Home Buyers: How To Avoid Paying Too Much in Red Deer & Central Alberta

As someone who has helped countless buyers find their dream homes and save money at the same time, I’ve developed this guide to help you avoid the pitfalls inherent in the home buying process. I’ll show you not only how to make sure you’ve found the right home, but also how to negotiate a price to your advantage. In today’s complex, fast-paced market, you can’t afford to learn these lessons through trial and error. The tips in this blog will go a long was toward making you a savvy buyer.

Tip #1: Know what you’re shopping for before you start! Before you begin shopping, understand that there are two homes out there vying for your interest-the one that meets your needs vs the one that fulfills your desires. So, do you choose the 3 bedroom home with room for your family to grow, or the one with the big back yard and deck that’s perfect for entertaining? Is having a big kitchen more important for you than a few extra rooms? You’re going to find homes you fall in love with for different reasons. That’s why you should make a list of the features you want before you start shopping, break into two categories: Needs and Desires. I’ve seen clients fall in love with a home for the wrong reasons, then regret their purchase when the home fails to meet their needs. Don’t let emotion cloud your judgement; satisfy your needs first! If you find a home that meets your needs and fulfills your desires, so much the better!

Tip #2: Shop for a mortgage before you shop for a home! Getting a loan pre-approval is the smart way to shop for a home. It tells sellers that you’re a serious prospect and you know in advance the maximum you can afford. Make sure you get a commitment in writing! I’ve seen many buyers make the mistake of learning what they qualify for but not getting that pre-approval in writing. The good news is that it’s easier than ever to qualify for a home loan! Lenders have modified qualification rules and created programs designed to help people even if they have problems in their credit or employment histories. Many programs call for dramatically reduced down payments-the biggest obstacle for first-time home buyers in particular. If you would like a recommendation for a mortgage broker, please let me know! 403-396-0721

Tip #3: Pick a winning Realtor® to help you! From picking a mortgage, to finding the right home, to inspections, to negotiating the best deal, it can be exhausting for even the hardiest souls. That’s why most people have a Realtor® in their corner. A good agent has the knowledge and experience that come from years of helping both buyers and sellers. He or she also has a team of other professionals to put at your disposal- lenders, lawyers, home inspectors, movers, etc. Most sellers you encounter are certainly going to have professionals in their corner. Having a pro on your team is the best way to make sure you get the best deal possible.

Tip #4: Make sure your Realtor® knows what you are looking for! Once you have a clear, detailed picture of the home you want, make sure your agent has the same picture. This communication is critical! Otherwise, you’ll both waster your time looking at homes you’re really not interested in. Also, make sure your Realtor® knows your priorities. Your shared goal is to find a place that meets all of your needs; your Realtor® will then try to satisfy as many of your desires as possible. A good Realtor® will ask you several questions about what you’re looking for and what you can afford. And they’ll listen carefully to your answers.

Tip #5: It’s a cliché, but location, location, location! The desirability and resale value of your home-to-be depend on location more than any other single factor. Again, don’t let emotion get in the way of a wise investment. No home is an island and the value of yours is affected by the homes that surround it. There are several elements that combine to create a good location. Your first consideration is neighbourhood. Do people take care of their homes and yards? Are yards fenced? Do children play in the streets? If the neighbourhood is to your satisfaction, look at homes on the market in the area. Extremely large homes surrounded by smaller ones tend to appreciate less than a large home among other large homes. The smallest home in the neighbourhood tends to be “pulled up” by the other homes on the block; although it may take longer to sell a smaller home because many people are unwilling to pay extra for the neighbourhood. The outer edge of a neighbourhood is usually not good for resale value. There are noticeable dividing lines between unlike neighbourhoods, such as architectural styles, home size, property use, etc. An exception to this rule is a house on the edge of a neighbourhood bounded by woods, park land, a golf course or other open space. These “edge” homes can actually command a better price. The exception to this rule is when there’s an unpleasant use planned for the open space. Other things that can negatively affect property values are traffic, sounds, smells, etc. Be sure to give the neighbourhood a long, hard look. The home you’re interested in may be perfect, BUT if the neighbourhood has problems, your investment won’t be worth as much when the time comes to sell.

Tip #6: Use your agent to narrow the prospect list! A good agent brings to the table an in-depth knowledge of the current housing inventory in his or her area, and continually updates that knowledge by touring homes as they are placed on the market. This is to your advantage. Trying to personally see every available home that might fit your needs would be an overwhelming process. If you are thorough in communicating your needs and what you can realistically afford, then your agent can help you narrow down the list of prospective homes to those that vest suit your needs. This will save you much time and energy. When the time comes to settle on one home, you can do it with confidence that you’ve made a well-informed choice.

Tip #7: Shop with your head, not your heart! Don’t forget the purpose of your “Needs” and “Desires” lists. Shopping for a home is an emotional process. Your heart will cost your money; using your head will save it.

