Amin Vaziri - COMPLETE GUIDE TO BUYING A HOME

COMPLETE GUIDE TO BUYING A HOME

Amin Vaziri

Table Of Contents

How Real Estate Agents Help Home Buyers

Owning vs. Renting

Buyers' Needs and Desires

Real Estate Horror Stories To Learn From 27

Searching for the Right Home

Buying a House: Negotiation Dos and Don'ts 41

What to Know About Home Inspections

Shopping for a Home Loan

Organizing Your Move

About the Author – Amin V uthor – Amin Vaziri I’m Amin Vaziri, a civil engineer by training, with an MBA degree and nearly 25 years of hands-on experience in the real estate market overseas and Canada. Throughout my career, I have been deeply involved in various projects, from residential and commercial developments to large-scale infrastructure ventures. My engineering background has provided me with a strong technical foundation, while my business education has enabled me to approach real estate with a strategic and entrepreneurial mindset. This blend of skills has shaped my perspective and fueled my passion for building, investing, and helping others navigate the real estate world. Over the past two and a half decades, I’ve built my career on a commitment to integrity, hard work, and results. Through this book, I aim to share the insights and lessons I've learned along the way, inspiring and empowering others to achieve success in real estate and beyond. All the information in this book is based on my knowledge, experience, and effort. However, it remains the reader’s responsibility to conduct further research and seek additional professional advice if any information appears unclear or requires further validation.

CHAPTER 1 How Real Estat eal Estate Agents e Agents Help Home Buyers At the start, I’ll come right out and tell you I’m a real estate agent — proudly so! Nice to meet you! I’m not trying to sell you anything, but I’m pleased to be of service. In fact, generally, real estate agents are paid out of the buyer’s commission. So, I’m not looking forward to parting with your money. Instead, I’m giving you the benefits of experience and advice I have gleaned throughout my career selling houses and being in real estate transactions — for both sellers and buyers. We can discuss this if you'd like me to help you find a home. Call me if you need me. Technology has changed the way homes are sought and bought today. In this “Information Era,” most buyers are first introduced to a house and eventually purchase it online, through sites like Prelist.org and Realtor.ca. So that means there’s no need for a buyer’s real estate agent, right? Using a real estate agent is to find a home and show homes available for sale, right? If a buyer can find and visit a home online alone, why involve another party?

WHY HOME BUYERS NEED A REAL ES UYERS NEED A REAL ESTATE AGENT

Ah, not so fast, friend. The reasons to use a real estate agent today are as valid as they were yesterday. The ease of online transactions and the proliferation of services to assist buyers in handling their real estate transactions have emerged recently, over the last decade. This has caused buyers to wonder if using a real estate agent is no longer necessary or an expense that can be avoided. While doing the work yourself can save you money if 1

you buy a “For Sale By Owner” (FSBO) house and the seller agrees to reduce the price by 3% (in the range of what a listing agent would traditionally receive), for many, a do-it-yourself home purchase might be pricier than a real estate agent's commission in the long run. Additionally, a buyer typically does not pay an agent a commission directly on a house purchase. On most home sales, there is a listing agent (the agent the seller engages to sell the property) and a selling agent (the agent who introduces the eventual buyer into the transaction). Some real estate agents market themselves as “buyer’s agents,” “exclusive buyer’s agents,” or “buyer’s representatives.” These real estate agents have chosen to specialize in finding homes for prospective buyers and handling the negotiations and transactions associated with the purchase. These agents want to emphasize why buyers shouldn’t go directly to the listing agent when purchasing real estate. A buyer who goes directly to the listing agent deals with an agent with conflicting responsibilities. You will be unrepresented if you choose not to hire an agent. A seller's agent's job is to obtain a reasonable price for the seller, and they may not necessarily represent the buyer’s interests ambitiously. Those who market themselves as buyers’ agents indicate they only work for the buyer in a real estate transaction. The buyer’s agent's commission is paid by the seller, except in rare cases. They either receive payment directly from the seller or set up the transaction so that the seller provides a “credit” to the buyer for the real estate commission, after which the buyer pays the commission. A maxim in real estate is, “No matter how it’s set up, the buyer still walks away with the house, and the seller still walks away with almost 97% of the purchase price.”

MORE ACCESS TO THE REAL ES O THE REAL ESTATE MARKE TE MARKET

A real estate agent will have better access to the market and an exceptional knowledge of local conditions. The agent is a full-

time liaison between sellers and buyers. An agent will have ready access to other properties listed by different agents. Buyers’ and sellers’ agents know how to negotiate a real estate deal. A real estate agent will track homes that meet your criteria, contact sellers’ agents, and secure appointments for viewing the homes. On their own, buyers often struggle with these issues. This is especially true when a buyer relocates or secures a new employment opportunity and fails to engage a buyer’s agent to handle the matter. NEGOTIATING IS HARDER ON YOUR OWN A real estate agent will keep the transaction “at arm’s length,” so personalities and emotions do not become involved. Price negotiations require special skills and understanding of the psychology of offering and counteroffering. Agents keep the transaction dispassionate and rational. For example, a buyer (you) might like a home but despise its wood- paneled walls, shag carpet, and lurid orange kitchen. When you work with an agent, you can express your opinions on the current owner’s decorating skills and complain about how much it will cost to upgrade the home without insulting the owner. Your agent will convey to the seller that you are very much interested in the property, but cannot afford to spend a certain amount on decorating costs, and thus can offer a lower amount.

