More Money Podcast - 045 House Hunting Dos & Don'ts - Kristina Wilson, Real Estate Council of Ontario (RECO)

Episode Date: April 13, 2016

In this episode, I talk with Kristina Wilson from the Real Estate Council of Ontario (RECO) about the most important dos and don'ts when it comes to house hunting. Buying a home isn't as glamorous as all those home buying reality shows make it seem. It's a lot of work, there are a lot of documents to be aware of, and making one of the most expensive purchases of your life should not be taken lightly. Luckily RECO is here to help with experts like Kristina as well as a number of other useful resources to help any homebuyer make a financially responsible decision. Long episode description: This podcast episode is all about real estate — one of my favourite topics! If you’re a longtime blog reader, you already know I had quite the experience when my husband and I were trying to buy a house in Toronto last year. After two straight months of house hunting and bidding wars, we decided to take a rest and continue renting. If you’re not familiar with my house hunting blog series, definitely check out these detailed posts. My House Hunting Blog Series Beware of the Buyer Representation Agreement When Shopping for a House Another Week, Another Round of House Hunting in Toronto My First Bidding War: But Not My Last House Hunting Checklist: My Must-Dos When Checking Out a House House Hunting in Toronto: My Experience in a Seller’s Market Even with that experience still fresh in my mind, over the past few months my husband and I have started talking about looking again. We now realize that owning a house is out of the question if we want to stay in the city, but we can definitely afford to buy a condo or townhouse, especially if we plan on continuing to live in good ol’ TO for the next 3-5 years. That’s why I’m so excited to share my interview with Kristina Wilson from the Real Estate Council of Ontario (RECO). Kristina has a wealth of knowledge when it comes to real estate buying and selling, and we delve into all the important things you need to know as a potential buyer in this episode. Here are a few takeaways from this episode: Key Takeaways from this Episode Find a realtor who specializes in the type of property you want to buy instead of a generalist. If you want to buy a condo, find a real estate agent who is an expert when it comes to condos. They’ll know what buildings to stay away from and will help serve your needs better than someone who is more specialized in houses or vacation homes. Interview at least 2 to 3 realtors before choosing one. Ask for references before making a decision, and ask them what their experience is. For instance, how many homes have they successfully helped buyers purchase in the last year? Before stepping foot in a home you think you may want to buy, know how much you can actually afford. This means crunching the numbers, creating a budget with your new mortgage in mind, and getting pre-approved for a mortgage. Calculate your closing costs. Most buyers forget about these costs, but they could make or break your dream home purchase. If possible, make special requests in your offer. For instance, if you really want the home’s washer and dryer, but you fear the owners will take it with them, put it in your offer that you want it to stay with the home. They are also a number of other great tips in this episode, so make sure to take a listen. But to supplement our interview, I’m including a number of helpful resources below. Happy house hunting! Helpful Resources If You’re Thinking of Buying a Home Thinking of buying a condo? Here’s what you need to know Homebuyer’s checklist Common buyer questions & answers Buyer representation agreements: Understanding the fine-print Dealing with competing offers as a buyer Home inspections and choosing a home inspector Follow RECO on Social Check out more of RECO’s helpful videos on YouTube Follow & chat with RECO on Twitter Stay up-to-date on everything real estate on Facebook Shownotes: jessicamoorhouse.com/45 Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Mo Money Podcast with your host, Jessica Morehouse. Hello and welcome to episode 45 of the Mo Money Podcast. I'm your host, Jessica Morehouse. Thank you so much for joining me for another episode. And I'm very excited about this one because it's on one of my favorite topics, real estate, house hunting, all of that good stuff. If you are a longtime blog reader of mine, then you know my whole experience with the house hunting game. Me and my husband thought we were going to go buy a house in Toronto because we thought it would be way easier than it actually was. And we house hunted for a good two months last winter. And it was quite the experience. I wrote a bunch of blog posts that

I will make sure to include in the show notes. But in the end, we decided it was not the time to buy for us. So we are still renters. But that doesn't mean that I always want to be a renter. I have big dreams of becoming a homeowner. And even though the time isn't right right now for us, I love researching and learning more about real estate. So when the time is right, I have all the facts and we can make the best possible investment because that's what it is. You're not just buying a home for home. It is an investment because it's a big chunk of money that we can. So today I'm interviewing Christine from RICO, which is the Real Estate Council of Ontario. And we are going to talk about things that you need to know before you even consider or even look at your first

house. So this is an episode that if you are thinking about shopping for a place of your own, some land, whatever, you're going to want to continue listening to this amazing episode. Thank you, Christina, for joining me on the show today. I'm excited to talk about real estate today. I'm excited to chat with you too. Awesome. So just to give listeners an idea of what you do and what RICO is all about, can you introduce yourself? Sure. So my name is Christina Wilson. I'm the Senior Communications Officer at the Real Estate Council of Ontario, or Rico as people often call it. So a lot of the work I do has to deal with helping homebuyers and sellers know the right

questions to ask and the right steps to take before they buy or sell a home. So it's really getting informed before you make such a large financial purchase. Yeah, it's kind of the biggest purchase most people will make in their lifetime. So you definitely need to be educated about that. That's for sure. Absolutely. And that's something that Rico is really passionate about. Our main role is that we are the provincial regulatory body for real estate professionals.