Tip #8: Don’t ignore red flags when evaluating a home’s pluses and minuses! When evaluating the advantages and drawbacks of a particular property, be sure you know the difference between acceptable and unacceptable problems. Some issues-peeling paint, worn carpeting, ugly wallpaper-are cosmetic and can be easily remedied. In fact, you can use these “problems” during negotiations to lower the asking price- after all, you’ll need to spend money to bring the house up to snuff. Make careful note of what you see that can be used to your advantage. Don’t nit-pick, however-if taken to extremes, you could end up alienating the seller and creating a hostile atmosphere. Other problems may be warnings to walk away: major foundation cracks, evidence of previous water damage, antiquated electrical systems or plumbing. Any one of these may be cause to reconsider your interest. Don’t let a house’s positive attributes blind you to very real problems or you’ll end up spending much more money than your ever expected down the line.

Tip #9: Hire a professional home inspector! In my experience , spending a few hundred dollars on a professional home inspection is the best investment you’ll ever make. A professional inspector brings experience in examining a great many homes, good evaluation standards and an unbiased perspective. Make sure you accompany your inspector on the tour. You’ll learn a lot about the home you’re thinking of buying. Once you have your evaluation, the decision to proceed is yours A home inspector only gives you a professional opinion of the home’s condition, not advice as to ether or not you should buy. A typical inspection looks at: foundation; electrical; heating and plumbing; floors, wall and ceilings; attic; roof; siding and trim; porches, patios and decks; garage; property drainage.

Tip # 10: Not all fixer-uppers are good buys! You may be the sort of person who looks at a home in need of significant work as a challenge and an opportunity to make money. Many people have bought fixer-uppers at below market rates, invested little sweat equity or more than a little money on renovation, then eventually put it back on the market at a profit. But if it isn’t priced low enough, you won’t recoup your investment of time, trouble and expense. Before you proceed, do a careful evaluation of what you’ll have to invest and consult with your Realtor® to learn what you can reasonably expect to make when you put the home back on the market. And be sure to include the unexpected-there’s no such thing as a “sure thing.”

Tip #11: Choose a home with an eye toward future needs! Buying a home is a big investment. If you can stretch a little today to buy a home that you can grow into-whether it’s having a child, running a home-based business, or having room to build an addition-do it! In the long run, it will probably be less expensive than moving up to a marginally larger home when the need does arise.

Tip #12: Once you’re ready to buy, move quickly! Good properties move fast! Once you’ve made up your mind to buy a home and you’ve lined up your Realtor®, be prepared to make decisions quickly. If you find the right home today but aren’t ready to buy until tomorrow, you may already be too late.

Tip #13: Clarify who your agent is! Make sure you know who the agent you’re talking to represents. Any agent has a responsibility to be open and honest with you and to let you know who he or she represents-the buyers, the seller or both.

Tip#14: Expect for a written comparative market analysis! One way to ensure that you don’t offer too much for a home is to have a written comparative market analysis. CMA will show you the sale prices of comparable homes in the neighbourhood. It also lists the asking prices of other homes in the area currently on the market. You may find that the asking price is above what comparable homes in the neighbourhood are actually selling for. Or you might even find another home in the area that’s a better bargain. When you make an offer, you can use the CMA as evidence to show the seller why you believe your offer is a reasonable one.

Tip #15: Use your time to your advantage! Just as you have a time frame in which you wish to buy, the seller almost certainly has a deadline of his/her own. If you can learn the seller’s deadline, it’s another piece of information that can be used to negotiate a better deal.

Tip #16: Don’t be pressured into a quick deal if it doesn’t feel right! While you want to move quickly once you’re in negotiations, don’t let the other side pressure you into a quick close. It may be a sign that there’s something you should know, but don’t. And the reason could be worth money.

Tip #17: Don’t be afraid to negotiate! You may be the type of person who prefers a hard-and-fast price tag on everything. “I don’t like to haggle” you say. BUT negotiation is the key to getting a good deal! If your goal is to get the best home possible for the least amount of money, then you had better be prepared to play.

Tip #18: Know your hidden costs! There’s more to buying a home than the mortgage. Don’t forget to factor in mortgage insurance, appraisal fees, inspection fees, title insurance and every other dollar you’ll have to spend in order to know what you’re really paying for your new home.

Most importantly,  Tip #19: Now, armed with this knowledge,  you stand a much better chance of avoiding overpaying for your home!  As you can imaging, there is no learning curve that forgives mistakes made during the home-buying process.  If I had to choose only one tip from the several I just listed, it would be this: Get yourself a good Realtor®- someone whose sole interest in the deal is to watch out for YOUR interests.  If you take this advice, the rest will follow.  A truly sharp agent will make sure that you follow all of the other suggestions I’ve included in this report.

Please contact me if you would like further explanation on any of these topics, or if you have any real estate questions at all. I simply see my mission as striving to be as helpful as I possibly can to Red Deer and Central Alberta home owners. Click Buyer’s Guide for more information from my website on buying a home