CONTRACTUALLY SPEAKING…

There are many contracts and documents involved in purchasing a house. The stack is more than an inch thick. Unless you’re a real estate lawyer or title agent, these documents will be foreign to you. Yet, they require detailed and accurate completions. Buying a property is not necessarily a “fill-in-the- blanks” transaction. One mistake, let’s say in title work, could haunt the buyer well down the line after purchase. This very situation happened. A property that sat on a double lot was put on the market. The neighbor bought it to remove a bit of the second lot to expand his yard.

The seller then returned home to the market, and it sold. Months later, through a property tax notification, it was revealed that, in preparing new deeds for the property, the expanded yard area had been incorrectly listed in the neighbor's name; however, the house had already been transferred to the home buyer. The new homeowner now owned both houses, and the neighbor owned his expanded driveway and yard. Fortunately, they were good neighbors and settled the matter with a few signatures. An experienced real estate agent deals regularly with these contracts, conditions, and unexpected situations and is familiar with which conditions should be used, when they can safely be removed, and how to use the contract to protect you.

YOU WON'T NECESSARIL N'T NECESSARILY SAVE MONEY

The primary reason for not using a real estate agent is to save money. Otherwise, why would someone turn down professional assistance in finding a home? However, it's unlikely that both the buyer and the seller will reap the benefits of not paying real estate agent commissions. It works like this: An owner selling on his own (FSBO) will price the house based on the sale prices of comparable properties in the area. Many of these properties will be sold with the help of an agent; therefore, the seller profits from keeping the percentage of the home's sale price that might otherwise be paid to the real estate agent (usually around 3.5%). Buyers looking to purchase a home sold by an owner without an agent may believe they can save money on the home by not having an agent involved, so they look solely at FSBO houses. They might expect to save money and make an offer accordingly. Unless the buyer and seller agree to split the savings, they can’t both save the commission, and that’s even if the nearly full commission amount did not already lower the listing price to make it more marketable. Here’s a short list of the advantages that using a real estate agent

can bring to your buying experience: · Education and experience · A buffer between you and the seller · Neighbourhood knowledge · Price guidance · Market conditions information · Negotiation skills and confidentiality · The ability to handle paperwork · The ability to handle closing questions · Relationships for Future Business

It’s essential to know the “ins and outs” of real estate agents before you bring one along to help in your search for a home, just so that you might know what to expect and what will be expected of you.

Who is A REAL ESTATE AGENT? GENT?

Simply put, a real estate agent is licensed to list and sell real estate, including homes, multi-family properties, commercial, and industrial buildings. A Realtor®, however, is somewhat different. A Realtor® is a member of the Canadian Real Estate Association®. While an agent is always a real estate agent, a real estate agent isn’t always a realtor®. As mentioned, real estate agents who work in the best interests of the buyer are commonly referred to as buyer’s agents. All listing agents represent the seller. In contrast, buyers’ agents work on commission, which is contracted in the listing agreement. When a buyer’s agent brings the buyer, the listing agent must split the contracted commission with the buyer’s agent.

HOW TO CHOOSE THE BEST AGENT FOR YOUR NEEDS UR NEEDS

You might be urged to pick the first real estate agent who appeals to you or approaches you, but that’s something to avoid.

As with any professional, there are degrees of professionalism, dedication, and experience. The “wow factor” will wear off. Meet with prospective buyers' agents in their offices. A good buyer’s agent will want to know whether you’re preapproved for a loan by a lender, what kind, and the loan terms you’re getting. They should spend adequate time discovering what you’re looking for in a house. They should listen as much as they talk and ask questions. Watch to see if the agent makes notes. If the agent doesn’t broach the topic, ask for an explanation of his understanding of agency relationships and obligations to you. The law requires agents to explain whether they’ll work for the buyer or the seller whenever they have substantive contact with a customer or prospective client. Ensure that the agent will show you all listings or properties on the market that meet your requirements, including those handled in-house. Buyer’s agents have the legal duty to put the buyer’s needs ahead of their own. Even when an agent will be paid more for selling an in-house listing, they must inform you about other available, suitable listings and take you to see viable prospects. A good buyer’s agent will provide a home-buying education. The listing agent will point out all the features of a home; a good buyer’s agent will point to the faults — or advise when they can be overlooked. Competent buyers’ agents help buyers think clearly as the home- buying process unfolds. For example, if a house is a good buy, a buyer’s agent might suggest looking past the dated bathroom and kitchen and looking at the space above the garage that will make the perfect art studio you desire. Likewise, a cute house with all the amenities but with knob-and-tube wiring or a 40-year-old roof might not be worth the asking price. If you decide to buy an addition, the agent should advise you to check the zoning before making an offer. Agree to sign a buyer’s agency agreement after you have met with an agent. Some people sign an agency agreement after attending a show that the agent gives. According to an article by

