Buying your first home is a dream for many and we’ve all heard the cliches about first time buyers but there’s a lot more under the surface. I have experience as a first time buyer, as a construction related person and as a condo president for a building of first time buyers. This group gets a bad rap as a picky bunch and that can be true but that’s just the start. It’s not the whole truth and real estate professionals like to gripe because so many people are first time buyers and who doesn’t like to complain about work? But the Real estate people aren’t telling you the whole truth and they’re the ones who stand to gain the most by with-holding must know info. I’m not an expert but there are some overarching things you need to be aware of. In fact some of the issues arise just from the corner of the market you’re looking at. Buying a starter home from another first time buyer presents it’s own set of ‘issues’ no one is telling you about in it’s own right. I’ve seen a lot of first time buyers have their bubbles burst at some point and others realize they’ve taken on more than they ever thought possible. That said in the end it has a way of working itself out most of the time but the more you know… Let’s start with the classics and move on to the stuff you probably never heard about before. Apparently this is going to be a long one so buckle up!
Thinking you’ll start where your parents ended up
These first two points go hand in hand. First time home buyers are often moving out of their parents homes or their rented accommodations. We, millennials or people in general tend to think that they will start out where their parents ended up. Maybe you’re buying your first house with a partner and planning on filling it with kids, cool. But thinking you’ll start out in a 5 bedroom, 4 bathroom home on acreage is just nutty. How many times did your parents move before they had you or while you were young. My mom never moved from her first home but the house started off much different then when I left it. There were no fewer than 3 extensions, 2 major landscaping overhauls, a guest house was built and finally she circled back and upgraded all the finishes throughout. Sure she has a stunning property now, with granite and marble everything but it started out half the size, on a glorified swamp with linoleum floors and plywood kitchen cabinets, the waterfront location though always rocked. Even if you think well we’ll get married, have kids and we need to be in a good school district realistically you have at least 7 years before your oldest starts school, (remember they don’t exist yet) and things will be okay if they don’t get into the ‘good district’ until the second grade. In other words you have time to move at least once in that time. Need to be close to work right away well until you can afford it you might have to accept a longer commute. Plus done right a starter home can be a great vehicle to turning a profit on the way to your forever home.
Looking for perfection, move in condition homes that ‘show well’
It’s no secret among real estate agents that first time home buyers are a pain in the ass. They will let the stupidest little $200 problem turn them off of a home. Hate the blue toilets? A new one is $150 plus a plumber can instal it for $100 if you can’t do it yourself. Terrible paint colours, then paint it. First time home buyers might even let a current owner’s furniture or clutter derail a purchase. First time buyers are notorious for their lack of perspective and want perfect, insta styled move in homes otherwise no deal. What you should be saying to your agent (and meaning) is, “I want to see homes that are structurally sound but show terribly.” Think dark paint colours, dark trim, cluttered bordering on messy with outdated easy to change fixtures or appliances. You will literally save tens of thousands of dollars if not more for some paint and appliances that you can replace as you can afford it or they break. These houses are under valued and stay on the market for a long time as all the other first time home buyers pass it up. That means you can come in a scoop it up under market value with more than enough left over for an extra month’s rent while you paint.
Depending on your comfort level consider taking on bigger little issues like cat pee smell or smoke smell. Shampooing carpets, airing it out, activated charcoal, renting an industrial ozonator and repainting can take away almost any smell in a month’s time. Have your agent negotiate a price assuming all the flooring needs to be replaced and the whole place painted. If washing the walls and shampooing the carpet solves it you’re 1000’s a head. If the bathrooms are terrible think almond fixtures and burnt laminate flooring a reasonable update can boost your home’s value immensely. Kitchens and bathrooms sell homes. You can totally pee and bathe in there until you get to it. Basic white fixtures, a premed granite vanity top and clearance tile can take to from oh my god to oh my god. As long as you have another bathroom or gym membership for the Reno, you can deal. My first kitchen was painted bright yellow, with aged smokey. beige cabinets where all but the doors were painted painter’s tape green. For $100 I repainted the walls and quality cabinets, the cheap linoleum was replaced with $150 of discount brown ceramic tile (installed by a friend), $50 for a light fixture and granite countertops made it a stunner by the times it was ready to sell. For those countertops I went to a cheaper start up supplier and opted for thin cuts with a strip on the front. I told the guy that I only wanted to see stone that was crazy cheap for a smoking deal and I’d pick stuff to match that. I waited a while but I ended up paying $900 for pieces cut to my needs from a kitchen another customer rejected because she didn’t like the variation. For $1200 I made the kitchen got from holy shit box to holy shit the good way. Look for potential cheap solutions when you’re shopping not reasons to flee.
