close a deal asap, and will try to jolly/rush you into it. Don't let them snow you into whatever is easiest for them, even as they couch it in glowing terms about how wonderful it is for you. They will likely fill out paperwork correctly, but their verbal assurances are worth little in general, and worth nothing when it comes to changes in the condition of the property that may or may not occur between signing and possession. Do make sure they have several years' experience in the kind of property you want, be it condo or house.
posted by Listener at 2:54 PM on November 1, 2008 [2 favorites]
posted by Listener at 2:54 PM on November 1, 2008 [2 favorites]
Oh I failed to notice that you're buying in the neighbourhood...I bought a condo in Clarkson (south Mississauga). I'd be happy to hook you up with my real estate agent. He's a great guy, born in the area and really knows it well. I even accompanied him when a friend of mine was looking for a place. So much fun! Ping me if you want, I'd be really happy to pass on the love. I'd trust the man with my life savings, no kidding.
posted by Hildegarde at 2:56 PM on November 1, 2008
posted by Hildegarde at 2:56 PM on November 1, 2008
get a broker. It's a lot less work. They also cost you nothing,
this is not necessarily true.
I'm actually taking the 3-class series to get a RE sales agent license (so I can represent myself when I buy in ~2010), and I can say the first class has been reasonably education so far.
2nding dg -- these days with zillow, ziprealty, and redfin, getting a feel for pricetrends and the market is really a lot easier than it was just 5 years ago, at least here in the lower 48.
Before you make an offer you should know when & why every house on the block/ in the condo development sold for.
posted by troy at 3:05 PM on November 1, 2008 [1 favorite]
this is not necessarily true.
I'm actually taking the 3-class series to get a RE sales agent license (so I can represent myself when I buy in ~2010), and I can say the first class has been reasonably education so far.
2nding dg -- these days with zillow, ziprealty, and redfin, getting a feel for pricetrends and the market is really a lot easier than it was just 5 years ago, at least here in the lower 48.
Before you make an offer you should know when & why every house on the block/ in the condo development sold for.
posted by troy at 3:05 PM on November 1, 2008 [1 favorite]
"The realtor is not your friend. He's a salesman." Watch him/her like a hawk. They just want to close a deal asap, and will try to jolly/rush you into it.
This is certainly not always the case. Our realtor made sure we found a house we would really be happy with, even cautioned us against rushing in when we found one that we liked fairly quickly. He spent a lot of time with us going over everything and answering all our questions, arranged all the inspections, did the research to make sure the title was clear, and so on. He knew we liked the house well enough to pay the asking price (which was already under the appraised value) if we couldn't cut a deal, but he still helped us negotiate a price well under the asking price even though it reduced his commission proportionately.
A lot of people aren't aware (we weren't) that the process involves not one but two agents, one representing the buyer and another representing the seller. The realtor's code of ethics prevents the same agent from representing both parties, so there's no conflict of interest. You decide what you want, the seller decides what they want, and the two realtors handle the actual negotiations. (This is in the US, and I don't know if it works the same way in Canada, but a good realtor shouldn't have a problem with you requesting that things work this way even if it's not required of them.)
You can get insurance against changes in the condition of the property between signing and possession (actually between inspection and possession). The cost may depend on the neighborhood and the age of the house, but ours was very inexpensive, and we agreed to it without a second thought. Your realtor can and should arrange this for you.
So I agree with those who say you should ask around for a good realtor. Ask everyone you know, and don't stop asking until you find the right one. When you find them, you'll know--I rave about our realtor to anyone who mentions buying a house.
Looks like Hildegarde is the person to start with, in fact. Good luck!
posted by [user was fined for this post] at 3:44 PM on November 1, 2008 [1 favorite]
This is certainly not always the case. Our realtor made sure we found a house we would really be happy with, even cautioned us against rushing in when we found one that we liked fairly quickly. He spent a lot of time with us going over everything and answering all our questions, arranged all the inspections, did the research to make sure the title was clear, and so on. He knew we liked the house well enough to pay the asking price (which was already under the appraised value) if we couldn't cut a deal, but he still helped us negotiate a price well under the asking price even though it reduced his commission proportionately.