Amy Fontanelle of Forbes’ Investopedia, being unrepresented and dealing directly with a seller's agent is a mistake . Any information you reveal will become leverage the seller can use in a purchase negotiation. A buyer’s agent is legally required to maintain your confidentiality, disclose material facts, and maintain loyalty. These are fiduciary duties.

LOOK FOR PROPER CREDENTIALS

You wouldn’t trust a doctor who didn’t have the proper credentials and licensing. Don’t trust a real estate agent who doesn’t present theirs or doesn’t have them at all. Similarly, if you choose to use a real estate agent who’s also a member of the Canadian Real Estate Association®, it will be a bonus. However, ensure they have credentials relevant to your need(s).

RESEARCH LICENSING

Your province will have a license board for all active Realtors®and real estate agents, which you can easily access. You will also be able to see their contact information, disciplinary actions, complaints, or any other information you’ll need to help influence your decision — especially since most information is now posted online.

GIVE THE “WHAT ELSE” TEST

A good agent will be familiar with all the other properties in the area. Additionally, a good agent continually researches the current market and identifies available homes. In short, you want an agent who’s an expert in the current market and someone who constantly stays on top of things.

RESEARCH THEIR BUSINESS ACTIVITY

Learning about the type of market presence a real estate agent has is the best way to determine their effectiveness. Ideally, you will want an agent who specializes in one or two specific real estate markets and understands the types of homes and amenities available within your price range. You can unearth this information by asking them or the provincial licensing authority if you’re uncomfortable with asking the agent directly. You’re better off with an agent who is actively engaged in one area and price range.

GOING THE BUYER'S AGENT ROUTE

So, you’re ready to take the plunge and look for a place to call “home.” To get the most out of it, use a buyer’s agent to avoid paperwork, stampedes of buyers competing for the same property, and other challenges. Home buying can be exciting but also complex and stressful — which is why having a pro by your side can make an enormous difference. As discussed, you’ve probably heard of buyer’s agents, seller’s agents, listing agents, and so on. You’re a buyer, so what’s a buyer’s agent? True to the name, buyer’s agents assist home buyers every step of the way; they can also save you both time and money on the road to homeownership. When you find the right one for you, these real estate agents will work day and night to ensure all your needs and requirements are met when it comes to finding the right home.

WHAT BUYER'S AGENTS DO FOR YOU

Your buyer’s agent will have extensive knowledge of the current real estate market in the area, including neighborhood amenities and conditions, local laws, zoning issues, price trends, negotiations, taxes, financing, and insurance. Once you meet with the buyer’s agent, they’ll help you determine your needs and wants when finding a home and a neighborhood. The agent will teach you what you can afford,

help you set a budget, provide some insight on the current conditions of the market, and explain what you should expect while shopping for a home. During the shopping period, you’ll meet with your agent for tours of homes in which you might be interested. They will provide you with insight into the floor plans, the home’s key selling points, and the overall crime rate of that neighborhood. They will also provide you with a rundown of local activities, restaurants, shopping centers, and schools in the area. Your agent is responsible for ensuring that inspections of the homes and the disclosures therein are complete. They’re also responsible for ensuring coordination and completion through the roof inspector, lawyers, lenders, and all other professionals involved in purchasing the home. If bargains are needed over the price, you won’t have to negotiate. Your buyer’s agent will do that for you and sign the final closing documents. They will be present whenever there are documents to go through and sign.

DUAL AGENCY: THE BASICS

In multiple instances, this is illegal due to the potential conflicts of interest that can arise regarding the broker. All agents are responsible for informing their clients of all possible risks associated with conflicts of interest. Legally, agents are prohibited from working on both sides of any transaction. It is only permitted in rare cases, with full disclosure to clients and their consent. Regarding dual agency, there are definite advantages for the seller. · Trust has already been gained with your listing agent, so representation for the buyer has been established. · Your agent brought you the buyer, knowing that you’re selling, even if your property has not yet hit the market. · Your listing agent will have already covered and researched

your neighbourhood’s market to gain buyer inquiries, which means your agent will be working from all sides of the deal to sell your house faster and with more incentive. · Your agent works with corporate relocation buyers who need to find a house quickly, and they will ensure it’s your house that is bought. There are also cons for the seller when it comes to dual agency, and they are: · You can’t be advised by your agent as thoroughly when they must act as a dual agent because impartial facilitation is required. · Your listing agent is not allowed to negotiate the best or highest price for you if they also negotiate the best and lowest terms for the buyer. · Earning a full commission, if the opportunity arises, may tempt the agent to coerce a deal that you might not accept otherwise. · Your agent may inhibit all access to your listing for buyers with agents. To avoid surprises or missteps in a dual agency sale, ensure you have clarified essential details with your agent beforehand. You can use an exclusive buyer agency agreement or a listing agreement.

