Buying a House

Buying a house is probably the biggest dollar transaction that most people make in their lives.  What amazes me is how little homework time is spent by the buyer prior to making the transaction. 

Think about it: how much time did you spend researching and test driving models before you bought your last car (or even a stereo)?  Did you spend that much time on the purchase of your house?

Here are a few things to think about BEFORE you sign the Offer:

The Offer is the entire deal.   If it’s not in the offer, it’s not in the deal.  A verbal promise to fix this or that is meaningless.  Verbal assurances that the basement has not leaked are virtually unenforceable.  If there is a warranty that you want for a particular item, get it in writing or forget it.

Get your lawyer to review the offer BEFORE you sign it.  While you will probably find that your agent will discourage this, so what?  Do NOT rely on “lawyer review” clause that agents like to put it.  A “lawyer review” clause is not another opportunity to change the deal. 

Don’t rely on your own abilities to inspect the house for major problems unless you are a qualified home inspector yourself.  I’m not trying to rustle up business for an inspector, but if your are willing to pay a mechanic $50 to look over that used car you want to buy for $10,000, why aren’t you willing to pay a home inspector $1000 for a $200,000 home?

A good proportion of real estate deals close at the end of the month.  Unless you really need to close at the end of the month, try picking another time.  Closing at the end of the month means at least two things: you will pay more (likely about 30-50%) for movers or rental trucks; and you may not get your keys until the end of the business day (or maybe the deal won’t close until the next day!)  It’s better to pay a few bucks to bridge your mortgage for a few days than to risk having your movers waiting outside your new home at $100+/hr.

Don’t waive conditions in your favour until they have been satisfied.  It’s pretty easy to get an extension of the condition date.  However, if you waive the financing clause before you have financing (a WRITTEN commitment from the bank) and then you can’t get financing, it’s not pretty.

Remember that you risk more than your deposit if you have to back out of the deal after going firm.  You WILL lose the deposit and you may lose a lot more.  For example, of you back out and the market tanks and the seller ends up getting $40,000 less for their home than what you were willing to pay, you are liable for the loss.

As the busy real estate season starts up, happy house hunting, but be sure to do your homework and know what you are getting into.