A lot of people aren't aware (we weren't) that the process involves not one but two agents, one representing the buyer and another representing the seller. The realtor's code of ethics prevents the same agent from representing both parties, so there's no conflict of interest. You decide what you want, the seller decides what they want, and the two realtors handle the actual negotiations. (This is in the US, and I don't know if it works the same way in Canada, but a good realtor shouldn't have a problem with you requesting that things work this way even if it's not required of them.)
You can get insurance against changes in the condition of the property between signing and possession (actually between inspection and possession). The cost may depend on the neighborhood and the age of the house, but ours was very inexpensive, and we agreed to it without a second thought. Your realtor can and should arrange this for you.
So I agree with those who say you should ask around for a good realtor. Ask everyone you know, and don't stop asking until you find the right one. When you find them, you'll know--I rave about our realtor to anyone who mentions buying a house.
Looks like Hildegarde is the person to start with, in fact. Good luck!
posted by [user was fined for this post] at 3:44 PM on November 1, 2008 [1 favorite]
I rent. My landlord decided to sell a couple years ago. After a year on the market I learned a lot from the Realtor.
1. Realtors do NOT want to know what problems there may be as they have to disclose that. The one selling our house did not want to know about the mold, the termites, or the fact that the septic tank needed to be replaced. When I tried to tell him, he would ask me to not tell him.
2. Get inspections before you buy. My new landlord is a contractor, but he had to replace every stud in the house due to the termite damage. Since we live in earthquake prone area, it is lucky we haven't had any major temblors!
3. When we do buy, we plan to do as previous have noted and get preapproved - no pressure that way to look at things we can't afford.
4. If the place is currently rented, talk to the renters. Find out about the septic, leaky pipes, etc. Yeah, they don't want to move out, but they will paint the place bad so they can stay and you will learn everything that needs fixing as well as what the previous landlord was doing for upkeep. (For the record, I didn't offer this to people, but if they asked, I told them. The Realtor usually went outside when this happened.... I was always home when they came.)
Wife of 445supermag
posted by 445supermag at 3:45 PM on November 1, 2008 [1 favorite]
1. Realtors do NOT want to know what problems there may be as they have to disclose that. The one selling our house did not want to know about the mold, the termites, or the fact that the septic tank needed to be replaced. When I tried to tell him, he would ask me to not tell him.
2. Get inspections before you buy. My new landlord is a contractor, but he had to replace every stud in the house due to the termite damage. Since we live in earthquake prone area, it is lucky we haven't had any major temblors!
3. When we do buy, we plan to do as previous have noted and get preapproved - no pressure that way to look at things we can't afford.
4. If the place is currently rented, talk to the renters. Find out about the septic, leaky pipes, etc. Yeah, they don't want to move out, but they will paint the place bad so they can stay and you will learn everything that needs fixing as well as what the previous landlord was doing for upkeep. (For the record, I didn't offer this to people, but if they asked, I told them. The Realtor usually went outside when this happened.... I was always home when they came.)
Wife of 445supermag
posted by 445supermag at 3:45 PM on November 1, 2008 [1 favorite]
My agent hooked me up with a home inspector, and then followed him through the place to hear what he thought. The home inspector said some stuff about problems with two of my light switches, but my agent didn't think he was right, so he hired an electrician himself to come in and check it out. No cost to me whatsoever.
Not all real estate agents are made equal. Some of them work really hard to get you the best possible price on the best possible place, because they know that word of mouth recommendations are worth their weight in gold.
posted by Hildegarde at 3:53 PM on November 1, 2008
Not all real estate agents are made equal. Some of them work really hard to get you the best possible price on the best possible place, because they know that word of mouth recommendations are worth their weight in gold.
posted by Hildegarde at 3:53 PM on November 1, 2008
[i]A lot of people aren't aware (we weren't) that the process involves not one but two agents, one representing the buyer and another representing the seller. The realtor's code of ethics prevents the same agent from representing both parties, so there's no conflict of interest. [/i]
This is not true (had my midterm on Thursday so I speak with authority about California at least).
Single agency is normal but dual-agency (one agent for both buyer and seller) is allowed if the agent is listed and their compensation is accurately disclosed on the buyer's offer form.
Dual-agency is generally not a good idea though since the agent wants a buyer to move onto the next deals -- and guess what, you're it.
posted by troy at 5:44 PM on November 1, 2008
This is not true (had my midterm on Thursday so I speak with authority about California at least).
