Buying a home is without a doubt one of the most important experiences of your lifetime. For most of us, it is the single biggest purchase that we will ever be involved in. For that reason, it takes a little bit (or a lot) of research to know what you should be looking for and why.
Whether it's your first home purchase or your tenth, work with a team of professionals who can provide an extra set of eyes. What to look for when buying a home...
Start broad then delve deeper. Start with the neighborhood. Look for amenities, transportation, parks, playgrounds and schools that are close by. Next look at the street your preferred home is on. Look at how these homes are kept, get a feel for the street. Talk to the neighbors. Next, look at the home from the street. Look at the landscaping, the roof, the siding, and visible foundation. Move inside, check out the floor plan, the furnace, and air-conditioning the electrical panel and the foundation.
By taking this perspective, you can identify many positives and negatives. You may love the home, but there is something about the street you don't like. Let's explore this topic in more detail so that you can make the best choice when buying a home.
In the article we are going to cover the following topics:
- Create a priority list
- Know your budget
- Location, location, location
- Landscaping and curb appeal
- Floor plan
- Windows and doors
- Heating and air conditioning
As we review these topics, we will discuss what to look for when buying a single-family home. After, we can review other types of homes like condos, town-homes, etc..
Create A Priority List
Before you buy a home, the first thing you should do is create a priority list. If you are working with a realtor, then your realtor will help you with that. If you are just beginning your home buying process, then make a list of your top priorities. As you visit homes and ask your friends who own homes, add to your list.
Without a priority list, your home buying journey could go anywhere. Here are a couple of things to think about:
- Location: where do you want to live? Closer to your work, closer to your family, somewhere else?
- Public transit: this is related to location. Do you want to walk to work, take public transit, or perhaps that doesn't matter?
- Old home versus a new home. Would you prefer an older home or a newer home or a newer neighborhood?
- Size of home. Do you want 1 bedroom or 5 bedrooms?
- Style of home. Do you want a 2 story home or bungalow? A home with a basement? A home with a basement suite?
- Fixer-upper. Perhaps you want to buy a home that needs repair. You could get a deal then make it your own and build sweat equity.
- Single-family home or condo or townhome. Don't bother looking at condos if you want to by a single-family home or vice versa.
- This is not an extensive list, but it's a great start.
Once you have chosen your priority list, then it's time to start looking, or is it?
Know Your Budget
I've had too many clients who started looking for a home before they knew home much they could qualify for. I've also had clients who could qualify for a certain amount but the mortgage payments, property taxes, utility payments, etc. were much more than they wanted to spend.
This article is targeted toward what to look for when buying a home. However, I want to make sure you know your budget and how much you can afford before you get too excited about a home you can't afford!
Speak with a mortgage broker who can provide you with a mortgage pre-approval (read about an article I wrote about getting a mortgage approval, click here). You will then know how much your mortgage payments will be. You will know how much purchase price you can afford. Then, you can start looking for the home of your dreams!
The first thing to look for when buying a home is…
Location, Location, Location
Location is everything or so the old saying goes. And while it can be easy to just focus simply on the home, it is important to know what is in the rest of the neighborhood. What schools are in this neighborhood? Are there parks or playgrounds? How do you get around? Are there walking paths or bike paths? How close is the local grocery store? Other shops?
All these questions are important for you now, but also in the future. If you ever sell this home, new buyers will be asking these questions too.
As you drive to the potential home, make sure that you check out the neighbor's houses. Are these homes kept in good condition or are they all run down. You don't want to buy the nicest home on the street! Is this just residential housing or are there large buildings, industrial, manufacturing close by? How close is a major thoroughfare? Is the street noisy?
Take note of things that might make things less pleasant if you lived in that home: things like odors, traffic, and noise. These are important things to notice before moving into a home. You don't want to find out about noise and smells after you buy it.
Landscaping and Curb Appeal
As you pull up to the home, have a look at the landscaping, the home's siding, and the roof. Make sure that the ground isn't funneling toward that home. You don't want water issues if there is heavy rain. The ground around a home should slope away slightly from the home. This will prevent water from coming into the home through the basement walls. If the ground around the home slopes toward the home could suggest clues to potential issues inside.
How does the siding look, the roof structure? A professional home inspector is a valuable resource to identify potential issues with a home related to the siding or the roof. You can also ask a roofer to make an inspection or provide a quote for repairs.
