As a Toronto Real Estate Agent, I always recommend a quality Home Inspection when purchasing a home. Here is an article that shows a few ways you can help to ensure the inspection is effective.
Home inspections are a good way to save money down the road.
I continue to receive complaints from readers about problems that they discover after closing their home purchase. Most complain about sellers who fail to disclose defects or home inspectors who fail to find them. The system is far from perfect. However, there are steps that buyers can take before and during a home inspection to protect their interests.
Check all electrical outlets to make sure that they work.
Open windows, even in the winter, to make sure they are not stuck or painted shut.
Look under any area rug or bed and behind any picture to check for cracked tiles, stained carpets or walls. Lift anything on the kitchen counters to look for defects.
Do any of the appliances show any rust? How old are they? If they are discontinued models, you will likely have to replace them if they break down because of the difficulty of finding replacement parts.
Start the dishwasher at the beginning of any home inspection. By the end, it should have gone through its entire cycle, without leaking.
Put a thermometer inside the oven and turn it on to 350 degrees. After 10 minutes, check the temperature. Test stove burners.
Put a cup of water in the microwave for 45 seconds. Does it heat up?
Flush every toilet and see whether it stops running after it is filled.
Check sinks, tubs and showers in the house. Is there proper water flow from each faucet and does everything drain properly?
You may want to consider turning all the faucets on at the same time and then flushing a toilet upstairs to see whether the water pressure slows or stops in any sink. This could indicate a problem with the system.
In older homes, consider a separate sewage inspection. Stan Collini, the President of Roto-Rooter Plumbing and Drain Service in the GTA, tells me that for $295, you can do a video camera of a property’s sewer system to see if there are any problems that would not be visible on a typical home inspection.
Check under the water heater for leaks or stains on the floor.
Ask how old the air conditioning unit is and when was it last serviced Is there sufficient hot or cold air reaching all of the rooms in the house?
Does the owner have a plan with their gas company to inspect the furnace once a year? When was the last inspection conducted?
If the house has an addition, ask whether any upgrade was done to the heating or cooling systems to account for the additional living area.
Look for water stains in the ceiling which could indicate leaking from the roof or other problems with the plumbing system.
When your inspector is on the roof, ask them to check for broken or cracked shingles. If it is a flat roof, look for the low spots where water can collect for any evidence of a problem. Check the eaves to see if there is any rot or decay. If any concerns are noted, consider bringing in a roofing contractor for an additional opinion, especially if the home is 15-20 years old and it is still the original roof.
You may also want to consider a separate inspection for mould or termites, as these may not be visible on a home inspection but can result in significant costs to repair later. Check if this is a known problem in the area.
Always ask the seller and the seller’s agent if they know about any hidden defects that are not visible. They must answer truthfully if you ask them.
Consider looking into after-sale warranty protection. Many of these products on the market will generally cover problems with a home electrical, plumbing, heating and cooling system, as well as the major appliances. But like any warranty, ask about deductibles and what is excluded from coverage.
By being properly prepared and asking the right questions both before and during any home inspection, you will be better protected against costly surprises after closing.
By Mark Weisleder | Fri Sep 9 2011
Tuesday, October 11, 2011
Wednesday, September 28, 2011
Ten Tips for Getting a Fair Price on a Home
Whether it's a buyer's market or a seller's market, all homebuyers have one thing in common: they don't want to get ripped off. But how do you know if you're getting a fair deal on the home you're prepared to place an offer on? Read on to find out how to evaluate the price of any home so you can make a sound investment decision.
Research recently sold, comparable properties
A comparable property is one that is similar in size, condition, neighbourhood and amenities. One 1,200-square-foot, recently remodeled, one-story home with an attached garage should be listed at roughly the same price as a similar 1,200-square-foot home in the same neighbourhood. That said, you can also gain valuable information by looking at how the property you're interested in compares in price to different properties. Is it considerably less expensive than larger or nicer properties? Is it more expensive than smaller or less attractive properties? Your real estate agent is the best source of accurate, up-to-date information on comparable properties (also known as “comps”).
Check out comparable properties that are currently on the market
In this case, you can actually visit other homes and get a true sense of how their size, condition and amenities compare to the property you're considering buying. Then you can compare prices and see what seems fair. Reasonable sellers know that they must price their properties similarly to market comparables if they want to be competitive.