Believing you are taken care of by the process
You’re sort of sold this bill of lies that everyone is there to take care of you and that’s why you’re paying them. Nothing could be further from the truth you should rely on yourself to do your due diligence. In some ways the whole set up is just there to give you a false sense of peace. I’m not saying in all cases you should expect this sort of thing but here goes. Educate yourself! In my experiences and those close to me it’s not always smooth knowing that beforehand can help you protect yourself.
Lawyer
I hired a family lawyer my mom used and she sorta sucked. She said she’d give me a deal and I opted for her rather than the one my agent recommended. My fault though, I should have remembered my mom didn’t really have legal issues and this lady mostly wrote letters giving my sister permission to leave the county with her friend’s families. She missed the fact that the building had a huge sprinkler problem that was in the documents. It ended up costing me $7600 in the first year and I stepped up to play general contractor for the whole building. They also used my unit as a staging space but that’s another storey. She missed it and no doubt about it she F&$%ed up.
The thing is… to get any satisfaction you have to SUE YOUR LAWYER, how much fun does that sound like? This means hiring another lawyer, a more expensive one, to sue the first one. Takes years, they’ll draw it out and even IF you win how much will you have spent doing it. I paid for the system and hired a better lawyer a real estate one with an office outside the downtown core when I sold and my closing ended up being weird due to the new buyer. Not shady just weird, it was delayed three days in a row. He kicked ass and wouldn’t you know I sold the unit on the exact sane day of the year I bought it. That meant my bank took my taxes for the next quarter and they shouldn’t have. He noticed (I didn’t) it and tracked it down a month later, he rocked so it is possible to get a good one.
Home inspection
I like to hide swears in this site but.. home inspections are typically bullshit! Sure it costs a couple hundred dollars and the bank insists on it, hell mine even came presented in a fancy binder. They exist to limit the liability associated with the bank’s assessment of the property, to be turned around quickly and not hold up the process and make you feel a bit better about checking the whole thing out. Depending on where you live there might be no licensing requirement whatsoever, you can start inspecting homes tomorrow even if you don’t know when a deck should be nailed or screwed down. But it’s not all their fault really and many do the best they can with the tools they have available. Mine wasn’t that bad overall but still not worth the paper it’s written on. Home inspections are all non-invasive which means you can’t do any damage to check things out. My kitchen window had some touched up paint and he noticed. He even checked the wall with a moisture meter he had and it was dry at the time. Turns out the siding on that side of the building was shot and it leaked every spring thaw. He noticed some places mice could get in and recommend Steele wool. He told me all the things he couldn’t see and that’s about it.
But the deck is stacked against them there’s not a lot of things they can tell without making a few holes. Plus I wonder what they can say without being sued if they’re not sure about something but it concerns them. For example is the deisel smell on one side of a house from a leaking oil tank (potentially hundreds of thousands of dollars) or from an old pickup parked on the street? Ideally on one of your visits have a construction person you trust come look with you they don’t have a dog in the race and they’ll tell you if they have concerns from their experience. You can’t really negotiate that unless your home inspector puts it in the report but you knowing maybe is enough to get it there. Also if the concerns concern you, you can always walk away. Richard looked at my condo and didn’t see anything big but he wasn’t sold that the window was fine, he could tell it was patched more than once.