HOW REAL ESTATE AGENTS ARE PAID

The Canadian Real Estate Association® 2024 Profile of Home Buyers and Sellers states that approximately 6% of homeowners opted to sell their homes in 2024 without using a real estate agent or Realtor®. A handful of For Sale By Owner (FSBO) transactions involved sellers and buyers who were previously acquainted or directly related. Real estate agents and Realtors® — unlike professionals in different categories who bill by hourly rates or earn a salary — get paid through a transaction (commission) at the end of each sale.

For example, if an agent has worked with a seller or buyer for months and no transaction occurs during that period, they do not receive payment for the time spent. Agents receive a commission once the transaction goes through to settlement (closes) based on the home's selling price. At that point, the commission is earned. Traditionally negotiated between the seller and agent, the commission structure is typically around 3.5% of the sale price. New regulations may influence these negotiations, and some brokerages offer commission discounts to sellers. Essentially, the listing agent and the buyer’s agent will split the commission. That can bring forth some issues. Usually, the split is not negotiated evenly. A seller could have agreed to pay a commission of 3.5%, with the buyer’s agent receiving 1.15% and the listing agent receiving 2.35%. Even though some agents are associate brokers, or brokers in general, all commission payments are instructed to go through to the broker managing the brokerage where the agent is working. From there, the commission is then split between the agent and the broker, according to the agreement that’s been made. The split will vary; sometimes, newer agents earn a smaller portion of the commission compared to experienced or successful agents, who generally sell more expensive properties or homes.

PAYING THE COMMISSION ITSELF

The seller pays the overall commission during the settlement period. The fee is deducted from the proceeds of the home's or property's sale. From there, the commission is then divided during the settlement process between the buyer’s agent's brokerage and the listing agent’s brokerage. Afterward, their brokers pay the agents who make the real estate sale.

CHAPTER 2 Owning vs. Renting

Owning your own home might be one of the defining qualities of the “Canadian Dream:” the ideals that include opportunity for prosperity and success and an upward social mobility for the family and children, achieved through hard work. Home ownership is surely ingrained as one of the strongest representations of that vision — 66% of Canadians own their own home, and more hope they will or wish they did. Something about home ownership plucks a strong chord with Canadians. Financial security, permanency, status, and pride are values many of us seek. Lifestyle plays a significant role in the decision between owning and renting a home. Home buying is often driven by household formation, including marriage and the growth of a family. Less than 26% of people under 35 own homes in 2024 (a significant drop from 47% in 2021), 61% of people over 35 own homes, and more than 75% of people 65 or over own homes. The Canadian homeownership rate has fluctuated between 62% and 70% since the 1950s. Most young people begin their independent lives renting an apartment, maximizing lifestyle flexibility and minimizing the hefty upfront costs of purchasing a home. As they build careers, save money, and start families, many buy a house, recognizing that homeownership, as opposed to rental living, is more suitable for their growing family needs. At the other end of the age spectrum are homeowners nearing retirement who may desire to sell their homes, downsize, avoid the maintenance and other obligations, and return to renting.

WHICH IS BEST?

Is it better to rent or buy a home? Most adults ask themselves 13

this at some point as they form their goals and plan for the years ahead. Before you answer the question, here are some things to ask yourself. Owning and renting each have advantages, but what’s best for you depends on your circumstances.

What will be the duration of your stay at home?

Each market is different, but whether the time you plan to spend in the house warrants its purchase is possible to predict. Generally, it takes almost 5 years to break even on a home (i.e., where there has been enough appreciation to pay back the cost of the transaction and ownership). If you’re considering buying and selling a home in two years, buying is very unlikely to be cheaper than renting. Do you consider your house an investment in your retirement plan? Canadians are accustomed to their homes serving as a store of wealth to liquidate in retirement when downsizing their lifestyle. According to Jacob Passy, a recent study by the Federal Reserve Bank of New York examined consumer preferences for homeownership and how their perceptions have changed during the COVID-19 pandemic. Survey participants were asked to rate the better investment: a home or stocks. The results showed that over 90% of the respondents preferred owning their residence over investing in the stock market. Most survey participants also favored being a landlord over buying stocks, with more than 50% of the participating households preferring to own a rental property.

Are you financially ready?

Owning a home is a significant financial commitment that requires planning how home ownership fits into your life's direction. Consider your budget and whether buying or renting

would require you to stretch your finances. Crunch all the numbers. A common mistake among first-time homebuyers is comparing a month’s rent to a month’s mortgage payment. Many people don’t have all the numbers. Several additional fees are necessary to make a fair comparison, including principal interest, property taxes, property insurance, and ongoing maintenance.