Single agency is normal but dual-agency (one agent for both buyer and seller) is allowed if the agent is listed and their compensation is accurately disclosed on the buyer's offer form.
Dual-agency is generally not a good idea though since the agent wants a buyer to move onto the next deals -- and guess what, you're it.
posted by troy at 5:44 PM on November 1, 2008
On the broker question, I did use a broker. But honestly, I costed each option out. In the end, I found that it was the best economical decision to use a broker, and also made my life easier.
posted by hazyspring at 6:08 PM on November 1, 2008 [1 favorite]
posted by hazyspring at 6:08 PM on November 1, 2008 [1 favorite]
I went with the broker. The process was very easy. After that, they sold my loan. All brokers do this. For the first time around, I think the broker was the way to go as the process was scary and they helped in a huge way. The second time I do this, I am going to go with my bank as paying the mortgage will be a better experience.
That's funny, because I went with my bank... and they sold the mortgage right away, too. It was the fashionable thing to do for some years, though hopefully it's a little less common now.
Real estate agents can be great or terrible, or anything in between. As noted, they get paid by completing deals, not by finding you the best price or most perfect house. But then, less cynically, agents who are in the business long term (as a career, unlike all the fly-by-night people who got into it when the market was hot) depend on word of mouth recommendations, which only happen when people are happy with the price they paid and the house they bought.
So don't believe they the agent is your new best friend, and understand that although their commission doesn't come directly out of your pocket it certainly is a component of the total sales price, but at the same time recognize that there are good real estate agents out there, and when they are good they can really make the process easier.
posted by Forktine at 2:11 AM on November 2, 2008
That's funny, because I went with my bank... and they sold the mortgage right away, too. It was the fashionable thing to do for some years, though hopefully it's a little less common now.
Real estate agents can be great or terrible, or anything in between. As noted, they get paid by completing deals, not by finding you the best price or most perfect house. But then, less cynically, agents who are in the business long term (as a career, unlike all the fly-by-night people who got into it when the market was hot) depend on word of mouth recommendations, which only happen when people are happy with the price they paid and the house they bought.
So don't believe they the agent is your new best friend, and understand that although their commission doesn't come directly out of your pocket it certainly is a component of the total sales price, but at the same time recognize that there are good real estate agents out there, and when they are good they can really make the process easier.
posted by Forktine at 2:11 AM on November 2, 2008
Regarding a realtor's willingness to stick it out and negotiate (in either direction)
The realtor's commission,being only a small fraction of the sale price, does not change by any order of magnitude as you negotiate. You saving or paying $20,000 extra might only translate to a few hundred dollars for the realtor.
What the realtor really wants is to close the deal as quickly as possible, and move on to the next customer.
posted by TravellingDen at 8:42 AM on November 2, 2008
The realtor's commission,being only a small fraction of the sale price, does not change by any order of magnitude as you negotiate. You saving or paying $20,000 extra might only translate to a few hundred dollars for the realtor.
What the realtor really wants is to close the deal as quickly as possible, and move on to the next customer.
posted by TravellingDen at 8:42 AM on November 2, 2008
When I put in an offer on a condo through my agent, I was prepared to accept the counter-offer. It seemed like a fair price and I could afford it. My agent thought he could shave of a few grand for me, so he recommended I submit a counter-offer, which was accepted. If it had been in my hands alone, I would have paid more.
Once again, while I'm sure there are lots of crooked agents out there, a good one knows that treating someone like me right means I write these kinds of things about him and refer him to my friends. That's worth more than a few extra bucks on a deal.
posted by Hildegarde at 3:05 PM on November 2, 2008
Once again, while I'm sure there are lots of crooked agents out there, a good one knows that treating someone like me right means I write these kinds of things about him and refer him to my friends. That's worth more than a few extra bucks on a deal.
posted by Hildegarde at 3:05 PM on November 2, 2008
We're going through the process yet another time. One website I found helpful is Redfin.com. It pulls a lot of historical data together. How many times it was sold, the year and price, lot size, market price estimates and more. I down load it all into a spreadsheet before we go hunting.
posted by Metachel at 9:34 AM on April 30, 2009
posted by Metachel at 9:34 AM on April 30, 2009
This thread is closed to new comments.
Ask your friends and family or people you work with in the area about agents they have used and would recommend, too.
posted by stefnet at 12:20 PM on November 1, 2008 [1 favorite]