We’ve been covering a lot of ground so far! I I hope you’re all gaining some more insight on home buying! I know how frustrating it can be trying to get the important questions you want to ask, so I’ve been doing this series of blogs which focus on the most common questions I’m asked by my first-time buyer clients. We started by talking about whether it’s a good time to buy. Then we discussed the seven questions you need to ask yourself when deciding if you want to buy. Next was how to choose a buying agent. Last week, we went over the pros and cons of going with new/pre-build versus buying a resale home.
What is a Resale Home, and Why Do I Love Them?
This simply refers to a home which has previously been lived in. This means you are negotiating with the current owner and their listing agent rather than a developer/builder.
To begin, I love finding resale homes to my first-time buyers. The reality is that the longer the house has existed, the more established the neighbourhood is. More mature trees, more stable local business environment, higher WalkScore ratings, better access to transit and amenities – you name it. My first-timers typically express a higher satisfaction with their home’s location when buying resale homes. This is because many have narrowed their search down to specific neighbourhoods very early on in their search. While they generally have to be patient in waiting for something to go on the market, they’ve done their homework and know exactly what they’re getting into when they do make the move.
Buying a Resale Home Means More Flexibility
Probably the most important factor is customizability. Buying an already-built/pre-owned home gives the buyer the most flexibility to customize their space based on their actual preferences, and not just options available via the builder. This can mean anything from designing your dream kitchen, to building a basement in-law suite, to finishing the attic. The main limit is always going to be your budget, and never your imagination. I think this is a huge plus for my first-time buyers because it tends to lead to them staying in place for longe. It’s because they don’t ‘outgrow’ it as quickly as condo buyers who are more restricted in what they can customize.
Last week, we talked about some key points to consider when buying a condo. This week, we’ll be talking about some key things to consider when buying a resale home. Based on the countless times I’ve worked with first-time buyers, these are the 5 most important things to consider when buying a resale home.
The points relating to closing apply to any home purchase. These examples have been made to reflect typical situations I encounter with buyers purchasing a resale home.
1. Have you Braced Yourself for the Deposit?
A lot of my first-time buyers don’t realize that they’ll need to put down a deposit when making an offer on a home. This is a standard part of the buying process, and it is a show of good faith between the potential buyer and a seller. It is essentially so that you have some skin in the game as proof you’re a serious bidder.
Traditionally, this accounts for 3-5% of the value of the offer, but it can be negotiable depending on the seller. Regardless, I always recommend my clients be prepared to make a deposit, and to prepare themselves for a bit of a shock when making out the cheque.
At 5%, imagine that as $5 on every $100. That means $50 on every $1,000, $500 on every $10,000, and $5,000 on every $100,000. Let’s say that you’re making an offer of $300,000 – that’s $15,000 you’d need to have ready relatively quickly if you’re in a competitive bidding situation.
This figure always makes my first-timers nervous, but I remind them that it takes time to adjust to the economics of home ownership. It’s not easy to go from paying $2,000 a month in rent to wrapping your head around handing someone a cheque for tens of thousands of dollars. This is a very sensitive time for most first-timers, and the time where you want a buying agent with both soft and hard skills in your corner!
2. Do you Know All of Your Closing Costs?
Of the most important costs to note is always the Land Transfer tax. This is a municipal/regional tax on real estate transactions, and is typically calculated factoring in the location of the property, the type of property, and the sale cost. While not onerous in terms of overall scope (generally it’s comparable to around 1-2% of your sale price), just like with your deposit it’s a proportion of a high-price item, so that low percentage still adds up very quickly. For a handy calculator, check this out!
3. Have You Found a Home Inspector?
I cannot stress how important it is to get a home inspection done for ANY of my clients, but for my first-timers, I stress it even more. As likely the first major investment you make, buying a home is an important decision. You want to have as much information on your side as possible.
Regardless of the age of the home, it’s important to know of any potential major repairs which could be needed. An inspector will check everything, including the roof, the foundation, the exterior, the electrical and plumbing. This can save you thousands of dollars through the time you own your home! Don’t know a home inspector? I work with some excellent ones, and am always happy to refer.
4. Have You Decided on a Closing Date?
One of the most essential and sensitive parts of closing is negotiating the closing date. This is the mutually agreed upon date when the sale is considered final and ownership is officially transferred. While negotiable, the most standard increments are 30, 60, or 90 day closings. For my first-time buyers, this is often a lot easier to negotiate as their offer isn’t conditional on the sale of another property. It generally comes down to how quickly the seller can be out.
In a future blog when I discuss pre-construction buying, we’ll talk about the differences in seller and builder closing dates! This will be a very important topic, trust me!
5. Do you Know Everything You’ll Need to Do to Get the House Move-In Ready?
My first-time buyers often have the luxury of a less urgent move-in date, so I always recommend they think about any major projects they would want done in advance of moving in. If you’re going with new appliances and/or appliances, do you know how long delivery will take? What about painting? New window coverings? Flooring? These are all things you may want to do before you start moving in to minimize the chaos that always surrounds a move.
Also important, have you made all of you arrangements to turn on utilities? Secured your homeowner’s insurance? The REALLY big one: did you arrange to have cable and internet installed? A move-in day without wi-fi can very easily make things more difficult than they need to be.
Buying a Resale Home: The Bottom Line
The reality is that not every first-time buyer wants a condo, so that’s why I get excited to work with first-timers who are interested in buying a resale home. I feel like they’re able to much better imagine themselves in the space, whether it’s renovating the basement for a man cave, making a high;-attractive backyard oasis, planting a full veggie garden, or making a home office that can one day become a nursery, a resale home will get your imagination going in ways a condo might not.
Are you thinking of buying a resale home as your first home? Let’s Talk!