Buying Your Home – Finding the Right Home

What are the pros and cons of adding on or buying new?
Before making a choice between adding on to an existing home or buying a larger one, consider these questions:
* How much money is available, either from cash reserves or through a home improvement loan, to remodel your current house?
* How much additional space is required? Would the foundation support a second floor or does the lot have room to expand on the ground level?
* What do local zoning and building ordinances permit?
* How much equity already exists in the property?
* Are there affordable properties for sale that would satisfy your changing housing needs?

Do we dig deep and buy a dream home or settle for a starter home?
Choosing between a smaller house in an affluent neighborhood, an older, bigger house in a more working-class community or a brand-new home is not easy. If you’re in this situation, start by examining your priorities and asking the following questions:
* Is the surrounding neighborhood or the home itself the most important consideration?
* Is each of the neighborhoods safe?
* Is quality of the schools an issue?
* Do any of the areas seem to attract more families with children or adult residents? And where do you fit in?

As for the return on your investment, home-price appreciation is hard to predict. In the late 1980s, and again 10 years later, the more expensive move-up housing appreciated wildly. But during the recession that followed, smaller homes tended to hold their value better than more expensive ones.

How do you choose between buying and renting?
Home ownership offers tax benefits as well as the freedom to make decisions about your home. An advantage of renting is not worrying about maintenance and other financial obligations associated with owning property. There also are a number of economic considerations. Unlike renters, home owners who secure a fixed-rate loan can lock in their monthly housing costs and make prudent investment plans knowing these expenses will not increase substantially. Home ownership is a highly leveraged investment that can yield substantial profit on a nominal front-end investment. However, such returns depend on home-price appreciation.

As for evaluating the risk associated with home ownership, David T. Schumacher and Erik Page Bucy write in their book “The Buy & Hold Real Estate Strategy,” John Wiley & Sons, New York; 1992, that “good property located in growth areas should be regarded as an investment as opposed to a speculation or gamble.” The authors recommend that prospective buyers spend a few months investigating a community. Many people make the mistake of buying in the wrong area. “Just because certain properties are high-priced doesn’t necessarily mean they have some inherent advantage,” the authors write. “One property may cost more than another today, but will it still be worth more down the line?”

How do I get the real scoop on homes I am looking at?
Home inspections, seller disclosure and the agent’s experience will help. In British Columbia, Realtors are required to obtain a Property Disclosure Statement from their sellers.  Sellers are also required to disclose any significant defects that may not be visible and they may be aware of (also know as Latent Material Defects). Among other things, a Property Disclosure Statement asks a seller to indicate to the best of their knowledge the condition of the building envelope (interior and exterior walls, ceilings, roof, insulation, etc), the foundation, as well as the electrical, heating and plumbing systems. The PDS also asks sellers to indicate the presence of environmental hazards such as buried oil tanks or use of the property for production of hazardous or illegal materials presently or in the past, encroachments or unregistered  easements, additions or repairs made without the necessary permits, zoning violations, and anything else that may affect the value or use and enjoyment of the property.

This Disclosure however, will not always protect a buyer from deficiencies.  A seller may not be aware of a deficiency or, in cases like foreclosures & estate sales, the seller may not have any knowledge of the property condition. A thorough investigation and professional inspections are always recommended regardless of the information a seller provides.  Any factor that is important to you, from the property condition, the surrounding neighbourhood, nearby development and more, should all be carefully considered and investigated to your satisfaction before you buy! Caveat Emptor or Let the Buyer beware still applies!