Buying a Home London Ontario
Finding the right home and making a prudent financial investment is more involved than just “buying right. If you’re like most, the decision to buy a home involves some stresses and strains. For about 90% of buyers, it’s the single largest financial transaction of their lives. Missteps in any part of the buying process can cost thousands.
These seven strategies will give you helpful, straightforward tips for buying a home and not overpaying, making a bad choice or buying a money pit!
#1: Understand What You Need.
Two things to consider are your NEEDs and your WANTS. They’re two very different things. You may need three bedrooms when you have guests or need a 2-car garage because of your two cars. What you’ll find is your needs are relatively basic. It’s the “wants” that take a little more time to clarify. Some requirements you may want to consider before looking at homes:
- General Price range of home. Can you live in the home of your desire without financial worries? Have you have heard the expression “House Poor”?
- The approximate size (in square footage) you need? Make it a reasonable range.
- General location, area, or subdivision. Are you looking for an attached, a semi, a townhouse, an apartment condo, ranch or a bungalow or two-storey home?
- How many bedrooms are required? Don’t forget to include any home offices or guest rooms.
- How many bathrooms do you need?
- Style and layout of the home. Do you want a more formal plan or a contemporary plan with great room designs?
- Any school requirements or districts?
- Parks, Entertainment, Shopping
All sound reasonable, doesn’t it? By taking the time to work your list, you will be surprised how easy the process goes after that.
#2: Clarify What You Want.
A great way to get a handle on your wants is to take a good look at your present home. What do you like about it? Do you like its open floor plan? Do you like the kitchen and eating areas? Do you like the common area layout? List out everything you want about your present home or homes you’ve visited.
Now, let’s take a look at what you don’t like about your home. Do you dislike the mansard roof? Are you unhappy about the size of the bedrooms? Does only having one bathroom an inconvenience? Is the kitchen too far from the garage? If you dislike something with your present home, you’re going to oppose it with your new home. So the better you can identify these items, the more likely you are to avoid them.
A suggestion that works: Take out a piece of paper and draw a vertical line down the middle. In the left column, write down everything you like about your present home. In the right column, write down everything you dislike about your current home. It’s also important you understand WHY you dislike something. Now, from your list of “likes,” compile a list of features you want for your next home. Here’s a tip that will help you narrow your focus.
Take out another sheet of paper and put two columns on it. On the left-hand side, you will be listing out the features of your home. And on the right-hand side, you’ll be listing out the benefits.
Features tell you what something is: two bedrooms, two baths, a 2-car garage, etc. Benefits tell you what something does. Benefits fulfill desires. For example, a great room concept (feature) will be ideal for entertaining friends and family at particular times (benefit). So on the left-hand side, you would put “great room.”
And on the right-hand side, list out all the benefits (or reasons) for the “great room” design: family entertaining, business entertaining, Christmas holidays with the family, etc.
Understand What Each Other Is Looking For, And WHY: If you’re a husband and wife looking for a home, this exercise will eliminate many disagreements over time. You will both understand what the other wants and why they want it. Rank each feature regarding its importance to you and your spouse. You’re both going to live in the house, so you better understand what the other wants. If you are single, do this as well, you never know when that perfect person shows up and if never, no harm in going through the exercise.
For example, a well-designed gourmet kitchen (remember, list all the kitchen features you’re looking for) may rank high with a woman, while having a man cave may rank high with a man. Or vice-versa.
More Dreams than Money?
The ranking will also show you areas you may need to eliminate because of price constraints. Having each person rank the importance of the features they want, you won’t be eliminating a high-priority item and putting additional stress on an already stressful time.
#3: Understand How Much Home You Can Afford.
Like it or not, there are two guidelines bankers and mortgage lenders use to determine how much loan you can afford. The first guideline is the Payment to Income Ratio. This guideline compares your income, or your total household income, to the amount of mortgage payment you’re considering. To calculate the “payment” part of the formula, the lender will take the mortgage payment (principal + interest) and add to its property taxes or condo fees. Hence the terms “PIT” (principal, interest, taxes).
Usually, lenders will loan up to a payment amount of 28% of your total household income. But before you think you’re home free, there’s something else you need to know.
It’s called the Debt to Income Ratio. Debt refers to ALL the significant monthly payments other than your mortgage payment (PIT). To arrive at this amount, the lender will consider
- Your car payment.
- Your credit card debt.
- Any Revenue Canada liens or payments due.
- Any other payments and debts you have (boat, second home, etc.)