I was working with a client who wrote an offer on a home. The property inspector identified issues with the roof and recommended roof replacement. The client asked a professional roofer for a quote to replace the roof. The roofer said that the damage on the roof as a result of hail damage. My client was able to go back to the seller, ask them to have the roof repaired by their insurance company.
My client just paid the $1,000 deductible and had a new roof, worth over $12,000 installed. This was a win for them and wouldn't have happened if they hadn't requested the quote. It's so beneficial when you employ the services of professionals in the home buying process.
Check out the floor plan. Check out how the home is laid out. Check out the size of the rooms. Take measurements. A home that's listed by a realtor (on the MLS) will have sizes disclosed, but you can still take the measurements when you are in the home. If you know how big your furniture is, then you can get a feel for how your stuff will fit into this home.
Knowing the layout of the home allows you to get a better feel for how you will fit into the home. You can figure out who will go to what room; what furniture will fit into which room, and so on.
Unless you plan major renovations, choose a home with a floor plan that fits you and your family. There is always another home coming onto the market. If this home isn't right, wait for the next one.
There are so many different floor plans for homes. If this is the perfect home, but you do need to make changes, then read this article I wrote. It covers financing improvements on a home you are in the process of purchasing.
Windows and doors
As you walk into the potential home, you want to look at the windows and doors. Whether or not they are clean helps curb appeal, but take a closer look. Windows and doors can be a huge source of heat in the summer and cool in the winter. When we purchased our home, we replaced the windows after 18 months. I noticed that my home was much cooler in the summer and much warmer in the winter after replacing them.
The quality of the windows, how old they are and whether or not they are sealed well can affect your heating and cooling bills. Have a professional look at these. If you need to replace them, you can again use the purchase plus program that I mentioned in the last section. Click here to read the article.
Heating and air conditioning
Your furnace and heating system is another major component in your home. A home inspector will give you a good idea about this. If your furnace is run by natural gas, then you can also get an inspection by your local natural gas provider. They will often do this at no cost. An HVAC company is another option for a furnace inspection. There will be a cost, but you could potentially negotiate with the current homeowner to pay for this if you don't buy the home.
If a home is brand new, then an inspection would have been done recently. If the furnace is more than 25 years old, then you should see evidence of regular inspections by a furnace company. There should be a sticker or more on the furnace with inspection dates. Replacement of the heating system in your home can be expensive. Make sure you have some sort of inspection before you buy it.
I've mentioned the purchase plus improvements program before. Replacement of the furnace is one of the improvements that my clients use this program for.
When buying a home, look closely at the electrical system. How is the electrical panel? Some insurance companies will not insure a home if the panel doesn't provide enough amps. A home inspector will let you know what your home has. Often, you will see this information listed on the details provided by the realtor.
Before you write an offer, you can ask your insurance company what they will cover in terms of the amperage of the electrical panel.
Old homes may have an old-style electrical system installed in the home called "knob and tube". It's not inherently dangers unless a previous owner has tried to modify or connect this type of wiring with more modern wiring. This topic is too large to talk about here. If you are looking at a home with knob and tube wiring, then do a very thorough inspection. Upgrading this type of wiring can be costly.
The foundation that your home is built on is a very important aspect of your home. Make sure that your home inspector looks at this thoroughly. Repairs to a foundation can be very costly. In my opinion, if a home has some major foundation issues, I just wouldn't buy it. There are always other homes on the market, choose one without foundation issues.
I had a client who bought a home. They had an inspection done and some clues pointed to foundation issues, but they didn't investigate those clues enough. A year after they moved in, they started renovating the basement and discovered the issues in the foundation. Over $60,000 later, the issues were resolved.
Fixing the foundation didn't increase their home's value by $60k. In hindsight, they wished they had walked away from this home and purchased another.
If you have any inclination about foundation issues, make sure you get to the bottom of it before you finalize your purchase.
I've covered many of the major things to look for when buying a home. Let's take a look at some of the different types of homes.
Things to look for when buying an older home
While older homes can certainly have charm and extra character that a modern build may lack, there are several different things that you need to be aware of when considering an older home. The last thing that you need is to purchase an older home only to find out that it has a litany of issues that you may have not been previously aware of.
Check roofs and gutters. The main issue with older homes typically revolves around its structural integrity. Things like the gutters and the roof are unsung, unseen, yet essential portions of your home. Making sure that those things are in good condition is a huge priority when you are checking out an older home.
Roof issues or gutter damage can be clues to bigger issues. Bigger issues can result in huge expenses for repairs or replacement. Issues with the roof can also hint at foundation issues, water damage, to take these things seriously.