Ownership costs
This is one that can be really specific to people buying starter homes for other first time buyers. Often people are single when they buy and selling an unneeded home once they’re coupled. You’ll usually get heating, water and electric bills for the previous year in the process so you know utility costs. The thing is in this scenario it’s very possible that no one was spending a lot of time there that year. No one was there turning up the heat, flushing the toilet or baking in the oven. This was totally true of my sale and not in order to be deceptive. Save for a few nights no one was in my condo the winter (or year) mostly before I sold it. Moving in together was not a smooth process for the two of us and a long drawn out private sale fell through before I sold mine. It wasn’t cheap to run but it sure looked like it was that last year in bills. I didn’t hold onto mine empty for a year on purpose but it happened and I suspect it happens to others too totally by accident. You spend all your time at your partner’s place, then move in as a test all the while holding on to your house just in case. I had the heat around 10 degrees Celsius that winter and that alone made my bills seem low. Other’s with a problem property might do it on purpose, move elsewhere and keep things on off, suffer the cold or burn wood instead of turning the heat on to lower the bills artificially. READ THE NEXT POINT!
Knowing the legalities of the certificate of declaration
They have to tell you if there’s a problem right? If they don’t you can sue them. Not so fast! The declaration is the the best of my knowledge, so you have to prove they knew about problems and that can be hard to do. Everything has a time frame, i think here it’s 3 or 5 years. But…. There’s one hell of a legal loop hole after that, one I’m guilty of (sort of but not really). If you have not occupied the property personally for 12 mother previous to signing you can legal say not to my knowledge on everything, even if you know there’s a problem and sign the declaration certificate. Now I hadn’t lived there for a year previously to selling so I was in this boat, like I said not on purpose, but as far as I knew truthfully there were no problems. There was when I bought but I became condo president and we had them all taken care of. Also not all the things that you should want to know are even on the form.
Say you have a real expensive lemon on you hands and you want to sell but not get sued and get your money back. All you have to do is move out for a year and or rent it out. Then you can’t be sued even if you knew there was a problem. I suspect this is what happened to my sister’s house. Piecing together information from the neighbours and I talked to the restoration company off the record the previous owners had one hell of a flood that perhaps moulded and the fight between the homeowners and the insurance company got nasty. They either moved back and then out fast or never moved back in. It was listed and never sold. A little less than a year later it was re-listed at a much lower price and appeared to be vacant. They bought it with a clean certificate. It turned out not all the plumbing problems were fixed and thankfully they saved a lot of money on the purchase but that first year was an eye opener and lead to a lot of mopping. No matter where you are ask your agent what the limitations of the declaration certificate is. If the property is vacant or rented for about a year only take extra care.
Bowing to pressure needlessly
It’s a deal right? A seller’s market or a hot market? You can’t let this one get away! There’s another couple considering an offer right now that saw the property this morning! You have to ask fast! Maybe but probably not. There seems to be this artificial time pressure in real estate deals out there. Perhaps we all buy into it because of home renovation shows but no matter how good the deal or perfect the property chances are there will be another one just as good next month. Even if that’s the case rushing into a huge purchase like that is a mistake. Think about buying a car which is likely you second biggest purchase you would never believe that kind of hype. If that deal got away you’d just go find another one. They make new cars every day right?
Guess what the same is true of houses. The same or similar house will be for sale next week, next month or the next street over. Don’t be rushed into this purchase by anyone, probably your agent. Honey bought ‘the last deal in the bay’ 20 years ago from a couple about to loose it to the bank for potentially a bit less than the cost of the land. This thing is it came with a 4 bedroom 1.5 bathroom house which was down to only load bearing studs and had the plumbing basically removed as they hacked and burnt everything to stay warm with no power for over a year. He fixed it up enough to move the kids in with leftovers and whatever he could find and upper his value about 3 times over about a month in a red hot market at the time. We all said it was the last deal like that though it came with more than a few surprises. Things like floating furnaces and a sinkhole due to blocked drainage that quickly ate his car.
