Buying a home is emotional. Did you know that the average homebuyer will look at 19 properties before finding the one that they love? It takes time, and rightly so. Most first-time homebuyers tend to head into their first-ever walkthrough with the blinders on. They become distracted with the vision of what their life would be like if they lived there. What should you really look for when house hunting?
Of course, everyone wants that at-ease feeling from a home, but this is only one side of the home-buying puzzle. You also need to look at other factors, such as financial circumstances. The average cost of a home in 2019 is now $480,743, according to the Canadian Real Estate Association (CREA).
“You need to prioritize whether or not a property is a good investment, in addition to meeting your wants and needs,” says Miliya Davidov, Zolo real estate agent.
To help you filter out those strong emotional tugs and heartstring pulls, we asked real estate experts to share what they consider when house hunting and what they encourage clients to review when looking for a home. Based on their answers, we found three themes you can use to help you with your house-hunt.
Tip #1: Finances come first
Before you can buy anything – let alone a home – you need to have your financial situation organized.
“You don’t want to get in over your head,” says real estate investor, Ali Boone. You need to have enough cash saved to cover the down payment and closing costs. You should also consider keeping a decent-sized emergency fund before you buy to take care of any unexpected expenses.
With the savings component sorted, it’s time to find out how much home you can afford.
The first step is to find out how much money you earn each month. From there, it’s important to crunch the numbers on what you could afford to pay each month in housing costs.
You don’t buy a home and wipe your hands clean from any additional expenses. Create a rough estimate of your monthly mortgage, and household expenses, ranging from garbage disposal to landscaping maintenance. Once you have the totals, decide if this is a reasonable number to manage on top of your mortgage.
Once you know how much you earn, and how much you’d like to spend – which shouldn’t be above 30% of your monthly income — find out if these numbers align. Will you bring in more money than what goes out? Use a trusted mortgage calculator to see what you can reasonably afford, or speak to a professional mortgage broker.
A home needs to be within your budget, but it should also be a good investment. If you have your finances set to go, the second financial aspect of buying a home is the actual potential for profit in your future property.
“You’re going to pay a lot of mortgage interest,” says Boone. She recommends that you acknowledge whether or not appreciation will make up for this additional cost. In other words, consider whether or not the home should, theoretically, appreciate over time. Remember not to speculate on a future price, as this can be a dangerous game. Speculating is not the same as investing.
To find a good investment, you need to be conservative while thinking about future price. An excellent place to start is by estimating a 2% appreciation each year. Alongside this, you should have a plan in case you are unable to sell your home in the future. If this happens, could you rent it out to cover the mortgage? It might be worthwhile to investigate.
After you find a property that is within your price range and has the potential for good resale value, it’s time to consider whether you can sustain those costs once you move in.
Tip #2: Don’t get distracted by staging
When you go house hunting to find your future home, you need to be mindful of how much work may be required to get your property up to snuff, or in some cases, to reach your level of expectation.
Both the inside and outside of a home will have critical indicators that can help make your decision much more straightforward.
“One of the fastest ways to tell if a home has been well-maintained is by looking at the roof,” says Davidov.
As you hunt for the perfect house, look for the following:
- Have any new renovation projects have been done? Take note of them. This way, you can double-check that all permits are up to date and that the home is good to go.
- Do a quick look at all of the electric panels, look for water damage, and do your best to be a home inspector even though you’re not. If you’re unsure of anything, you can ask the real inspector to look for you.
- If there are any projects or renovations you want to take on, will you be able to afford them while paying a mortgage? Plus, ask yourself: How pressing are these changes?
- Is there room for you to grow if you plan to stay in this home long term? The more time you can buy in a property, the longer your asset’s value can grow, and the more equity you’ll build.
- Don’t be distracted by staging. Look in the fridge, around and behind furniture to see if any damage is hidden. It’s okay to be paranoid. Purchasing a home is a significant investment.
Be mindful of the fact that almost every home comes with its list of minor renovations. There is a bright side, though. Any change or update that you make to the house is considered sweat equity. The value of your home will increase due to the time and work you put into the property. You need to decide how much work you’re willing to do to get there.
Tip #3: You need to feel at home in the community
Numbers and sweat equity aside, real estate experts like Boone and Davidov, caution first-time homebuyers from letting the financial side be the only factor they consider when house hunting. Both agree that you need to love the home.
When you hunt for your future home, some focus on the appearance of the property is okay. Don’t be fooled, though. The look doesn’t only include the inside of the house. Now is the time to check the surroundings – neighbourhood and community alike. You should also thoroughly investigate both outside and inside the home.
Take note of whether or not the neighbouring homes are well taken care of or not. You should also consider the following: Is the street busy? What is the parking situation? Even something as simple as friendly neighbours should be things you look for while house hunting.
It’s always a good idea to ask your Realtor for information about the community, potential developments in the area, and whether any homes close by have recently sold. Davidov also recommends that you and your agent go through the listing line by line to ensure that everything mentioned is accurate.
Now is also an appropriate time to look at the emotional side of house hunting. Don’t be afraid to romanticize the home and let yourself envision future holidays, weekends spent cuddled up by the fireplace or drinking wine in the backyard.
When it comes to buying a home, the more you can educate yourself, the better. Personally, when I purchased my first home, the emotional side played a massive role in the final decision. It was hard not to look at the high ceilings in the living room and start to imagine which Christmas tree I would buy and which corner it would fit best.
This emotional decision can sometimes take away from all of the potential work and costs associated with becoming a homeowner. I was willing to look past the lack of maintenance done in the backyard because I felt right at home before we had even made our final decision or put in an offer, but you may not feel the same.
It’s okay to shop around before you make your final decision. The more you shop around, the more clearly you will be confident in what you want. This way, when the right home jumps out at you, it’ll become that much more apparent.