Look at the electrical panel and boxes. The wiring in old homes can be dubious at best, especially when they have those old fuse boxes that older homes can still come equipped with. If there were multiple owners, there could be many small changes and renovations that aren't visible and may not have been done properly or to code.
Upgrading and replacing the electrical in a home isn't cheap. As mentioned before, your homeowner's insurance may not cover the home if it has an outdated electrical system.
In my opinion, a home inspection is a must when buying an older home. I would bring in as many professionals to look at the home as possible. There are lots of things that could be hidden behind a nicely decorated and painted wall.
Any signs of water damage? Water damage can occur over time and it certainly doesn't take a flood to cause it. With a bit of excess moisture in your home, you can see things like dark spots on the walls or the roof, a disgusting, mildew smell or even marks on a wall that could be a sign of major problems.
This is important for a few reasons. The first is that identifying water damage will help the homeowner (or you, if that is you) identify any other potential leaks, preventing further water damage to the home. The second is that any potential leaks that are left unchecked can spread throughout the home and result in serious structural damage.
What to look for when buying a new home
Like purchasing an existing home you want to look at the neighborhood, the street, the home itself. If your home isn't built yet, then look at other homes that the builder has built. Look at the materials they use, the window companies that they use. Look at the type of roofing material, look at the furnace and heating options.
With a new home, the neighborhood is often new. Many services and amenities aren't always there yet. Consider what is planned and for when. If you have small kids and there aren't schools, then your kids may be too old by the time a school is built.
Most builders have some sort of 1-year warranty. I would recommend that you get a home inspection at the 9 month mark so that you can get any issues fixed that came to light in the first year of living there.
I've purchased a few new homes in the past and I had an inspection done when I moved in to make sure that everything was satisfactory. The inspector did find some items that I wouldn't have noticed. The inspector also provides some excellent tips for maintaining my new home. Tips I hadn't known!
With a new home, you will often have a warranty with many of the providers. The window company, the HVAC company, electrical, etc.. Keep this information handy so that you can get things fixed under warranty if you need to.
One thing to remember, when you buy new, the ground often settles around the foundation. You may have to grade the land again to make sure that water is running away from your home instead of toward it. Don't build a fence or add too much landscaping too soon. You might have to re-do everything if there is a lot of settling.
Like an existing home purchase, check the quality of craftsmanship. Your new home should be in it's best possible condition when you move in. If the quality of materials isn't great, then you are starting at a disadvantage. Builders often have show homes, take a look at them in detail.
The builder has likely built other homes in the area. Walk around, talk to the neighbors. Get their feedback about the home's that they own. Ask them what they would have added if they were buying again. Ask if they would choose that builder again. Ask if there were any surprises or things they hadn't expected.
What to look for when buying a condo
Condos are rapidly becoming a more popular option today compared to single-family homes. I think that condos are becoming a popular option because they provide the single-family space of a house without all the maintenance and upkeep.
When you purchase a condo, things like lawn maintenance, snow removal, exterior maintenance, and other service are the responsibility of the condo corporation. Some condos have separate storage units for each home and others don't. All these things come at a cost, the condo fees! However, for some, the convenience is more than worthwhile.
That said, when you purchase a condo, it's hard to inspect the foundation or the roof. If something is of bad quality or needs repair, you may not be allowed to change, replace or repair those items. When you buy a condo, there are other things to look for and ways to look for them!
The condo fees. Make sure you know what services are included in the condo fee. Also, make sure you know what is the responsibility of the condo corp and what is your responsibility.
One way to do this is to review the condo meeting minutes for the last 12 months, or more if they are available. You can often read about issues that the condo is dealing with when you read the latest minutes. Review the financials. The condo should be receiving enough funds to maintain the property. There should also be a reserve fund. Have they completed a reserve fund study?
If you want help reviewing the details about the condo, you could hire a condo document review company. You could also hire a lawyer to review the details. I think that the condo document review companies charge too much. However, they do see lots of different condos and can give you an unbiased opinion about the condo you wish to purchase.
If you can, I would also suggest that you try to speak to people who live there. Ask them what the condo is like. Ask about the noise. Ask about issues they have heard about. When you do this, try to speak with more than one person. Everyone has a different perspective and you want to get a couple of perspectives before you draw any conclusions.
When you are buying a condo, you're not just buying a home. You are also buying into an association and in many cases a corporation. The condo will be run by members of the association. There will be rules. Some rules you may like and others you may not. Changing these rules may not be easy or even possible. Know what the condo bylaws are and the rules of the condo.