Are you prepared for the down payment?

This lump sum payment funds your equity in the property (how much of the property you own). Down payments vary; 20% is preferred and gets the best rates. Some loans allow down payments as low as 5%. Sometimes relatives help with the down payment. If you have a choice, opt for a gift rather than a loan, as lenders will include the loan debt in their calculation of your debt-to-income ratio. According to CMHC, this ratio shouldn't exceed 44% to qualify for a mortgage.

Can you afford the monthly mortgage payment and its associated costs?

Generally, a mortgage includes the loan principal, interest, and property taxes. These items can affect the monthly loan-only payment by several hundred dollars.

Are you emotionally ready?

Can you handle the stress? A significant factor to consider when buying a home is the stress it can cause. The Holmes and Rahe Stress Scale, a landmark study on stress, ranks purchasing a house as one of the top 43 most stressful life events. Four events are specifically home related: change in financial state (No. 16), large mortgage or loan (No. 20), change in living conditions (No. 28), and change in residence (No. 32). If someone has recently made other life changes, such as marriage (No. 7),

switching careers (No. 18), or having a child (No. 14), it might be wise to postpone buying a home. Stress overload can lead to missed payments, destroying credit, or even losing the house. It’s better to rent if your life is in flux and buy when your stress levels are lower.

Are you ready for commitment?

Are you prepared to make numerous decisions, from selecting a real estate agent to choosing paint colors? Are you confident enough to pick a neighborhood where you believe home values will continue to be appreciated and that will serve your needs (i.e., proximity to schools, shopping, recreation, etc.)? Are you ready to devote time and attention to maintaining a home (i.e., leaf-raking, grass-cutting, appliance maintenance and repair, etc.)? Taking care of your most significant investment can be gratifying, but only if you’re ready.

ADVANTAGES OF BUYING YOUR HOME

Control over housing expenses.

By selecting a fixed-rate mortgage, the homeowner ensures that their housing costs will not increase for the next 5 years. Mortgages are typically renewed after 5 years at the current interest rate.

You build equity.

Some of each monthly mortgage payment goes toward the loan’s interest. Other portions may go toward property taxes to the city. The remainder pays down the loan principal. Every dollar put toward your loan’s principal represents a dollar of equity — actual property ownership. Furthermore, the property should be appreciated yearly, adding to its equity (the difference between what the house could be sold for and what is currently owned).

Improvements increase your home’s value.

A homeowner can also increase a home’s value through home improvements, thus making it more comfortable and enjoyable while growing its loan-to-value (LTV) ratio. For instance, adding a bathroom or finishing a basement substantially increases the property’s functionality and appeal, potentially boosting its value.

Tax advantages of home ownership.

Significant tax benefits are associated with buying a house, both at the time of purchase and for the duration you own the home.

Ownership rights and creative freedom.

You’re decorating and home-improvement choices are yours, provided they don’t break building codes or violate homeowners’ association rules. You can paint the walls any way you like, add fixtures, update or finish your basement, or build a patio or deck. Changing your environment to suit whims is a freeing aspect of homeownership.

A sense of belonging to the community.

Homeowners tend to stay in their homes longer than renters and are more likely to establish roots. They might join a neighborhood association, volunteer at a nearby community center, participate in a school group, or affiliate with a business improvement district. Renters might not do any of those things, particularly if they know their lease is up in a year and they might move. An intangible, pleasant feeling is associated with owning your own house — a sense of freedom and independence. Your home belongs to you, and you can do with it as you please. You aren’t

daunted by increases in rent or the possibility of losing the lease. You’re free to make any necessary improvements and changes. Additionally, owning your home provides your children with the assurance of attending the local schools on a more permanent basis; you never need to worry about receiving a notice from the landlord to vacate your rented house or apartment for various reasons beyond your control.

ADVANTAGES OF RENTING

It seems like a shorter list, but one man’s pro is another man’s con, and renting certainly has advantages that factor into your buy-or-rent decision.

No responsibility for maintenance.

Admittedly, this is a big one. You’re not responsible for home maintenance or repair costs as a renter. If a toilet backs up, a pipe bursts, or an appliance stops working, you don’t have to call an expensive repair person — you call your landlord or superintendent. Renters in condos, townhouses, or apartments also don’t have lawn and grounds care obligations.

Relocating is easier.

When renting, relocating for work is easier. Although a sudden move may require you to break your lease, you can partially offset the cost by subletting your apartment or discussing options with your landlord. On the other hand, selling a home takes time and effort. If you have a short timeline to sell your home, you may be forced to accept a lower price and lose some of your investment.

No real estate market exposure.

Home values fluctuate and can decline over time. If you’re a

renter, that’s not your problem. If you’re an owner trying to sell, it is.

DISADVANTAGES OF OWNING

Maintenance.