- Child Support
They’ll then compare your total debt to your ability to make current payments with your home loan added into the equation. Now, here’s the “stickler.” Most lenders have set different limits on your Debt Income Ratio, which is why it’s critically important to shop around. (I have seen huge differences in rates and terms, ask around) Don’t follow the “canned” financial advice as you see on TV. Most of that advice is a “rule of thumb” and designed for the lowest credit rating and highest interest rates.
Think about this
If you spend two or three days to find a loan that saves you $10,000 to $60,000 over its term, your time is well worth it! Doing a little homework on your own, or I can recommend some great mortgage providers that have helped hundreds of my clients save thousands over the loan term.
#4: How You Evaluate Homes Will Save You Thousands of Dollars And Heartaches!
One of the biggest mistakes people make when buying a home is they rely solely on “local neighbourhood market analysis information” to determine the right price. Buyers rely on information provided by whom? A real simple question, and I hope you fully grasp this! I am a firm believer that historical home values and current prices of homes sold or not sold are facts, and they should not be confused with anything having the words ‘potential’, ‘should,’ ‘could be’ or ‘averaging”.
As well, family, friends, co-workers, while meaning well, will have opinions and their perspective on what you should do! You are going to be living there, not them, really think this through. Facts do not lie; the question will be, what attributes determine the price you are willing to pay the home seller? Before you buy a home, insist on seeing a “total market overview” of exactly what is going on in the entire market. Then narrow your analysis to local market information.
Why do I say this? Because you want to know two things: 1) what is the entire market doing with values? Are they going up, and by how much? 2) What is the specific area doing with market values? How does it compare to what the total market is doing? Are the growth rates the same, lower, or higher than the overall market? Understanding these parameters will save you thousands of dollars when you make an offer on the house.
OK, so let’s say you’re now pre-qualified with financing, and you have narrowed down what you can afford, what, and you know where.
#5: The Way You Visit a House for Sale Can Save You Enormous Amounts of Money and Time
It’s now time to find not only a home that fits your needs but also a home that will not be a money pit. Keep in mind the following:
- The general location of the house you’re considering could determine how happy you’ll be living there. Is it near a common area? Does it capture better views than other lots in the area? Is it more private or shaped better than other lots? Is it near a loud street? Near a walkway? Near a school and so on.
- A house located in a neighbourhood will give you a basis for knowing how well the home will appreciate vs. other homes on the street.
- Look at the house layout. How well did the builder take advantage of all the amenities the home offers? Are the views great? How’s the curb appeal? Is there a balance between the front and backyards? Think through these things as you visit each house.
Here’s an important tip that will almost always make you money,
Buy the Midrange House in the Best Neighbourhood You Can Afford. Why do I say this? Because the better the neighbourhood, the better the appreciation for you over time. And if you buy the midrange house, the home will “generally” appreciate faster and more significantly than a higher-priced unit in the same area. Plus, you will most certainly spend money updating or decorating your new home, and you don’t want to get “upside-down” on your home’s value after spending money on improvements. So remember.
Now, as you approach your home, there are other things you want to keep in mind.
- What is your initial reaction to the house as you approach it from the street? This feeling is called “curb appeal,” and it dramatically impacts the value of the neighbourhood. Is the home situated right on the lot? Notice the areas around the house? Are they well maintained? Is the landscaping groomed?
- Take a look at the structure of the house. As you go through the home, windows and doors should be square, and they should close correctly. Look around windows and doors for cracks. Check corners of rooms for sloping or tile/wood cracks. These may reveal foundation or water problems.
- Now think about the floor plan of the house. Is it functional? Do the rooms flow the way you want them? Are the halls narrow and long, or are they open? How far will you have to carry the groceries from the garage? Are the rooms the right size and height for your desires? If there have been any additions, were they done professionally? Do they fit with the flow and style of the home?
- Now, check the roof and ceilings. What kind of roof is it, when was it last replaced, is the roof’s slope consistent with our winter climate?
- Now make a basic check of the plumbing, mechanical, and electrical systems. You will be getting a home inspection if you decide on the house, but a cursory review will help save some time.
- Do the drains and toilets work correctly?
- Is the electrical wiring up to code?
- Are the mechanical systems working properly?
#6: Save Thousands of Dollars Writing Your Offer and Negotiating Your Deal
In the real world, sellers want as much as they can get for their home, and buyers want to spend less than the seller wants; the trick is to know:
How MOTIVATED Is the Seller, And How MOTIVATED Are YOU?
