While it won’t result in a messed up haircut, making mistakes in a real estate transaction can cost you more than a few strands.
I just stumbled across an old article from 2013 that was put out by the Real Estate Council of Ontario (RECO) about 10 major home buying and selling mistakes people make that can lead to an unsatisfying experience or even serious complications.
Even though many years have passed since then, the list is still valid today. Here are the most common buying and selling hazards, and how to avoid them:
- Allowing emotions to overtake common sense When you fall in love with a property it can be hard to walk away. Know your budget and don’t overpay. Don’t forgo a home inspection just to win a bidding war.
- Hiring the first salesperson you meet Ontario has over 60,000 brokers and salespersons, with a broad range of approaches to the buying and selling process. Meet with a few different representatives before settling on one, and make sure you feel comfortable with them and their approach to the process. Also be sure to get references and contact them to learn about their experience with the salesperson.
- Not making your expectations clear with your real estate professional It’s important that you and your representative have a mutual understanding about what you’re looking for, and what services the brokerage will be responsible for. Make sure you talk to your broker or salesperson about the services you expect them to provide, and get it in writing.
- Failing to read and understand forms and contracts It can be tempting to speed the process along by signing forms that you haven’t read. But taking the time to understand what you’re signing can avoid a lot of problems later on. For example, you don’t want to find out that you’re on the hook for a six month listing agreement to sell your home if you only want your house on the market for three months. In addition, a holdover clause could mean that if you sell your property during a specified period without the assistance of the broker or salesperson, you would still owe them commission. Make sure all the blanks on the form are filled in before you sign it, and make sure you get a copy of whatever you sign.
- Assuming everything is included Don’t assume that the furnace, dishwasher or other items are included with the property. The seller may want to take the dishwasher with them to their new home, and the furnace might be under a rental contract that you’ll be required to take over. Before making an offer, detail all items, known as chattels, in writing. Your offer can also include a clause stating that the seller will pay out any outstanding leases on the home’s major systems.
- Forgetting about what’s within the walls Granite countertops and new hardwood floors are appealing, but the insulation, wiring and plumbing are just as important when you’re evaluating a property. Ask your real estate representative to look into the age of the home’s systems and if there have been any upgrades. If extensive renovations have been done, your real estate professional can determine if the appropriate permits were issued.
- Forgetting about what’s outside the walls When you buy a house you’re also buying a place in a community. Some places are lively, others are quiet. Some places are filled with kids while others are not. Visit the neighbourhood at different times of the day to see if it fits your lifestyle. Talk to the neighbours about the community and the locations of various amenities like grocery stores and banks.
- Not doing your research If you’re concerned about buying a home with a troubled past, a simple Internet search for the address can go a long way. This is also something you can ask the neighbours about.
- Making verbal agreements Verbal agreements aren’t a problem, until they’re a problem. Putting everything in writing forces both parties to be clear about their expectations and provides a record that can prevent disputes later on.
- Underestimating closing costs From land transfer taxes to title insurance to a home inspection, the costs of a real estate transaction can add up quickly. Take the time to include estimates and other expenses in the full cost of buying or selling a property.
While all of these tips are essential, the most important advice is to work with a registered real estate professional.