So anyone who works as a broker, as a salesperson, has to be licensed through us. But a big part of what we do is that consumer education. So making sure that when you're ready to buy or sell a home, you know that you can come to us and get all the information resources that you need. Absolutely. And I know the first time that I really learned about RICO was when I was searching for a house with my husband around this time last year. Our realtor mentioned something about buyer representation agreements. And I was like, what, what is that? And so I looked it up online. And of course, you had a great resource on RICO, this website, all about that, which was super helpful. Well, that's great that you found it. Yeah. So let's kind of start with what, you know, I want this episode to be about informing

people that, you know, are thinking of buying or maybe they're in the middle of buying what people should really know. So they make a really smart, educated decision when buying a home for themselves. So in terms of the realtors that you deal with, what kind of education do they need? Like what does someone need in order to become a realtor? Absolutely. So before anyone becomes a salesperson or broker, they have to go through an education program. So it's pretty standard for everyone. They take a pre-registration sort of education program where I believe it's five courses and they learn

everything they need to know to make sure they can follow the rules and they're able to help clients navigate the buying and selling process. So how to fill out all the forms, how to understand the agreements. So everyone starts with that sort of basic competence. But when you're looking for an agent, there's really a lot of different things people can bring to the table. I mean, some people might be really focused on condos, others might be more familiar with rural properties or cottages. Some people might have, you know, an engineering background, and they can sort of bring that knowledge and information, you know, as you're going through the house hunting process, someone else might be really into marketing. So there's, you know,

the core competencies that all, we call them registrants that all real estate professionals will have, but it's those extras that, you know, maybe are really important to you. And you can find someone that has those skills. Now, that's interesting that you bring that up because I think, you know, I definitely learned a lot in my kind of house hunting experience. But one of the things that I never really thought about was finding a realtor that was very specialized when it comes to like just houses or condos or summer houses. So that's something, you know, that's actually really interesting that you bring up. Yeah, I mean, if you're looking to buy a condo, then somebody who is really focused in on that they might know which buildings, you know, might have lower maintenance fees, or maybe they have certain reputations or better layouts or you know, whatever it may be. So that person can really help to kind of zero in on whatever type of property it is that you're trying to look for.

But beyond just those specializations, it's really important to meet with at least a few people. So I know a lot of us will go with maybe someone that is a family member or a friend or a friend of a friend. But Eureka, we always recommend that you meet with at least maybe two or three different people just to get a better sense of you know what skills are out there and if you're on the selling side then you really get to know um what the person's marketing abilities are like and you know um what different sort of price levels people might be working with as well because not everyone charges the same amount so it's really good just to know what's out there and meet with a few people and really make sure that the person

you choose has kind of the right fit for you. So if you're someone who maybe likes to text and be in communication that way, you know, maybe meeting up with someone who only likes to meet in person or only likes to conduct their business face to face, maybe that's going to be a challenge for you. Yeah. So yeah, that brings me to a question that I think I really wish that I had thought about before, you know, searching for a house is what kind of things should you do before choosing the realtor to go with? I, you know, we had a recommendation from a friend and we did meet her and we asked the questions that we thought were the right questions and we liked her and so we went with her. But I probably wish we interviewed a few more candidates to

really find the right realtor for us. So what kind of things can people do so they make the right choice? Sure. So you'll want to ask them about their experience and that's more than just how many years they've been in business. You'll want to find out how many homes did they help buy or sell last year or maybe in the last couple of years. Are they focused on certain neighborhoods? Again, if you are looking for that specialized type of property, have they worked with condos before or have they worked with cottages before? If you're buying, you know, particularly right now in the GTA, it is such a hot market. So maybe have they worked in competing offer situations? How have they handled it?

What are their sort of what's their approach? How do they do negotiations? You'll really want to get a good sense of what they bring to the table. If you're selling, then of course, you'll want to know how are they going to market your home um you know are certain services going to be maybe included like um you know do they think staging is needed um maybe professional photography uh and you you really want to find out what it is they can offer you and of course um you know you want to be sure that you also know what you'll be paying too. So you want to find someone who brings you that nice mix that you're really comfortable with.