If the house has been on the market for over nine days, perhaps it’s because the seller hasn’t been motivated enough to sell or is given false hope by their real estate person. Or, their price reflects their two mortgages, car loans, credit card debt and a few thousand dollars of play money!
No offers by now, the house hasn’t sold, and he/she is very motivated. If a job transfers, you have your home listed, you wish to downsize, or your spouse kicked you out, or you left, or you’ve had it with your landlord, YOU may be very motivated to buy!
Nevertheless, here’s a tip for bringing remember in any real estate transaction. Move Heaven And Earth To AVOID Emotional Attachment To the Home, You’re Considering
If you’re all jacked up about the home, if you can’t hold back your emotions when around the house, then you’re going to get destroyed when negotiating the purchase. Another good reason why an excellent professional Realtor® representing you during the transaction and acting as the middle person will help save you money.
So let’s say you have someone representing you, and you’re ready to write an offer. What’s the single best piece of information you can have? Other than my phone number (I couldn’t resist!), it’s the comparable sales and market data for the entire market and the area. Ask your Realtor for a printout of both for you to use.
You want to take a look at three vital “market telltale signs:”
- Take a look at the currently active (for sale) listings in the area. Was the house you’re considering priced within reason to other homes? If so, you know you’re at a reasonable starting point.
- Now, take a look at the average selling price compared to the listing price. You may notice that most London houses are selling for the asking price or above.
- Make sure you visit several of the other listings in the area. How does your choice compare to the others on the market? Is the home you’re considering in a similar shape? Is it better, sited? Is it bigger, smaller, better style, better landscaping, etc.? These factors will help you determine how much you should pay for your home vs. how much others paid for similar homes in the neighbourhood.
You’re now ready to make your offer. What strategies such as price, date and inclusions are you considering? Are there other offers? What about financing, a home inspection, a survey?
The best strategy depends on you and your Realtor, who has the skillset and experience to strategize your offer, who has the negotiating expertise and maturity to get you what you want!
#7: Use A BUYER’S REPRESENTATIVE! (That’s a Realtor!)
Avoid Dual Agency if at all possible; if you find a home on your own, know that the listing agent represents the seller, not you! It’s true, and the question you have to ask yourself is: “Is this person going to represent MY interests?” Think about this: If you had to go to court, would you use the same lawyer the opposing side was using?
I think you know the answer! But did you know that by creating a “buyer’s representation” with a Realtor, you not only get someone representing you but…
- A buyer’s representative doesn’t cost you a nickel more. Even though they represent you, they are paid out of the standard commission that the home seller has built into their price.
- Buyer representation is straightforward to enter into, but be very careful; buyer representation can be hard to get out of if you are not happy with the Realtor you have chosen. Know what you are signing.
- A buyer’s representative will keep everything about you and your transaction confidential!
Fully grasp the difference of who is representing whom. If more buyers and sellers of real estate understood this, there would be far fewer issues.’ What an excellent real estate person can do to help:
- Knows the area you want to buy in because he/she is out always looking at homes.
- Be able to spot trouble for you as they daily look at homes and see things you might not see.
- Can simplify the buying process.
- Can provide you with motivated, reliable financing sources and options.
- Can refer you to proven inspectors, lawyers and accountants and other service providers you may need.
Most importantly, There Are “Real Estate Agents,” And Then There Are Committed Professionals. Which One Do YOU Want Representing Your Interests?
Warning: Here Comes a Sales Pitch!
I hope the information above has given you some helpful ideas and things to think about when finding and buying a home? Now, some self-promotion.
To show you what I think should be done whenever working with a client.
- I’ll evaluate the value of your chosen home with a 12 page home audit I designed, plus an evaluation worksheet that involves about 2-3 hours of preparation.
- Negotiate the best agreement for you, not only price but clauses that I deem necessary to protect you and your family.
- Guide you to locate the best mortgage in the market for your situation if required.
- Coordinate all inspections, appraisals with the very best firms, so you can feel confident and free to focus on other important family tasks during your move.
- Make the entire process as hassle-free as possible. We have the administrative talent that has been doing transactions for 20 years plus!
- Everything you do and say is confidential.
- When a client, you will receive my ‘Dedicated Home Buyer’ binder with everything you need to know about buying a home, your checklists, moving tips and things to consider as you are getting ready to move.
Before even looking at homes, I will:
- Meet with you to discuss your needs and desires;
- Highlight various neighbourhoods to determine which ones are best suited to your needs.
