Educate yourself before jumping into the Toronto real estate market
Dos and don’ts for first-time home buyers
By Joanna Smith - The Globe and Mail
Sandra Rinomato made her first foray into Toronto real estate when she stopped by a new-home development, curious about what they had to offer. She walked away as the owner of a property she admits she shouldn’t have bought.
“Don’t do it!” she says of the experience.
As a successful real estate agent and the host of the HGTV reality-television show Property Virgins, Ms. Rinomato now helps first-time buyers put their emotions aside and follow some basic guidelines.
She recently took a break from filming in Toronto to talk about the dos and don’ts of buying your first home.
Investigate your area
“Get as much information as you can before actually buying,” Ms. Rinomato says, noting that it doesn’t require a lot of time to do that. “It’s not like you have to spend six months educating yourself.”
She suggests you investigate various neighbourhoods as well as types of real estate you may not have previously considered. And find out how far your dollar will go in the neighbourhood where you would like to buy.
A lot of information is available on the Internet, but Ms. Rinomato urges people to hire a Toronto real estate agent to help interpret it properly and dispel any real estate myths.
Get solid representation
Without something called a buyer representation agreement, you are essentially in a customer-beware situation. Your real estate agent will be obligated to answer your questions honestly, but “if you don’t know what question to ask, they don’t have to divulge that information to you,” Ms. Rinomato explains.
A buyer representation agreement makes you a client, and with it your real estate agent will owe you a higher level of accountability.
While the agreement obligates you to use a particular real estate firm over a specific period of time, the firm, in turn, is required to work exclusively on your behalf - to help you find the property you want to buy. It also means the real estate agent is committed to giving you the full benefit of his or her expertise.
“[Clients] don’t have to think of the question - I have to think of it for them,” Ms. Rinomato says.
Suit your lifestyle
She remembers one childless young couple that asked whether there were any good high schools in their desired area, even though they would probably move before their kids got to be high-school age.
“A lot of times, [first-time buyers] have a limited budget and they are trying to get everything in that first house,” she says. “What they have to do … is buy a property that suits their lifestyle now and for the next few years.”
When a limited budget prevents you from getting what you want in a house and location, it’s time to start looking at less spacious but more practical options, such as smaller houses, townhouses or condos, Ms. Rinomato says.
But even potential condo buyers often limit their options by asking for features such as an extra bedroom to put up guests, she adds.
” ‘Are they helping you pay the mortgage?’ ” she wants to ask them. ” ‘How about a futon?’ ”
Don’t bid too low
You’ll only insult the seller if you offer $250,000 for the sake of bargaining when similar houses in the same neighbourhood have sold for $300,000, she says.
“In those cases, sometimes you end up either never getting the property no matter how you bid, or you have to pay a lot more than if you’d just done it sensibly in the beginning.”
Make your strongest bid
The time for bargaining is not in the middle of a bidding war.
If you really want a house, bid as much as you can possibly afford (based on what you think the home is worth, of course), because if you hold back by even just $500, you may lose it.
“Don’t make the mistake of thinking you’re going to get a second chance.”
Buyers should remember, however, that they can always walk away without bidding when they feel the asking price is too high, she adds.
“You never have to pay more than the house is worth to you.”
A strong bid also doesn’t have any conditions, including for an inspection and a closing date.
“If they’re not offering the dining room chandelier, don’t ask for it,” she says.
And show sellers you are serious by offering a solid deposit along with your bid. With so much on the line, sellers want to be sure the buyer won’t get cold feet.
“Having that certified cheque [for a substantial amount] shows your seriousness and intent to purchase that property,” she says.
“A person with a big deposit upfront, in their hands… can outweigh a few thousand dollars on the offer price.”
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