Ernie Hills
A Quick Lesson for First Time Buyers
Ernie Hills
A Quick Lesson for First Time Buyers
When considering buying your first property, the foremost questions are:
I
think I want to buy something. Can I? Should I?
Is It Easy to Buy?
What should I do first?
Who has the right answers?
Who can tell me the questions to
ask?
Who is the best agent for me?
Can I afford to buy what I want?
Do I want a
dream home or do I want any old thing to start?
How do I decide
what neighbourhood I want to live in?
Can I afford to
live in the neighbourhood that I want?
Should I take
whatever I can get or whatever I can afford?
Do I know enough
to proceed with this endeavour?
I think I want to buy something. Can I? Should I?
You first must decide whether it is
beneficial or not to your lifestyle.
If you are a renter, the entire rent is going to your landlord and nothing
comes back to you in terms of equity.
If that is fine now, will things always be the same?
Building equity has to be one of the major reasons for buying property.
If we were all independently wealthy, would anyone buy property?
Of course there would be people that would buy one property, but there will
always be someone out there that wants to buy more and more building an empire
is in the nature of some people.
If you are raising a family, should you buy to give your children some
stability and consistency or should we move on a regular basis moving them from
school to school? Tough questions that will play a role in all of your lives.
back
Realizing that this is probably the largest
investment of your life, it is prudent to make sure you have enough information
to proceed. From that point on, it is really deciding on a strategy for a
lifetime. Buying a first home may or may not be your last purchase.
Whether or not you can afford to buy what you want is a very important
issue. "I want a 4 bedroom house with Central Air, an indoor
pool, double garage, big yard, ravine property, huge family room."
Sounds wonderful!
What you can afford? Starting with current assets, you take your savings et
al and will be aiming for at least 5% of the total Selling Price of the
property. This is an absolute minimum! back
Start by deciding what money you have to work
with be it savings, RRSP's or family assistance. (In some cases, company
assistance.)
Then you find out what amount of mortgage that you can afford to carry.
Next step Location Location Location! Where to live? That is
decided only by experience with neighbourhoods, friends, relatives or your own
understanding of where you want to live.
Next step would be to make a list of what you want in a property. Detached
home, Semi-detached, town house, condo.
Once you decide what you think you want, then you have to find out if you can
afford it in the neighbourhood of choice. back
Everyone is an expert in real estate.
At least they think they are. Agents work an average of 10 to 16 hours a
day and a lot of them do nothing but real estate. These are the people
that have the answers. First let me say unequivocally that I have most of
the answers for you. :) But then a lot of other real estate agents
have good answers as well. The difficulty is knowing the agent and
knowing that they are doing the best for you. There are some agents that
think that they are the greatest thing since sliced bread. ( Run away
quickly.) back
Who can tell me the questions to ask?
Hopefully this will ultimately be
yourself. I do not profess to have all answers here, but if this works for
you, you should be able to ask yourself as many questions as I can
answer. I also hope that I can ask you some questions that will make
you think of other questions to ask yourself and or your agent. It doesn't
hurt to write them down as you go along. At least that way, if I can't
answer them in the following pages, you will have a bunch of questions to pose
to someone else. back
Me of course! :) Some agents are very
good at pulling you in as a Buyer. They are somewhat like the
Sirens. If you are ready to buy, then this type of agent you will
know. If you are just starting out and find yourself putting an offer on a
property in less than a week or two, then it is obvious that the agent has
you convinced that you should buy. Do yourself a favour and keep your
money in your pocket until you have seen at least a few places. back
Can I afford to buy what I want?
Tough question. Unless your bank
account is rather full, try to avoid the 5% solution of buying something
with only 5% down. It can be a staggering financial drain if you push
yourself too far. Maybe you should start with a more modest home, buy and
sell a few places before getting to that dream home that you would love to
have. back
Do I want a dream home or do I want any old thing to start?
Your call here. As I said in the
previous paragraph, maybe your dream home is a little further into your pocket
than you can afford. I guess then you may decide to go with a more modest
start electing to build your way to that special home. If you can get it
now, that is OK too. One can look at the process as a long term business
plan. If you have children now, are you in the right area for the schools
that you want? Ask yourself more questions. As long as you don't
answer yourself out loud, you should gain some insights. :)back
How do I decide what neighbourhood I want to live in?
It certainly makes my job easier if you know
where you want to live. In the late 80's, people were grabbing anything
that they could get their hands on and subsequently, they are only now getting
back what they paid for their home. Prices have risen close to 89 prices,
but what is more important, is the fact that an upgrade can still be affordable
if you are at the right place at the right time. There have been a lot of
bidding wars in the past year. Mainly due to lack of product. A lot
of people after the same property because they all want the same thing.
There are some areas of the city that are more desirable than others and those
areas are the ones that command the highest prices. eg. Yonge
Davisville to Lawrence and above. Bathurst to Bayview and Leaside as
well. Absolutely prime areas with the best demographics for professionals
in the city. back
Can I afford to live in the neighbourhood that I want?
Target the area you want. If you can't
afford it now, then buy something that you know will appreciate and in 2 to five
years sell with a mind to move to the area that you want. The most
important bit of information that I can offer you is - Don't buy the
best house in the worst neighbourhood. Better to buy a product that
has no negatives and will be easy to sell when the time is
right. Always remember that a detached house is more desirable
than a semi or an attached home. Townhouses are a good start IF the
complex is in a reasonable neighbourhood. (What is reasonable??)
Call me and we can discuss. back
Should I take whatever I can get or whatever I can afford?
Both! You are after the best buy in the
best neighbourhood. Don't go over your budget unless there is an excellent
buy in a better neighbourhood. If something is 10 to 20% lower than
comparable properties, then there will be a fight for it. But keep
trying. This has happened with a few of my clients in the past few
years. They have missed on a few and then managed to get a good deal
because we caught everyone napping. back
Do I know enough to proceed with this endeavour?
If you haven't been exploring home or condo
ownership seriously over the past few years then I highly doubt if you are
capable of making an informed decision. A lot of people rely on agents to
tell them what to do. Some people don't want to take the time to find out
for themselves and thus will buy according to what the agent says. An
informed buyer has looked at dozens of properties and when the "right"
place shows up on the market, they make a decision to buy so fast that it would
make your head spin if you haven't seen it happen. back
There are tons of other ideas
and I may add them if I have some time. I just wanted to get the mental
juices flowing here so that you will have a better chance of making an informed
decision. The next part deals a little with financing and figuring out
what you have to work with.
Ernie Hills 00