- Allow you to evaluate whether I can really help you or even like me.
- Assist you in pre-qualifying for mortgage purposes if required.
During the Search for the Right Home, I will:
- Launch my detailed High Energy Home Buyer Program action plan;
- Keep you informed of daily updates on newly listed properties that meet your buyer profile;
- Ensure that I am available to you for offers, questions and concerns and not passed on to an assistant or an inexperienced Realtor.
At the Time of Offer, I will:
- Prepare and review the Offer to Purchase;
- Explain all conditions and special clauses;
- Represent you in presenting the Offer;
- Present the offer and handle negotiations until we have an agreement.
When we have a Conditional Sale Agreement, I will:
- Ensure that all documents required by your Mortgage Provider are signed and provided.
- Assist you in choosing a lawyer to represent you for a smooth and successful closing;
- Assist you in choosing a reputable and professional Home Inspector; I will be there with you at the home inspection as well.
- Monitor that conditions are all completed promptly (inspections, mortgage financing, etc.)
Once we have a Firm and Binding Agreement, I will
- Keep in touch and maintain communication with you;
- Ensure that all documents required by your Lawyer are signed and provided.
- Arrange for a final walk-through 2 or 3 days before you take possession to ensure what you bought is still there and in the same condition.;
- Make you part of our “Most Valuable Client” follow-up program with discount coupons, home maintenance tips.
These are only a few of the things we discuss with you before, and during the buying process, there are 92 items we cover. Sound like a lot? It is, but the way we see it, if you are paying hundreds of thousands of dollars for a property, it is imperative to protect yourself, your family and your future.
Note: Thank you for reading this far, it says a lot about your willingness to be prepared, and I hope that I have shown to you that we too are prepared and have the ability & experience to guide you to get what you want!
Where can we help you?
Our real estate brokerage covers London and parts of South West Ontario. We are licensed in the Province of Ontario and can refer you to our network of qualified real estate professionals across Canada, Florida, California, Arizona, North and South Carolina!
What Will It Cost You?
99.8% of the time, we are paid by the listing real estate brokerage, disclosed to you upfront at all times in writing and verifiable. No retainer fee or any upfront fees are required; we only get paid once the property you choose has changed hands. I call it our success fee! We get paid after you have successfully and happily purchased a property.
Why Us and Not The Other 1900 + Realtors in London Alone?
- We work exclusively for you (the buyer) while the listing agent works for the seller. If you were to approach a listing agent, they would represent the seller, not you. Lawyers cannot work for the buyer and the seller on the same property for a reason; why should Realtors be able to?
- We are your eyes and ears in the London, Ontario real estate market. We take as long as it takes to understand your individual needs by creating a personalized “property profile.” We know about all the homes for sale, be it private, MLS or exclusives and for sale by the owner.
- Our network and long-standing relationships with lenders, lawyers, financial advisors, appraisers, trades and Realtors are continually expanding.
- We will give you an objective and unbiased view of a property’s true worth backed up with documented research of the current market and trends.
Something You Don’t Like? We Can Come Up With a Solution.
- Renting? Solve the problem by buying a house or a condo
- Is House or condo too small? Too big? Solve the problem by buying something bigger or smaller
- Too Expensive to maintain? Solve
- Relocating? Solve
- Don’t like the neighbourhood? Solve
- Are you getting Divorced? Living TMother-in-law too close? Solve
- Fill in the blanks ___________________? Solve
I have been a Realtor for quite a few years and own the brokerage and have learned that buyers want more than a Realtor who can help buy or sell homes; anybody can do that; that is what average does. People hire us because we solve problems, we identify them, take a focused view and solve the problem, end of story!
You don’t hire a Realtor because you need a taxi driver or because they are pretty, ugly, skinny, fat, bald, young or old. You have a problem(which can be good or bad), and you want someone to listen and solve the problem quickly and save some money.
To Buy a Home in London, Ontario, Who Gets The Biggest Bang For Their Dollar?
The biggest bang for their dollar goes to the buyer who has the first opportunity to say yes with conviction! And, who is that buyer?
- The buyer who has identified their needs, not their wants
- The buyer understands that buying a home is a process, not an event! In other words, keeping their emotions in check and aware that opinions from family, co-workers & friends, though well-meaning, may not be accurate or up to date.
- The buyer who knows what questions to ask & is aware of all the facts ends up with the home that matches their budget and needs.
The quality of the questions we ask dictates the quality of our life!