The renter’s most significant advantage might be the homeowner’s major disadvantage. While insurance might be available to protect against expenses from a major catastrophe, usual maintenance items are on the homeowner’s dime. Maintenance and repair can range from as simple as repainting the baseboards to as extensive and expensive as replacing an HVAC system or sewer pipe. The expense will vary from year to year; however, you can expect to pay approximately 1% of your home's value annually toward these expenses. If you live in an $800,000 home for 10 years, that’s $80,000 over the period, and perhaps more if you must replace a costly, long-lived mechanical item, such as a furnace. Remember the usual homeowner’s lawn care chores, such as snow removal and gutter cleaning, as well as other regular home maintenance needs.

Upfront and closing costs.

Buying a home entails numerous upfront costs. Some are paid out-of-pocket after the seller accepts your purchase offer, while others are paid at closing. These include the deposit, down payment (typically 5% to more than 20% of the purchase price), home appraisal, inspection, and property taxes.

Loss of relocation flexibility.

It’s much easier to break a lease and move out of town than to arrange to sell a residence. Selling a home from out of town involves special logistics and financial considerations, such as managing the mortgage while the house is on the market.

Financial loss potential.

Homeownership builds equity over time; however, equity doesn’t equate to profit. If home values in your area go down or remain stagnant during your time as a homeowner, the appraised value of your home could decrease, putting you at risk of a financial loss when you sell.

DISADVANTAGES OF RENTING

No equity building.

The monthly rent you pay goes to the landlord. It represents the fee you pay for using the property. No matter how long you live there, you gain no ownership in the property.

Home improvements go to the landlord.

Any structural and decorative home improvements that renters make belong to the building owner and must be left behind when you move to a different place. Additionally, approval for the desired major redecoration will be necessary. Ultimately, the decision to buy or rent depends on the prospective home buyer’s circumstances. There’s no denying that a home of your own is a sound financial and significant emotional investment. An investment in a home can also mean an investment in your future. There are many factors to consider when purchasing a home. Switching from renting to homeownership is challenging, but it's also an exciting and amazing decision.

CHAPTER 3 Buyers' Needs and Desires

After you buy a home, your next step is to determine what type of home it will be. It’s a better approach to have a concrete vision in mind of what kind of features and amenities you want in your home, rather than a “shotgun look” at every listing that’s out there in your price range. Imagine your dream house. It fulfills both your needs and desires. It fits the need for a good roof over your head, a sturdy structure, modern fixtures and appliances, living space (i.e., bedrooms, living room), and functional rooms (i.e., kitchen, bathroom[s]). Your needs are fulfilled, and you turn to your desires. Perhaps you envision a home on the beach or in the woods, a gourmet kitchen, a wood-paneled den, a crystal chandelier over a banquet table in the manor-sized dining room, or an Olympic- sized swimming pool with a hot tub and sauna. Your priority in any home purchase should be meeting all your needs. Sometimes, you won’t find everything you desire in a home; if you do, you may not be able to afford it. It’s essential to prioritize the things you want in a house based on their importance in your search. Decide your needs vs. your desires . · Would you like a swimming pool? Is it enough that a home without one will not be looked at? · In what areas or neighbourhoods might the home be located? Where do you want to live? Where might you have to live for work commute or home price reasons? · What features would make it special? · What can you afford, and what is out of your budget? Budget usually constrains us the most when selecting a home. While some things are necessary for any home (as mentioned, a 21

good roof and working appliances), others will stay on the list of desires for now (like the sauna).

MAKE A LIST; CHECK IT T ; CHECK IT TWICE

You may have an impression of what you want in your new home. Putting that on paper and having a complete checklist can be helpful. Before starting your hunt for a new home, it’s advisable to list all your basic needs and desires, then prioritize the desires, figuring that all needs must be met in any house under consideration. This will make the search easier and help weed out the ones that don’t meet the basics. Realize, however, that it’s nearly impossible to find a home that meets all requirements. Compromises will be necessary. It’s a good idea to work from outside-the-house factors to inside-the-house. For example, location is perhaps the primary concern, and both “needs” and “desires” factors might be involved. A “need” would be “must be within 25 kilometers of work.” A desire might be, “would like Stanley Park” (a favored neighborhood), while a need might be “on the west side of the city” (because work, family, friends, and recreation activities are all located there). Location needs may include proximity to schools, frequently used recreational facilities, or access to modes of transportation (such as bus or suburban rail). Whether an item is a need or a desire depends on the circumstances. Closeness to family might be a need for a couple with young children or elderly parents to care for, or a desire if those factors aren’t involved. Items like these make a checklist most helpful. After location needs and desires are compiled, housing factors can be considered. Needs include having all essential house structures and systems in good working order. Accepting a house that needs a new roof because the owner is willing to knock $7,000 off the listing price — but it will cost $10,000 to replace the roof in two years — is not a sensible deal.

