Finding your perfect abode

I RECENTLY purchased my first home, because I was tired of throwing money down the rental pit (or rather, my parents pushed me to make that purchase). However, when it comes to buying property, which is likely the biggest investment one will ever make, there can be a lot of catches. I don’t claim to be an expert: I am not a real estate agent nor a property consultant. All I can tell you is what I’ve learned from my experience as a first time homebuyer, and a few things that “I wish I had known then”.

Lesson 1: Timing, timing, timing. You won’t get it perfect.

If you do get the timing perfect, then good for you. Everyone wants to “buy low, sell high.” I thought the prices were high in 2008. Little did I know that the property market went on a steady rise despite the gloomy global economy. Problem is, no one can predict the future. Try not to buy a house solely based on the assumption that it will rise in value. Yes, in the long term (long term meaning 20 or 30 years), real estate tends to be a pretty good investment, plus it is an investment you can actually use in the meantime (you get to live in it while it appreciates).

Lesson 2: Realise the hidden costs.

Realise that buying real estate costs money. There are closing costs on a loan, inspection fees, lawyer fees. When you a sell a house, it’s the same deal. Not to mention the moving costs. Buying a house really is a long term investment, so you’d better be sure you know what you want and that you can afford it, because you have to understand that your house may drop in value in the short term. If you plan to be there 10 years, then a short term drop in value due to the economy should not bother you. You should buy for other reasons than potential profit, because as a lot of people are finding out, that’s not a safe bet.

Lesson 3: Don’t look at homes before you have examined your own budget.

I knew of someone who insisted on looking for high end condominiums before knowing her loan amount. When you apply for a loan, the bank can offer you a purchase price which is the absolute limit of what you could afford, based on what you’ve shown them. Do you really want to buy at your absolute affordability limit? Not a fun idea. Sure, you could probably afford to pay the mortgage. But you’ll be able to afford little else. How about some disposable income for vacations and savings?

For example, if you’ve been renting, you’ve enjoyed the landlord’s responsibility to fix maintenance issues in your home. That option will cease to exist. You will now need to pay a professional to fix issues that may be expensive later on. When looking at housing, sometimes it is depressing what is actually affordable.

Once you’ve determined a truly comfortable price range, then look at properties only in that price range. Tell your real estate agent you are only willing to look in that price range. Do not tempt yourself by looking at anything above that price range (because like me, you’ll definitely like it!) If you cannot find something livable in that price range, then perhaps it is not the right time for you to buy. Perhaps the smart thing to do would be to wait a couple more years until you have a more sizeable down payment.

Lesson 4: Don’t skip the home inspections.

You absolutely must pay the money for a thorough home inspection as well as termite or pest inspection, especially if you’re buying a home that has been lived in before. The cost of these inspections is minor in comparison with the cost of the problems they might uncover.

Don’t skip your own personal visual inspection, either! I had looked so long at condos, that when I found one I liked based on first impression, but you have to really inspect every nook and cranny yourself. Because while that old floor might be perfectly functional and not something of note for the inspector, is the ugliness really something you can live with? Or will you be dying to spend big bucks to replace it once you’ve moved in? Don’t gloss over the details. Poke and prod. The sellers can be clever.

My friend discovered on her final walk-through (when it was really too late to back out without losing a ton of money) that there was a lot the previous owners had hidden. There were huge cracks in the walls that had been disguised with lots of bookshelves. The flooring was in terrible shape but she hadn’t noticed due to the area rugs. So, before you plunk down a huge deposit, take a flashlight with you and don’t be afraid to lift rugs or move furniture to look at everything thoroughly.

The process of finding, buying, and renovating a house can be the most frustrating, stressful processes we would have to endure. It is littered with people of little competence, high disinterest, and no accountability. It is expensive and time-consuming, but hopefully, very rewarding once you’ve settled in.

Dawn Jeremiah has yet to renovate and furnish her condo and is afraid of starting the process. Armed with a passion for television and journalism, she handles regional marketing at a regional lifestyle channel. She also tweets at www.twitter.com/dawnjeremiah

By The Star (by Dawn Jeremiah)