Month: July 2021

Finding shelter has always been a top priority for humans. Caves and other types of protection were occupied and transformed into a cozy place that protected against the elements and allowed for socialization. These days, it’s a bit more complicated to find a home you love and decide whether or not to purchase it for the long term or find another home to rent for a short term. Financially, buying a home can be a very smart decision, but there are times when it doesn’t make sense. There are many reasons why you may make the decision to purchase a home. It may be the right time in your life – both financially and personally – and you may have found a home you love offered at the right price.

Know for sure that you can afford the home. That is determined by your collective income and financial assets. Much of your income will be spent toward your home payment and some of your assets may be used (liquidated) toward the down payment, closing costs and other matters.

Once you decide if you can afford the home, you should consider the area, how easily accessed, security, condition of home, amenities, reputation of the contractor (if new) and the clean history of the home.

When you’re ready to negotiate a price with a builder or seller, research some data on the home other than what has been provided by the seller. For example, you can find data published by other agencies on the appreciation value of homes in the area.

One major reason people decide to buy rather than rent is the Income Tax Act which provides a rebate (Section 24 of the 1961 Income Tax Act). You can get a limited exemption of interest if the property is occupied by you – and if renting, there’s no limit on the exemption of interest.

You’ll want to get the best value for your money when purchasing a home and that happens during the negotiation phase with the builder or seller. By conducting your own research and consulting the realtor, you can be sure to optimize the money you’re spending.

Keep in mind that if you’re only planning to be in a home for two years or less, you likely won’t get much, if any, return on your investment. You will, however, have a place that you love in which to live and that will give you pleasure.

Buying a home is one of the most emotional decisions you’ll ever make. That’s why it’s a good idea to detach yourself from the home and look at the financial and long term aspects of purchasing the home so you don’t end up getting a money pit that will make you miserable in due time.

If you’re working with a professional real estate agent, she’s going to know what contingencies to put in the contract to make sure you get protected as the seller. There are fairly common contingencies that you can make sure are included in a contract if you’re selling your home on your own without an agent. 

You need to make sure that you protect your ability to stay in the home with a remain in clause often called the seller’s right to stay. This gives you a week to thirty days to stay in your house in the event that something’s going wrong with the house you’re buying or where you’re going to stay. If you do this, then you’ll have to pay the new buyer rent for the days that you stay in the home. This should be covered in the contract. You’ll have to pay all the costs associated with staying in your home after it’s sold. 

Because making home repairs are often contingencies set in real estate contracts, you can expect that you’ll be making some of those. However, you can put in the contract that you’re lowering the purchase price instead of repairing the items and that’s one of your contingencies. You need to be very clear on the bottom line that you’re going to pay out if it’s in the contingencies that you’re going to pay for all the repairs. Because you might be thinking the cost of putting on a new roof is around $5,000 while the potential owner is expecting you to pay for a higher grade root and the cost is closer to $8,000. If you don’t have it specifically spelled out with the amount you’re willing to pay (and no more) for these repairs, then the buyer could legally force you to spend more. 

You want to make sure that the contingency states all that you’re willing to pay and that anything that’s over that amount is the buyer’s responsibility. Never put in there that you’ll make repairs “to the buyer’s satisfaction” because you’re giving them the right to continually force you to make a repeated repair until they deem it’s done. Don’t give a buyer that kind of control. One of your contingencies should be the right to void the contract. If the potential buyer has agreed to certain terms and then isn’t following through, you want to be able to walk away from the deal without repercussions. 

You may want to have a multiple offer clause in your contingencies as well. This allows you to accept more than one counter offer and gives you the freedom to pick which buyer gets the house. What this does for you is gives you the right to up the asking price of your home if you end up in a bidding war. Make sure that you have a contingency in the contract for the potential buyer’s financing. 

If it falls through, you don’t want to be stuck in a contract while he scrambles trying to find new financing. This could tie your home up for months. You need a way to protect yourself from that.