Life Lesson #4: Do Your Own Homework

Buying our first home was the biggest and hardest purchase of our life.  When we began house hunting in 2015, bidding wars were the norm.  Homes were intentionally listed below list price to solicit multiple offers.  In Toronto, homes were selling in an average of 8 days for 10 – 20 % over list price.

There was little time to react and we ended up losing on 8 bidding wars before we bought our house.  We were literally placing offers on one home on one day and placing an offer on another home the next day/week.  It was mentally exhausting and there were times we felt like offering the maximum amount we could afford just to win the bid.

House hunting became homework to us.  Even though it was our realtor that brought us to showings and sent us new listings, it was Amanda and I that ultimately decided which homes we wanted to put offers on and how much we wanted place the offers for.

We’d listen to what our realtor had to say, but we would do our own homework.

Here’s what we did:

1. Explore the neighbourhood

We would never rely on the listing description to describe the neighbourhood.  At the end of the day, anything written on the listing agreement needs to be verified by the buyer not your realtor.  We would take the time to see it with our own eyes during the day.  If possible, we’d also try to visit the neighbourhood at night to see what the street was like.  Buying a house involved buying the neighbourhood so we needed to know what it was like at all times of the day and what was nearby.

After all, our realtor won’t know if the seller has lousy/loud neighbours.  For buying a house in Toronto, we found this link very helpful to give us an idea of the surrounding neighbours.  By searching a home address, we were able to see if there were any neighbourhood driven complaints against any property owners on the street.  Although it doesn’t go into complete detail, it will show the type of investigation that was completed by the City of Toronto’s bylaw officers (i.e noise complaints, long weeds and grass, etc.).

2. Be prepared during home showings

One of our biggest mistakes when we first started going to showings was that we would immediately fall in love with renovated homes.  We automatically assumed renovated homes would entail less work after the purchase.  We were totally wrong.

A lot of homes that were renovated and listed on the market right after the renovations were done poorly and fast.  They were a shoemaker’s job with the sole purpose of selling the home for maximum price and hiding deficiencies.  We personally tried to avoid these homes.

We were more attracted to homes that were renovated and had the owners living in it for a few years.  It made us feel more at ease because the sellers in these cases were not renovating to sell, they were renovating to live in.  The likelihood of them cheapening out on contractors and materials is greatly reduced as they had the full intention of living in the home for the foreseeable future.

This was also our chance to note down any indoor/outdoor furniture, equipment, Gazebo, etc. we wanted to keep so that it could be included in our offer price.  This was important to us because we were first time homeowners and didn’t have any furniture, shovels, garden hose, ladder, etc. so anything we could avoid buying would make life much easier.

We would also pay careful attention to the condition of the home and how it was maintained both inside and out.  This would tell us a lot about the sellers and would make us more at ease when we were placing offers on homes that showed pride of ownership.

3. Arrange home inspections prior to placing an offer

We completed home inspections before we placed offers on the homes.  This gave us an advantage on offer night because we were comfortable placing offers without any conditions.  We recommend going on HomeStars to find a home inspector that is highly reviewed instead of relying on the one recommended by our realtor.  We made sure we attended the home inspection so that the inspector could walk us through the home and explain in detail what we should be aware of and any additional work that should be done if the home is purchased.  An experienced home inspector should have the equipment necessary to detect moisture, mould and whether there is sufficient insulation behind the walls.

They will also test all faucets, electrical outlets/panel, appliances, HVAC unit.

We were able to save $300 by negotiating and prepaying for 3 home inspections ahead of time (instead of paying for $400 per inspection, we were paying $300 per inspection).

This was well worth the price because we didn’t want to buy a home and later find out that it was infested by termites and termite damage or foundational issues that caused basement flooding and water intrusion.  We wanted to avoid overpaying for these homes and ensure we had enough money aside to have the problems fixed.  Our home inspector was able to tell us how much the work would cost to fix and we would be able to adjust our offer price accordingly.  We wanted to keep our options open on all kinds of homes no matter the condition it was in as long as it was for a price we were comfortable with offering.

4. Talk to the neighbours

We also tried talking to the neighbours, if possible, to find out what kind of people the sellers are, their reason for selling, and what their opinion of the neighbourhood was like.  The neighbours usually know the real reason for a sale and whether the sellers took good care of the house.  Sometimes finding out why the home was selling from a listing realtor may not give the full story.

It’s important to know the reason for the sale and as much about the sellers as possible because it helped us determine how we should make an offer.

  • Sellers that are selling their home because they already bought another house may just want to sell the house as soon as possible (early closing) and are not too focused on selling the house for the highest price.
  • Sellers that have children/pets may want to avoid having to go through a full weekend of open house and having many strangers coming to the home.  These sellers may be more open to pre-emptive offers to avoid having to declutter and re-arrange the home for the open house.

It’s important to do your own homework for any large purchases.  Don’t over rely on what experts and salespeople tell you.  At the end of the day, you’ll be the only one responsible for living with the consequences of a rushed and uninformed decision.

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