Buying a House?

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The decision to buy a house is a big decision and there are many factors that need to be considered. One of the main considerations will be the cost of the house. This includes the purchase price and other less apparent costs. Another major consideration will be ensuring that you are getting good value for your money. In this regard there are a number of steps you can take to determine if the house you are considering buying is a good investment.

Before even starting to look for a house, it is important to know your financial limits. Most people understand that when they buy a house, they will have to make payments to the lending institution that is lending the money for the purchase of the house, but what other costs should be factored in? There are a number of "hidden costs" that you may be unaware of when you purchase a house. For example:

• Legal fees and disbursements associated with buying a house. Disbursements will include a tax, Title and writ search as well as registration of the mortgage. These are important components of your real estate purchase.
• Property taxes. The buyer may have to pay the seller for a portion of the property taxes. For example, if you buy the house in August, and the seller has paid the taxes for the entire year, you will be required to reimburse the seller for the taxes paid for August through December.
• Insurance. Your mortgage company will likely require that you purchase fire insurance to take effect on the possession date. Mortgage insurance may also be an important consideration. People who take out high ratio mortgages, or mortgages for more than 75% of the value of the property, may be required to pay Canadian Mortgage and Housing Corporation (CMHC) insurance fees as well.
• Moving expenses, appliances, repairs and utility hookups or transfers.

In addition to the costs associated with buying a house, it is equally important to know exactly what you will be getting for the money you are paying. Steps that should be taken include, but are not limited to the following:

• Do an inspection. You may wish to hire a commercial inspection company to ensure that the house is in good shape and that you are aware of any deficiencies. Discovering problems after the purchase has been finalized can be a costly mistake.
• Make sure to check the zoning in the area. It may be important to the value of your property if there is a potential for apartment buildings to pop up next door.
• Get a surveyor's report. This will indicate the exact boundaries of the property and any easements.
• Read your contract carefully and be sure to specify all of the items you intend to be included in the purchase, including plumbing fixtures, lighting fixtures, drapes or other items that may be removed from the house.

An agreement to purchase property is a contract in which both buyers and sellers incur legal obligations. Consequently, both parties should consider having a lawyer advise them in the transaction. A lawyer can assist in interpreting the legal and financial documents involved. The lawyer can help to make the transfer of property a smooth and easy one. The lawyer will search the Title and perform other services as necessary. These services include searching property tax records, removing encumbrances on Title, having a new mortgage registered on the Title, and ensuring that mortgage money is advanced and proceeds are available to the seller.

Realtors can also provide a valuable service by helping you establish a market value and providing a comparative market analysis. Services also include marketing and advertising the property, matching buyers and sellers, arranging and attending appointments and inspections, negotiating a deal and assisting with arranging financing.

For more information about this topic, see our online publication Buying and Selling a Home, available at www.plea.org.