For example, if you have a pet and the condo doesn't allow pets, then you either don't move in or you have to give away your pet. This wouldn't be a nice surprise after you purchase and moved in.
When buying a condo, you have to look for different things that when you buy a home. These tips will help you make a choice that's best for you.
What to look for when buying a townhouse
A townhouse is very similar to a condo with the shared walls. There are a few small differences between condos and townhouses, so you should follow the general guidelines of things to look for in a condo.
Are there association fees? Know what these fees are and what they cover. Typically a townhome will have a small yard space that you can use that's either private or semi-private. Some townhomes have yard space, but it's all public and you aren't allowed to keep any personal items in the space when not in use.
Like with condos, review the bylaws. Review the meeting minutes, the financials, etc..
The heating and electrical for a townhome are usually associated with each unit or associated with each building group. If you have a furnace and electrical panel in your townhome, then you want to get a proper inspection. The townhome will not likely cover the costs of repair if the specific items reside inside your home.
Now let's review some of the professionals that you will want to work with when you purchase a home. Your team of professionals will help guide you on what to look for when buying a home.
Professionals on your team:
- Mortgage Broker
- Property Inspector
- Lawyer / Notary / Solicitor
Your Mortgage Broker
A mortgage broker can help you get pre-approved. You will know what your budget is and you should know how much you will be paying monthly for your perspective home. The broker may tell you that you qualify for a million-dollar home which is exciting. However, if you don't want to make the payments associated with a million-dollar mortgage, then find out what purchase price fits into your monthly budget!
For you, that should be your priority. Know how much you want to spend each month on a home. Then find out how much mortgage and purchase price that will be. Then make sure you can qualify for that amount. Once you know you can qualify, then you can start your home search.
Your Real Estate Agent
On the surface, it may seem like the real estate agent is simply walking you through the home and collecting a big commission when the house is sold. But real estate agents do so much more. (One note, realtors are paid by the vendor. You don't typically pay your realtor upfront unless you have made a specific agreement with him or her)
In my opinion, the biggest thing that a real estate agent does for you is to negotiate on your behalf. They should know the market. They should know the area. They have access to the listing service where homes are listed for sale. They will have access to the selling history of the property you are interested in. All of these things are important. Their ability to negotiate is your top priority.
A skilled real estate agent will work to get you the best possible price with as many items that are your priority as possible.
Your Home Inspector
A good home inspector could save you thousands of dollars in the long run. There may be an upfront cost, but your inspector could uncover things that you may never notice until it's too late.
Many inspectors have tools that help them to find leaks and missing insulation and moisture that isn't visible yet. An inspection could also reveal structural issues. You may want to walk away from home if there are too many issues. That's ok. There are many homes out on the market. Choose one that is in good condition!
Your Lawyer / Notary / Solicitor
I have listed three legal professions, your lawyer or notary or solicitor. In different areas, real estate transactions are completed by professionals with different titles.
Your lawyer is responsible for three things:
- the money
- the title
- the mortgage.
The money is held in trust by the lawyer until the title is changed over to your name. The lawyer also registers the mortgage and can't release the money from the bank until the mortgage is registered properly.
Your lawyer can also help when there are issues with the property. This is greater than the scope of this article and I won't cover that here.
We have covered a lot of ground. When buying a home there are several different things to look for. My best advice is to review things from a broader perspective then narrow your focus.
Start with the neighborhood, then the street, then the home itself, then focus on the different aspects of your home. Focus on the heating, the foundation, the electrical, the floor plan and then finally the esthetics.
Set priorities. With priorities, you can narrow your search and more quickly find the perfect home for you. The location might be the biggest priority: being able to get to and from work or to a shopping center might be the biggest deal for you. Or maybe you are looking for a big, fenced-in yard if you have animals.
Things like this should be on your list of priorities so that you know exactly what you will not budge on. This will set clear guidelines and help your real estate agent narrow down the search and find the home or homes that best fit your needs.
Buying a home can be a frustrating and trying process but it doesn't have to be. Utilize the services of professionals to help you through the process. These professionals can save you thousands of dollars in the long run.
The key reason for prioritization is simple. Sure, you made a list of the things that you want, but it may not be possible for the price you are looking for. When you prioritize your list, you find out what is truly important to you and what you can live without.
Follow these tips and you can make the home-buying experience far more easy and enjoyable. Not only that, you will find the home that you dreamed of. You can do this without feeling as though you are missing an important part of the process.