Fast forward 20 years and his son undercut his price by 35% when he bought his first home. The thing is he found two other deals like that that got away first before he did. Moral of the storey, no matter how good the deal, impossible the situation or once in a lifetime something seems there’s another opportunity right around the corner, in fact they will exist forever.
Buying all you can
The bank will loan you more than enough money to make you VERY, VERY house poor. Too poor for dinner out, traveling or even high end makeup your entire housing costs shouldn’t exceed 35% of your income. If you’ve been pre-approved for a certain amount recognize that as a number you can’t afford. Things will come up, your fridge will break and especially if you’re doing it on your own you need a healthy savings number every month and an big emergency fund. I made this mistake, don’t let yourself make the same.
Not asking neighbours what’s up
It’s not hard to do, buy or make a couple of nice pies and cross the street or the hall to find out what’s up. You’ll find out more this way than anything else.
Neglecting ‘nesting’ costs
Sure you’ve probably factored in moving costs and furniture costs but whenever you move into a home, even one that needs nothing you’re going to end up spending over $1000 and a lot of your time. If you’re self employed that means money too. You will end up painting something, buying curtains, the perfect light fixture, drawer organizers and linen for the spare room. This all adds up a pillow set to tie in your couch to the wall colour, new dishes for that table scape and closet organizers all seem like money savers compared to a new couch, table or custom closets. This adds up and it’s best to put aside at least $1000 to make your home the way you want it. If you don’t you’ll end up spending it anyway and some of it is a legitimate need.
Making a change plan and sticking to it (aka: Not letting the house tell you what it needs, Renovating stupidly)
I had this as three separate things but it’s really just part and parcel of the same one. There’s an old adage that you should live in a house for a year before changing anything. It’s not bad advice but you might not listen to it and to a certain extent you don’t have to. For all the reasons discussed above and just life you might find that you have a problem that needs to be fixed like right now. Don’t plan on doing much more than paining straight off the bat. The key is to give the house a chance to tell you want it needs and listen. You might have decided on your first walk through that the kitchen is the first to go and you want to update the bathrooms too later on. A drain issue that forces you to take out a bathroom wall of floor might mean it makes a lot more sense to start there. A friend might buy a half palate of clearance hardwood only to find out they’re 4 boxes short and so the bedroom floors will turn out to be almost free if you start there. There truth is it all adds your value (maybe read on). Life and home ownership is what happens when you’re busy making other plans. Sticking to a plan no matter what might mean you put yourself in the poor house straight off. I didn’t encounter much of this but my sister and mom sure did
Not upping your value ASAP or lowering it unintentionally
Remember the advice about buying a home that doesn’t show well at the very least rather than a perfect one here comes the rational. If you can make some small (or big) changes easily and cheaply that make it more attractive to buyers in short order that’s a great form of life insurance. Life may go off the rails for you in short order after buying a home or at some point at least and you might be forced to sell. As soon as you can do something to add your value right away. But read the next section for a word of caution on that too. That way you at least won’t loose money when you factor in closing costs or at least make it sell faster. If you buy a cat pee house with cash back on closing for new floors and actually install them you’ve upped the value. A word about cash back on closing though, you’re actually paying for a house where the work has already been done. If you instead negotiate a price based on adding hardwood and having it professionally installed but opt for nice laminate you install yourself you’re money ahead.
But… you might also unintentionally lower you homes value after you moved in. Here’s a scenario say you buy a house with a finished basement a really, really ugly one so you rip it out for when you can replace it or pick away at it. You actually lowered your home’s value. Always wanted an IKEA kitchen, while ripping out a dated wood one to get it could go either way.