Needs might include a minimum number of bedrooms and bathrooms, no steps, a fenced yard, perhaps a first-floor laundry facility, and any feature the prospective buyers have decided they cannot accept in a home. Desires are features that make a house more attractive or enjoyable — such as an upgraded kitchen, walk-in closets, and a main bedroom suite. Of course, one buyer’s need is another buyer’s desire. The key is to understand your needs and desires to effectively assess potential properties and streamline the process. Regardless, buying a house is not a simple process. Before contacting a real estate agent or viewing homes, thorough planning is essential. Work on the costs as well as your budget. Choose a general location. Contact lenders well in advance of home shopping so that your offers aren’t tied up with obtaining financial approval. Having the image of your dream home is reality married with imagination. In fact, you may find that some aspects of the house you intend to buy are different. It’s not the same as what your dreams told you. Other people have different requirements. It depends on your thought processes and personality. We understand essential things and potential compromises differently. Needs are basic requirements that just can’t be ignored or compromised. On the other hand, desires can be left behind if the situation demands it. You need to clearly distinguish between your needs and which items you would classify as desires. No matter how many desires you have fulfilled now, there are still more to work on later. A pool can be added, and paint colors can be changed at any time.

A NOTE ABOUT PETS

Consider your pets when shopping for a home. Home buyers who are pet owners have specific requirements — they must provide for their pets. A third of millennial-aged respondents (ages 18 to 36) who purchased their first home (33%) say the

desire to have a better space or yard for a dog influenced their decision to buy the home, according to a survey conducted online by Harris Poll, on behalf of SunTrust Mortgage. Dogs ranked among the top three motivators for first-time homebuyers and were cited by more millennials than marriage/ upcoming marriage (25%) or the birth/expected birth of a child (19%). The neighborhood where you’re going to buy a house must have no restrictions on pets or livestock, if that’s something you desire. Do you raise American Staffordshire Terriers, also commonly referred to as pit bulls? Some neighborhoods ban this breed. What about goats? Vietnamese pigs? Have you always wanted fresh eggs from your own chickens? Include your animals in location planning. Some pet owners opt for wood or other hard flooring, as they prefer to avoid potential pet damage or unpleasant odors. An appropriately sized fenced backyard is on the “needs” list for many pet-owning house buyers. Consider the arrangement of rooms and the house's structure to ensure it’s suitable for your pets as well. Traffic in the area could be another item to check on the checklist. Pet services, such as veterinary care, grooming, and exercise, should be conveniently located nearby.

LOCATION, LOCATION, LOCATION!

You must limit your search to a neighborhood that offers the closest possible match to the kind of lifestyle you like and want to live. In addition, based on the 2021 NAR Generational Trends Report, 62% of homebuyers ages 22-95 prioritized the quality of the neighborhood as a reason for purchasing a house and the primary reason for neighborhood choice. Location is so important that people are willing to give up “must-have” features to buy into their desired neighborhood — 72% would forgo a pool, 55% would sacrifice a finished basement, and 33% would settle for less square footage.

What matters is living in a safe place with good schools. According to Trulia, 69% would drive through the neighborhood at different times of day to determine if the neighborhood was the right fit. You can’t go shopping for a home without choosing a location where you’d like to live. The most significant decision when buying a home is probably where it is. Location influences your everyday life. Your property is not an island; it’s part of a larger community. It’s essential to find a neighborhood or area that suits your needs. Do you want the peace of a secluded woods, or the energy of a bustling city center? Do research before starting your search. Drive through the area and see if all the stores, activities, and features you want are there. Eat at local restaurants and walk through a nearby park. As the price is mainly based on the location and condition of the property, when someone starts looking for a house, it’s essential to consider the location and how far it is from schools, shopping areas, and other facilities. Home means comfort, which can’t come if the location isn’t suitable.

CHAPTER 4 Real Estate Horror Stories To Learn From

You’ve seen frightening stories like this on TV. Perhaps you’ve heard about them from neighbors or co-workers, but still haven’t witnessed anything like them. Be warned. The first time is one time too many. Now that you’re in the market for your first home, or maybe a second or third, congratulations! Buying a new home is one of the most significant achievements for many people. Unfortunately, home buyers — especially first-time buyers — can be the victims of real estate horror stories. Absolute horror, from the buyer’s perspective. Here are a few examples. Alex was excited about making her first home purchase. Being in the Toronto metropolitan area, she was limited in her pricing options, with many lower-cost homes available for around $550,000. She visited several banks and was preapproved for different loan amounts at lower interest rates. She found her dream condo, and, after some deliberation, she decided to go with the lowest rate of 4.8% offered by her lender. She completed her paperwork and submitted it with her 10% deposit. The rate wasn’t her only deciding factor. The personnel were friendly and great at communication, making her feel comfortable about the process. Until now, it seemed all the bank corporations dropped off the map. The closing process, which should have taken 30 days or less, turned into several months of waiting and required an additional deposit of $20,000. They ran her in circles until the seller told her, through the real estate agent, that the deal was over if she didn’t find another 27

