5 TOP BUYING MISTAKES

 Buying a home today is far from being a mistake.  Interest rates are still remarkably low, maintenance costs are falling due to energy efficiency innovations, prices are still affordable, and equity rises quickly with a variety of accelerated payment options. 

However, prospective homeowners continue to make myriad mistakes when buying, even though the decision to purchase may be a wise one.  Most of those mistakes revolve around inadequate planning.

The five most common errors are:

1) failure to calculate the long term costs of energy, repairs and taxes

2) failure to plan for growth (family, income and community)

3) failure to prioritize the important personal factors in acquiring the home

4) misrepresenting budgetary commitments, to obtain mortgage

5) relying on cosmetic appeal without adequate consideration for structural condition.

Most of these impediments to proper and responsible purchasing are a direct result of the enthusiasm to make that purchase, whether it be for your first home or your dream home.

1.  When visiting a home, ask to see the prior two years of energy bills.  In 2009, the federal government offered a home renovation tax credit that required that claimants keep their receipts (this means keeping them for six years).  Ask to see renovation costs.  Knowing what has been spent will help you to calculate what will be spent.  But don’t stop at looking backward.  Plan forward, by factoring a reasonable inflationary increase in average costs of taxes, energy & utilities and repairs.  Inquire as to whether any special municipal levies are anticipated in the area, and look at historical tax increases. Lastly, figure out what you need to repair in the short and long term, and what you want to upgrade or renovate in those same periods.  Factor these costs into your budget, to see if the home is affordable for you.

2.  If you are buying a starter home, estimate what space you will need fore your growing family, and when you will need it.  Look at trends in the community to see if it is vibrant, or decaying.  Look to growth patterns, and the patterns of renovations in your prospective neighbourhood.  Older communities often are great buys, if the people are upgrading and renovating or, at least, maintaining their properties well.  Check to see if there are any industrial or commercial encroachments planned for the community.  Check for road upgrades being planned, or new schools being built.

3.  What is important to you in a home?  Access to shopping, schools, hospitals, etc?  An energetic, involved and friendly community?  Solitude and quiet?   Growth, or predictable and static community? Green, or bustling with industry?  The house is only one part of your home.  Your neighbours, neighbourhood and region are part of that home, as well.

4.  Too often, we conservatively project our expenses and liberally project our growth of income.  This optimism is great, except that it provides a very distorted view of your financial position and ability to afford to purchase and maintain a home.  Be conservative with your income projections, instead, and liberal with your listing of expenses.

5. One home, in a quiet, older neighbourhood, sold for $45,000 over asking price on the first day on the market.,  It had fantastic cosmetic appeal, in spite of being an older home.  The purchaser later discovered that it had major structural flaws that rendered it borderline habitable.  He had to double his mortgage to complete the necessary upgrades!  If he had called in a home inspector as a condition of purchase, or looked beyond the great cosmetic appeal, he would not have purchased the home.

Buying a home is a major event, and an exciting experience.  In order to make it a positive one, be sure to avoid the five buying mistakes  that haunt many neophyte home buyers