I recently read a great article by Mark Weisleder who is a Toronto lawyer and a regular contributor to the National Post Real Estate section. It inspired me to share with you these tips to help you have success and avoid stress when buying property in beautiful Muskoka.
Approval without an appraisal may lead to disappointment!
Being pre-approved for your financing does not mean you are guaranteed to have the money you need. There will be some small print in the pre-approval that say subject to some lender conditions being satisfied. It may be income verification and proof of down payment. It is likely that an appraisal of the home you wish to purchase will have to be completed by an independent professional to make sure you didn’t overpay. To avoid a problem on closing make sure you let me, or your Sales Representative know you will be getting a mortgage so I can ensure a financing clause is in your offer. This allows for time to get this taken care of before your offer becomes firm and binding. You need a letter of commitment from your Mortgage holder before you remove the financing condition. There have been cases where lenders have refused to advance money on the closing date because of a failure to comply with the pre-approval conditions. This can lead to delayed closing, extra moving expenses and in worst case scenarios, a default in the deal where, as the buyer, you may forfeit your deposit and worse, potentially be responsible for sellers’ losses if they are significant.
Ask lots of questions to lots of people about the property?
As a Realtor I am always asking questions of the listing Sales Representative about a property my client is interested, but I cannot directly ask the seller questions unless I am representing them too. I make it a point to give full disclosure of pertinent information to my buyer. There are rare occasions, however, when a seller is not disclosing things to their listing Brokerage that you may want to or need to know. How are the neighbours? Was there ever a death in the home? Have there been any major repairs done by insurance in the past? In my experience a seller won’t tell you about a neighbour from hell or problems with other homes on the street. They may also fail to disclose problems with their own home. Sometimes they have been repaired and are not a concern, but sometimes they have been covered up so we cannot see the issues. When you are doing your home inspection, have someone talk to your potential new neighbours, if possible, and ask them directly if they saw any repair trucks at the home you are interested in, and whether there may be some strange people living nearby! Remember the neighbour you talk to may not like the seller so you will need to weigh the information carefully but you still should get all the information you can.
Choose a home inspector carefully
I find that a good home inspector is a fantastic asset in the home or cottage buying process. I work with several in this area who do a fantastic job for my clients. The home inspection is a critical part of the process, so do your research. Make sure the company is registered before retaining them. The Ontario Association of Home Inspectors is a self-regulating body that defines qualifications for home inspectors, and grants the designation RHI, or Registered Home Inspector, to qualified practitioners in Ontario. Most inspection firms have a limitation of liability clause, which states that if they miss something that costs you money, they are not responsible. Ask the inspection company if they have ever been sued by a buyer. Also ask them whether they carry insurance in case they do get sued. Remember that home inspectors cannot see behind walls. During the home inspection there is often the need to have septic system inspected as well as wood burning appliances, so ask the inspector if he can do those inspections too.
Go to the building department
When I list a property I try to discover all the information I can about it by contacting the municipal offices and going to the Land Registry office. When I represent a buyer I recommend we do the same. A visit to the local building department will find out if any new developments are planned. New development may increase property values but also increase traffic. Other proposed developments may decrease property values. A shopping plaza or a recycling plant would change the nature of the area and you may not want to live there.
Chattels and Fixtures included
There is no such thing as too much detail in an offer. Insert clearly everything you expect to receive on closing, including window coverings, drapes, mirrors, closet organizers, TV brackets, garage door openers. This is even more important when buying recreational property that often comes fully furnished. If the seller wants to remove the chandelier, make sure they will install a new fixture before closing. You don’t want to end up with dangling wires in the dark when you are trying to move in. If the fridge is almost new and stainless steel finish you don’t want to arrive to a second hand 25 year old model with a fragrance of stale beer! Make sure that the inclusions are described in detail.
Apartments must be legal
If the home contains a basement apartment and the income is important to you, make sure that it legally complies with zoning and the fire code by-laws. If it doesn’t, then all it takes is one complaint from a neighbour and you may be forced to spend thousands of dollars to make it comply after you buy.
Check about your insurance premium early
Many lenders will require that the home or cottage is insured before they release funds. You should ask your sales representative to include a condition in your offer for obtaining satisfactory insurance. Find an insurance agent right away and check what it will cost to obtain insurance as soon as you have an accepted agreement. An insurance agent can check the history of claims in the neighbourhood and can let you know about claims for sewage back-ups or vandalism. If it has old knob and tube wiring, galvanized plumbing, wood heat as a primary source or the place used to be a grow house, you will have difficulty arranging insurance. This is important information that any buyer should have before deciding to waive their conditions and complete the deal.
By following these steps, you can avoid being disappointed and your purchase of your new Muskoka home or cottage will be an exciting and stress-free process.