solution. Luckily, the seller’s real estate agent referred her to another lender and helped her obtain a loan (although at a higher interest rate) much more quickly. It turned out the first lender was a scammer. In another case, Ron and Jenna planned to upgrade to a new home. After a long search, they found it — or so they thought. The house seemed perfect, with a bright and colorful kitchen, an open living and dining area, three bathrooms, high ceilings, a fireplace, and a covered porch. They were especially thrilled that the price was only $535,000. That was a steal. They signed the contract and were in the house more than a month later. Less than six months later, the horror story began to unfold. Jenna was cleaning one of the bathrooms when she noticed tiny ants with wings. Following Ron’s advice, she called the exterminator. When he arrived, he delivered the first blow — these winged ants were termites . The exterminator went under the house to assess the damage. He found that not only was the floor under the bathroom completely infested, but also the other two bathrooms, and the infestation was spreading to more of the house. The total cost of repairing this problem was over $12,000. That’s an unbelievable amount of money to unexpectedly invest in a house you’ve only lived in for less than six months. The key lesson here is to know the house you’re buying. You should always hire an exterminator to investigate the house, particularly for termites. If you make such a massive investment in a new home, the small price of precaution is worth it. The stories continue endlessly. I recently met a lady at a café with an incredible story of a first-time buyer. I overheard her conversation, so I decided to step in and ask about it. Sue and her fiancé were searching for their first home with the intention of buying one before their wedding. They had been told about a great real estate agent in the city where they wanted to make

their home, so they looked him up to ask for help in finding the right house. The problem was that the only praise they heard about him came from clients who had hired him to sell homes, not from homebuyers. The agent met up with Sue and her fiancé to go over different homes he had on his list, and then it was time to take a trip around town to see them. There was one home that he talked profusely about, and so they went in person to take a look. Sue and her fiancé knew what good quality was, so they could immediately see that there were problems. The basement doorway was weak. The upstairs bathroom floor bounced, and the light switches in the hallway seemed to pop and flicker. Although very nicely painted, this house didn’t fool them. When confronted with these concerns, the agent replied that they could fix them later. Although their gut told them not to move forward with making a purchase, they agreed to a $10,000 price reduction and took the house. Big mistake! The problems they had noticed went much deeper. The weak basement doorway translated into unfortified walls leading downstairs. The bouncy bathroom floor had been wet under the linoleum and about three inches up two of the walls. The flickering light switches warned them of the outdated wiring that had to be replaced. Ultimately, their $10,000 savings only provided a bit of consolation when they paid $27,000 for all the remodeling. The five-bedroom house sat on pastoral acreage in the Canadian countryside. At less than $380,000, it seemed like a steal. But it wasn’t a bargain. Ben and Amber soon realized the dream home they had purchased for their growing family was infested with hundreds of garter snakes. Throngs of reptiles crawled beneath the outer walls. The young couple said they would lie awake and listen to slithering inside the walls at night. It was like living in a horror movie.

The home was most likely built on a winter snake den, or hibernaculum, where the reptiles gather in large numbers to hibernate. In the spring and summer, the snakes fan out across southeast Idaho, but they return to their dens as the days grow shorter and cooler. At the height of the infestation, the home buyer said he killed 42 snakes in one day before he decided he couldn’t do it anymore. He waged war against the snakes, and “they won.” Buyers had little recourse when they decided to flee the home. They had signed a document, noting the snake infestation. They said their agent had assured them that the snakes were just a story “invented” by the previous owners to leave their mortgage behind. The buyers filed for bankruptcy, and the house was repossessed. They left the home the day their daughter was born, just three months after they had moved in. The house was briefly taken off the market. Now owned by the bank, it was listed at $244,900 a year later. The property has since been taken off the market, and the bank decides what to do. The moral of the story is to have a good inspection. The price attracted these buyers. They didn’t have a proper inspection of the home before purchasing. The real issue was the agent who prioritized selling the house over his clients' needs. HOME-BUYER PLAGUES Although a home inspector passed Justin’s and Kate’s home, he missed some problems. For instance, the previous homeowner supposedly installed and tested the sump pump in the basement, but it failed shortly after moving in, resulting in flooding of the basement. Then, the sunroom was infested with termites, resulting in $2,000 in repairs for the couple. After the termites were eradicated, they discovered the sunroom was entirely covered in mold, and there was no caulking around the windows to keep the moisture out. A better home inspector would have been able to see the signs of

termites and mold. The inspector should have also checked the sump pump, but it could have failed after the inspection was completed. Sump pumps can burn out, lose power, become clogged or misaligned, or malfunction in various other ways. It’s valuable to have a warning device installed to alert you to water buildup. These alarms can alert homeowners or neighbors to flooding, so it can be resolved before water damage occurs. Be careful. Be smart. These horror stories are real and happen every day. Do your homework before signing paperwork or jumping into a new home. Too many people spend more time shopping for a car than on a house, a much larger and more permanent investment. You have time to educate yourself, and I hope this has helped you move forward in the right direction.

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