When it comes to buying a property, there are dozens of potential roadblocks that can waste your time or money. Working with a broker will help you avoid these pitfalls, making your path to homeownership stress-free and secure. Here are the 7 most common mistakes that home-buyers make, and their solutions.
When setting your budget, don’t overlook closing costs
Closing costs are additional expenses that a homeowner will have to pay when finalizing their purchase. These include:
- Your mortgage insurance, if you plan to put down a downpayment of less than 20%
- Notary fees can range from $500 to $1500
- Property taxes include your school taxes, land transfer taxes, and municipal taxes
- Prorated adjustments on condo fees and taxes in cases where the seller has prepaid these bills
- Inspection costs can range from $400 for a condo to $700 for a single family home or revenue property.
Starting your home search without a pre-approval
Having a pre-approval in hand before you start visiting properties safeguards you against many potential home-buying roadblocks. It determines your buying capacity (which prevents you from falling in love with properties you can’t afford), protects you from interest rate fluctuations, and strengthens your offer in the case of a bidding war.
You can request a pre-approval for free without any commitment, from any bank or mortgage broker.
Missing your delays due to lacking documentation
In a hot seller’s market, you might be expected to act fast and beat out your competition. Missing documents can slow down your offer and cause you to lose the home to another buyer. Other than your pre-approval, you will also need the following paperwork when submitting your offer and your application for a mortgage loan.
- Profit and loss statements if you own a company
- Federal tax returns for the past 2 years
- Recent pay stubs
- Complete list of debts such as credit cards, student loans, car loans, child support payments, monthly expenses
- Complete list of assets including mutual funds, real estate investments, brokerage statements, and other investments
- Your government ID (Driver’s license or passport)
- Your completed promise to purchase, stating your offered price, terms and signature.
Getting caught up in a bidding war and breaking your budget ceiling
When making an offer, it’s important to stick to the market value determined by your comparative market analysis. Overpaying for your property will make it harder to resell, when the time comes to upgrade or downsize.
Skipping your home inspection
Home inspections are voluntary, but it’s always advised to inspect your home before signing your final offer. Buyers of condos are sometimes tempted to bypass the inspection costs, assuming that a new property will not have any major faults. However, inspections can reveal surprising issues such as poor insulation, low water pressure, and outdated AC units, all which can be used to negotiate on price.
Declining assistance from professionals
Using a real estate broker and a mortgage broker is free for all buyers in Quebec, so there’s no harm in benefitting from their market knowledge and experience. Real estate professionals provide a host of invaluable services such as helping you determine fair market value, negotiating with the seller on price, and reviewing the seller’s declaration and the co-ownership documents.
Last-minute stress after the act of sale
Once your offer is accepted, you’ll have a short delay to sell or sublease your current residence, and to move to your new home. Make sure to read our moving day checklist, to plan for a smooth transition.