Over estimating your homes value
You love your home, and you very well might have a lot of blood sweat and tears poured in there at the very least a few pay checks. Good memories, the reason’s you picked it and any work you’ve down on it are great, good for you. The thing is the changes might very well be cost neutral to buyers and the layout you love a chore for someone else, the Pinterest pages you brought to life might look way too trendy to the next person. To a certain extent if it has a bathroom there already it sort of doesn’t matter what it looks like. Say you swapped a brown ceramic for honed travertine tile and a pedestal for a small vanity in a main floor powder room. You painted the walls a dramatic colour for impact and changed out the builder’s boob light for a vintage chandelier and installed mirrored accessories. Way better right and an increase in value for sure? Hmm maybe, I’m with you on the vanity and light fixture but that might be about it. Whether you did it yourself, shopped carefully hired someone or splurged all along the way it doesn’t really matter if the next person thinks it looks worse. What you have really done is just made it more to your taste. You think I spent $10 000 my hose must be worth at least that much more, maybe but be smart about this. We all fall into this trap and there’s nothing wrong with customizing it to your taste. If you know you’ll be moving agin go for timeless not trendy. Here are some examples of things that might not be the upgrade you’re banking on and some that are always a win:
- Laminate to hardwood, maybe but lots of people just care about the look plus, dogs
- Dark to lighter tile or flooring in a small room, people who don’t like to clean know that the secret to a happy life can be dirt coloured floors
- Cheap stainless appliances, fingerprints, features and an industrial look can put some off
- Adding a clawfoot tub, leads to mildew and terrible showers for those that don’t bathe, where do you put the shampoo?
- Palate walls and other permanent Pinterest ideas, these look dated and overdone fast plus DIY doesn’t usually relate to quality.
- Stereotypical man caves with dark walls, leather couches and giant big screens. Showing a space can be enjoyed by the whole family is a safer choice.
- Homages to lifestyles like wet bars, extreme landscaping even a beautiful or an entertainer’s kitchen with open shelves. People want to imagine themselves in a home not how you live.
- Heavily custom stuff like kitchens, built-ins and window treatments. You can’t take it with you and it just looks hard to remove if not loved by a new owner.
- Fancy built in tech like home automation can be intimidating to some.
- Garage conversions you see more space others see outdoor parking and a drafty, trashy room.
Smarter spends:
- #1 all year long is things that make you’re home cheaper to operate. You might not care about the environment or the next guy but lots of people do and everyone loves to save money. Think insulation.
- Swapping out wooden windows. Not a huge deal like people think but adds value to your home for everyone.
- No maintenance products like composite decking, metal roofing, vinyl siding and resin facia. Even if your buyer doesn’t know about it their agent and home inspector is going to sell it.
- Deal with security and safety concerns first, buyers think if you’re neglecting that you’re neglecting everything else.
- I think at this stage we can say get rid of coloured bathroom fixtures and carpet.
- Replace anything that had a moment more than 10 years ago, that’s what dated actually mens not I don’t like that. My mom installed her timeless kitchen 18 years ago saw the same one on display at a building supply store last week.
- Finish unfinished projects and unfinished space. Make scary spaces less scary if not able to finish them. (our basement 6 years ago, yikes!)
- Bare lots: add shrubs ASAP so they can grow by the time you sell. Things like Rhodes, Azaleas, boxwood and forsythia and cheap, common and beautiful usually you can pick up the small size for about $10 at the grocery store. Four years from now they’ll be the $50 each rent a truck size.
- Spend on the front entrance, people make their decisions within about a minute of entering a home.
Not listening to the good advice
People think they know better than experts, experienced parents and agents they don’t like. It’s one of those fields where you can find an opinion that you agree with easily. Sometimes there’s more than one way to do things right. Remember TV hosts are mostly making entertaining TV for the most part, not smart real estate decisions. Since your home is your biggest investment you owe it to yourself to consider the source and the advice carefully before deciding what to do.
So do you agree with this disagree? Any of it happen to you? What was the biggest mistake you made as a first time home owner? Share below and save us the trouble.
Sweat Sweetly 