Here are some things you should watch for when buying a home:
Budgeting
Make sure you have set your budget realistically. There are many costs that you must consider before you purchase a property:
- Down payment
- Purchase price
- Legal fees
- Property inspection costs
- Carrying costs
- Mortgage payments
- Utilities
- Insurance
- Maintenance
- Property taxes
- Security
In order to maintain all of your payments, you must be financially secure. Is your job stable? Do you have any other large expenditures to make in the near future? The industry rule of thumb is to spend about 30% of gross income on housing. Spending more than this may lead to financial hardship.
Finding the right home
When buying a home, you must make sure that it fits your needs. Ask yourself the following questions:
- Is the house large enough for your family?
- For how long will it be large enough if you are just starting a family?
- Is it close to schools, shopping, work?
- What kind of neighborhood is it in?
- Are there other amenities close by?
- Is there any planned development for the area? (check with city planning)
- If it is an older house, ask if it leaks or has heat problems in the winter. If you buy a property in the summer, you will not necessarily know how well it performs under adverse conditions.
Evaluating the property
Once you have narrowed down your search to several homes that potentially fit your needs, you should make a checklist of each so that you can compare them.
Contract Language
You will need to know a few facts about the legal process that you must follow when buying a home.
Offers
When you are interested in buying a property you must first make an offer.
The offer should include a deadline for acceptance and a few "subject to" clauses to protect yourself. The "subject to" clauses are conditions that must be met before the contract is binding.
There are a few clauses you should be a aware of:
- "this offer is subject to arranging financing..."
- "this offer is subject to lawyers approval..."
- "this offer is subject to selling the purchasers home..."
Note: It is recommended that you have a comprehensive home inspection report done on any property that you are serious about purchasing before making the offer, or, as a minimum, insist on having a "subject to inspection" clause written into any agreements.
By inserting these clauses into the offer you can protect yourself from entering into a contract that you may not be able to honor.
Offers can be nullified if they are not accepted by the stated time limit, if they are revoked before they are accepted, or if the conditions of the offer are not met.
Liens, Caveats, and Encumbrances
These are documents registered against the property which may hinder the selling transaction. You should ensure that there are no such documents registered against the title. If there are, then make sure that the seller deals with them in a timely manner. Consult your lawyer if this situation arises. Conduct a title search of the property before you sign any contract.
Restrictions
There may be restrictions on the property that may have resulted from city zoning or other means. They must be disclosed by the seller in the purchase contract.
Real Property Report
This report will show the boundaries and improvement locations on the property. The seller should have a copy for you so that you know if any improvements are within the properties boundaries or if any planned improvements are feasible.
A Real Property Report shows:
- legal description of the property
- dimensions of boundaries
- location of all improvements
- overhangs and eaves
- list of encroachments
Purchase Contract
You can get a copy of a purchase contract from your lawyer. The seller will have a few copies of this on hand, but it is a good idea to familiarize yourself with its terms and clauses.
Property Inspection
Buyers should always have the property inspected before they close any sale. Structural damage, leaks, etc. may not have been disclosed by the seller, or the seller may have not even have been aware of them. Regardless, a buyer who does not have a property inspected runs the risk of assuming the costs of repair of any hidden defects of a property. See our list of property inspectors if you do not have one in mind already. Remember, property inspection is a competitive industry, so call around and negotiate a good price for yourself.
Notification of an Address Change
In addition to filling out a change of address form at the post office, you should contact directly any companies with whom you will need either to arrange for a transfer of services or to have services discontinued.
Following is a short list of those you will likely need to contact when you are moving:
- Electric utilities
- Gas utilities
- Water utilities
- Insurance company
- Newspapers
- Doctor
- Dentist
- Lawyer
- Friends, relatives
- Bank
- Schools
- Long Distance Moving Trips
Nadeem Khan
Century 21 Elite Estate Ltd. Brokerage
416-566-1102
For Mississauga homes, condos, real estate services please contact Mississauga REALTOR®
Nadeem Khan.