So yeah, that's an interesting thing you mentioned because before I was researching and trying to figure out what I need to know before buying a house, I actually wasn't aware that if you are looking to buy a house, you do not pay the realtor. It's the seller that pays the realtor. That's right. That's typically the case. So fortunately, on the buying side, most of the time, it is the seller who will take care of the commission for both sides. Which is why it's probably recommended to have a realtor when buying a house, because why not? They can be a really great resource. So it's just an extra sort of helping hand. And the other point too is, you know, with most job interviews, we're asked for

references. So that's something you'll want to do too is ask the candidates you're meeting with for a couple of references and then actually contact those people, find out how their experience went. Was the person communicative? You know, were they happy with the experience overall? And that'll give you a better sense too, if maybe that's the right person for you or not. Absolutely. No, that's a great idea. Because, you know, if you do talk to people that they've worked with, you will get kind of a better sense of how they do work instead of just taking their word for it. Yeah, absolutely. So say you've done your interviews, you've chosen the realtor you want to go with.

Before jumping in and start seeing houses, because I know that's kind of what the realtors want. They want to, you know, all right, all right, let's do this. Let's start seeing some houses. Because I remember once we chose our realtor, I think it was like the next week we started looking at places, which seemed really soon. What kind of things should potential home buyers do before even getting to that step so they are super prepared and educated and are on the right track to make a good financial decision? I mean, when it comes down to it, you really want to know how much you're able to spend. So you might have a ballpark idea of, you know, we want to spend X amount, but it's always a smart idea to meet with your financial institution or your lender and run the numbers and make sure that, you know, whatever it is you are looking to spend is going to be comfortable for your lifestyle, so that it's not just the purchase price, but there will be other costs involved on a monthly basis to maintaining that home. So you definitely want to know what your budget is, you'll want to be pretty sensible about

your wants and your needs, again, in such a hot market, you know, all of us want to be in that, you know, detached home in that coveted neighborhood. But, you know, maybe that's not realistic. Yeah, no, I definitely found we our list of needs and wants drastically changed from the beginning to the end of our house hunting experience, that's for sure. Because you just, you don't really know until you start seeing what's actually out there and what fits your budget. Oh, absolutely. I know that when we were house hunting, we kind of thought that there was a neighborhood that we'd really like to be in. And as we started seeing homes and realizing what it would take to be in that neighborhood, we had to move a little bit further out. So it's always good to be realistic and really understand, you know, what you can spend and still enjoy your life as well beyond just having the house.

Absolutely. Yeah. That's one thing that I definitely advocate is, you know, I absolutely want to own property one day. And I think it is a good investment historically, but you'd never want to buy too much house and be house poor. That's never a good situation to be in. Oh, absolutely. Agreed. Get groceries delivered across the GTA from Real Canadian Superstore with PC Express. Shop online for super prices and super savings. Try it today and get up to $75 in PC Optimum Points. Visit superstore.ca to get started. So beyond definitely, you know, talking to your banks or getting pre-approved for a mortgage, which is something that we did, which was very helpful to find out how much we could afford.

And that definitely kind of, I think, changed some of the on the map where we could potentially live. What other kind of suggestions would you give? I'm kind of thinking one thing that, you know, we didn't really know too much about were, you know, certain forms that we need to be aware of, like the buyer representation form and contracts that maybe a home buyer should expect to see or, you know, assign. So with the buyer representation agreement, there's a few things that you want to be sure that you really understand before you sign. One of those things is when the contract takes effect and also when it ends.

It can be for any amount of time. So it could be for a month, it could be for three months. If it's any longer than six months, you have to actually initial beside the dates just to make sure that you're aware of how long it's for. You'll also want to be sure that you know which services are being provided to you. So anything that you talk about with your representative, you'll want to be sure that it's in writing so that there's no misunderstandings down the line. Absolutely. And one thing that I did kind of find out when I was looking for more information about buyer representation agreements was, yeah, it's definitely important to know the date of, you know, how long that agreement is for. Because I remember

seeing a couple of news stories about people, you know, maybe glanced at the contract and didn't really read it properly and, you know, found out they were locked in for a year and weren't able to work with someone else and were essentially, you know, had to wait until the time lapse so they can work with something else. So it's definitely something to be aware of. Oh, for sure. And all of these things can be discussed between you and the salesperson. So nothing set in stone. If you want the contract to, you know, maybe only be for a month or for three months, or, you know, maybe you're looking for a house simultaneously in Toronto and also maybe in Ottawa for some reason, you can limit the contract to Toronto and then potentially have another one in Ottawa if that's your situation.