Look at comparables that were on the market recently but didn't sell
If the house you're considering buying is priced similarly to homes that were taken off the market because they didn't sell, the property you're considering may be overpriced. Also, if there are a lot of similar properties on the market, prices should be lower, especially if those properties are vacant. Check out the unsold inventory index for information about current supply and demand in the housing market. This index attempts to measure how long it will take for all the homes currently on the market to be sold given the rate at which homes are currently selling.
Consider market conditions and appreciation rates in the area
Have prices been going up recently or going down? In a seller's market, properties will probably be somewhat overpriced, and in a buyer's market, properties are apt to be underpriced. It all depends on where the market currently sits on the real estate boom-and-bust curve. Even in a seller's market, properties may not be overpriced if the market is on the upswing and not near its peak. Conversely, properties can be overpriced even in a buyer's market if prices have only recently begun to decline. Of course, it can be difficult to see the peaks and valleys until they're history. Also consider the impact of mortgage interest rates and the job market on the economy. (Knowing your mortgage choices is important.
Are you buying a for-sale-by-owner property?
A for-sale-by-owner (FSBO) property should be discounted to reflect the fact that there is no 6 per cent (on average) seller's agent commission, something that many sellers don't take into consideration when setting their prices. Another potential problem with FSBOs is that the seller may not have had an agent's guidance in setting a reasonable price in the first place, or may have been so unhappy with an agent's suggestion as to decide to go it alone. In any of these situations, the property may be overpriced.
What Is the expected appreciation for the area?
The future prospects for your chosen neighbourhood can have an impact on price. If positive development is planned, such as a major mall being built, the extension of light rail to the neighbourhood, or a large new company moving to the area, the prospects of future home appreciation look good. Even small developments like plans to add more roads or build a new school can be a good sign. On the other hand, if grocery stores and gas stations are closing down, the home price should be lower to reflect that, and you should probably reconsider moving to the area. The development of new housing can go either way - it can mean that the area is hot and is likely to be in high demand in the future, increasing your home's value, or it can result in a surplus of housing, which will lower the value of all the homes in the area.
What Is your real estate agent's opinion?
Without even analyzing the data, your real estate agent is likely to have a good gut sense (thanks to experience) of whether the property is priced appropriately or not and what a fair offering price might be.
Does the price feel fair to you?
If you're not happy with the property, the price will never seem fair, even if you get a bargain. Even if you pay a little over market value for a home you love, in the end, you won't really care.
Test the waters
Even in a seller's market, you can always offer below list price just to see how the seller reacts. Some sellers list properties for the lowest price they're willing to take because they don't want to negotiate, while others list their homes for higher than they expect to earn because they expect to negotiate downward or they want to see if someone will make an offer at the higher price. If the seller accepts your price or counteroffer, you'll get an indication that the property probably wasn't worth what it was listed for and you have a good chance at getting a fair deal. On the other hand, some sellers may underprice their properties in the hope of generating lots of interest and sparking a bidding war. Unlike on eBay, however, the seller doesn't have to simply sell to the highest bidder: Sellers can reject any and all offers that don't meet their expectations. If you have your heart set on the property, be warned that some sellers may be offended by lowball offers and refuse to work with you if you chose to employ such a tactic. Also, when you offer less than the list price, you may increase your risk of being outbid by another buyer.
Get an appraised value and a home inspection
Once you're under contract, the lender will have an appraisal of the property done (usually at your expense) to protect its financial interests. The lender wants to make sure that if you stop making your mortgage payments, it'll be able to get a reasonable amount of its money back when it forecloses on your home. If the appraisal comes in at considerably less than your offering price, you may not be getting a fair deal. In fact, the lender may not even let you purchase the home unless the seller is willing to bring the price down. A home inspection, which is completed after you're under contract, will also give you a way to gauge your offering price. If the home needs many expensive repairs, you'll want to ask the seller to make the repairs for you or discount the purchase price so you can make them yourself.
Conclusion
When you're shopping for a home, it's important to understand how homes are priced so you can make a sound investment and reach a fair agreement with the seller. Using these tips, you'll be able to make a confident and well-informed offer on any home in any market.
Amy Fontinelle
Published Thursday, Sep. 08, 2011 Globe and Mail
Research recently sold, comparable properties
A comparable property is one that is similar in size, condition, neighbourhood and amenities. One 1,200-square-foot, recently remodeled, one-story home with an attached garage should be listed at roughly the same price as a similar 1,200-square-foot home in the same neighbourhood. That said, you can also gain valuable information by looking at how the property you're interested in compares in price to different properties. Is it considerably less expensive than larger or nicer properties? Is it more expensive than smaller or less attractive properties? Your real estate agent is the best source of accurate, up-to-date information on comparable properties (also known as “comps”).
Check out comparable properties that are currently on the market
In this case, you can actually visit other homes and get a true sense of how their size, condition and amenities compare to the property you're considering buying. Then you can compare prices and see what seems fair. Reasonable sellers know that they must price their properties similarly to market comparables if they want to be competitive.
Look at comparables that were on the market recently but didn't sell
If the house you're considering buying is priced similarly to homes that were taken off the market because they didn't sell, the property you're considering may be overpriced. Also, if there are a lot of similar properties on the market, prices should be lower, especially if those properties are vacant. Check out the unsold inventory index for information about current supply and demand in the housing market. This index attempts to measure how long it will take for all the homes currently on the market to be sold given the rate at which homes are currently selling.
Consider market conditions and appreciation rates in the area
Have prices been going up recently or going down? In a seller's market, properties will probably be somewhat overpriced, and in a buyer's market, properties are apt to be underpriced. It all depends on where the market currently sits on the real estate boom-and-bust curve. Even in a seller's market, properties may not be overpriced if the market is on the upswing and not near its peak. Conversely, properties can be overpriced even in a buyer's market if prices have only recently begun to decline. Of course, it can be difficult to see the peaks and valleys until they're history. Also consider the impact of mortgage interest rates and the job market on the economy. (Knowing your mortgage choices is important.
Are you buying a for-sale-by-owner property?
A for-sale-by-owner (FSBO) property should be discounted to reflect the fact that there is no 6 per cent (on average) seller's agent commission, something that many sellers don't take into consideration when setting their prices. Another potential problem with FSBOs is that the seller may not have had an agent's guidance in setting a reasonable price in the first place, or may have been so unhappy with an agent's suggestion as to decide to go it alone. In any of these situations, the property may be overpriced.
What Is the expected appreciation for the area?
The future prospects for your chosen neighbourhood can have an impact on price. If positive development is planned, such as a major mall being built, the extension of light rail to the neighbourhood, or a large new company moving to the area, the prospects of future home appreciation look good. Even small developments like plans to add more roads or build a new school can be a good sign. On the other hand, if grocery stores and gas stations are closing down, the home price should be lower to reflect that, and you should probably reconsider moving to the area. The development of new housing can go either way - it can mean that the area is hot and is likely to be in high demand in the future, increasing your home's value, or it can result in a surplus of housing, which will lower the value of all the homes in the area.
What Is your real estate agent's opinion?
Without even analyzing the data, your real estate agent is likely to have a good gut sense (thanks to experience) of whether the property is priced appropriately or not and what a fair offering price might be.
Does the price feel fair to you?
If you're not happy with the property, the price will never seem fair, even if you get a bargain. Even if you pay a little over market value for a home you love, in the end, you won't really care.
Test the waters
Even in a seller's market, you can always offer below list price just to see how the seller reacts. Some sellers list properties for the lowest price they're willing to take because they don't want to negotiate, while others list their homes for higher than they expect to earn because they expect to negotiate downward or they want to see if someone will make an offer at the higher price. If the seller accepts your price or counteroffer, you'll get an indication that the property probably wasn't worth what it was listed for and you have a good chance at getting a fair deal. On the other hand, some sellers may underprice their properties in the hope of generating lots of interest and sparking a bidding war. Unlike on eBay, however, the seller doesn't have to simply sell to the highest bidder: Sellers can reject any and all offers that don't meet their expectations. If you have your heart set on the property, be warned that some sellers may be offended by lowball offers and refuse to work with you if you chose to employ such a tactic. Also, when you offer less than the list price, you may increase your risk of being outbid by another buyer.
Get an appraised value and a home inspection
Once you're under contract, the lender will have an appraisal of the property done (usually at your expense) to protect its financial interests. The lender wants to make sure that if you stop making your mortgage payments, it'll be able to get a reasonable amount of its money back when it forecloses on your home. If the appraisal comes in at considerably less than your offering price, you may not be getting a fair deal. In fact, the lender may not even let you purchase the home unless the seller is willing to bring the price down. A home inspection, which is completed after you're under contract, will also give you a way to gauge your offering price. If the home needs many expensive repairs, you'll want to ask the seller to make the repairs for you or discount the purchase price so you can make them yourself.
Conclusion
When you're shopping for a home, it's important to understand how homes are priced so you can make a sound investment and reach a fair agreement with the seller. Using these tips, you'll be able to make a confident and well-informed offer on any home in any market.
Amy Fontinelle
Published Thursday, Sep. 08, 2011 Globe and Mail
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