So if you have questions, it's really important to ask them before you sign, because once the contract is signed, it is legally binding and it is a contract that you have to be held to. So it's always smart to really understand it before you sign. Absolutely. And if for whatever reason you're not able to get the answers you're looking for, you can always consider speaking to the broker of record at the brokerage. So that's the person in charge of the brokerage where your salesperson works. Alternatively, chances are you'll be dealing with a real estate lawyer at some point during the transaction. So you can always reach out to that person at that time too. And also in our circumstance, you know,

after a few months of looking, we kind of decided that this isn't the right time for us to look for a home. So we were going to continue renting. And so we had to talk to our real estate agent to say, Hey, we don't want to continue looking. Can we get out of our agreement with you? And luckily she was like, yeah, that's no problem. And also it's like, we don't want to continue looking. Can we get out of our agreement with you? And luckily she was like, yeah, that's no problem. And also it's like, we don't want to waste your time because we aren't going to look for any more houses. So might as well just, um, kind of move on. So that's, you know, one thing, but it is good to understand, uh, all of those very precise things in the contract. So you're not kind of stuck in a situation. Yeah, definitely. We always say read before you sign,

because as soon as that signature is on there, you know, there's not necessarily much you can do. Absolutely. And it's good to know this way beforehand because in our circumstance, I had an idea of it because I did do a little bit of research beforehand. But when we were given the contract, it was actually right after us looking at a home that we're like, oh, yes, we love this place. We definitely want to put an offer in. And while she was putting together the paperwork, I think we were in her car. She's like, oh, can you also sign this by representation agreement? So if we didn't have the knowledge of what this agreement was, we probably would have maybe made an uninformed decision, which wouldn't have been good. So good to be

prepared before you even start looking at houses, I'd say. Definitely. And I mean, real estate has so much paperwork that comes along with it. So it can really be daunting. And you just think, oh, it's all just standard and let me just sign and it's no big deal. But, you know, things can be adjusted based on your needs. So it's really important to, you know, look for those things and really keep them in mind. Absolutely. And also just the house, like, I'm not sure, you know, probably also for the house selling experience, but for house hunting, I didn't realize, especially in just a hot market as Toronto and lots of other markets in Canada, how fast things can go. I mean, we, you know, like I mentioned, we saw this house that we loved and we were like,

we definitely want to put an offer in, but we don't want to put an offer in until we get a home inspection. And, you know, usually, you know, when it's not such a hot market, you can put an offer with a contingency that, you know, it's only good, this offer is only good if we get the inspection and it's all good. But for us, I guess this is just the norm right now. We actually had to get an inspection before we put an agreement in because they wouldn't allow any kind of contingencies because there's definitely a bidding war on this particular house. And so it was just, I think we saw the house on a Saturday. We had the home inspection on the Monday and we had to put an offer in on the Tuesday and there was a bidding war. It was crazy. Absolutely. I mean, you know, that's kind of the situation where you

start to maybe make some rash decisions. And, you know, I love the house and it's beautiful and it's got this great new kitchen and hardwood floors. You know, there can't be anything wrong with it. And so you start thinking like, OK, well, let me just wave away the inspection. And, you know, I'm sure the financing will work out and you just kind of hope for the best. But that puts you in such a scary position because, you know, what if that home inspection caught, you know, a major problem? And, you know, potentially that would have changed your mind or you would have had the ability to maybe work with a seller on, you know, reducing the price or doing something to help the situation. So. Absolutely. No, I'm really glad that we spent, I think it cost us maybe 150 bucks or something with the inspection, but I'm so glad we

spent the time and the money to do it because we found out that there was actually some damage to the basement. There was some flooding that had happened a couple years ago. And also when he was doing the inspection, he said that there's about $10,000 worth of repairs that need to happen to prevent future flooding. And so that almost kind of made it easier when we did, you know, lose the bidding war because, you know, we just couldn't compete with all the other bids. I wasn't so sad to let it go because I also knew it wasn't that perfect home. There was actually quite a bit of money that had to be put into it still. And I'm glad I knew that.

And in situations like that, I mean, you guys were happy that you were able to walk away and not purchase the home. But if you were the ones to buy it, then at least you would go in with eyes wide open knowing that we have to spend an additional $10,000 fixing this. Which can really be a huge financial burden if somebody doesn't know that in advance. Exactly. So definitely conditions are there to protect buyers. So consider the home inspection clause.

Consider financing. If you're buying a condo, it's really a smart idea to have your lawyer review the status certificate, which is basically the sort of financial pulse of your building. It lets you know how much money the building has in reserve and whether there's anything major coming up. And that way, too, you're not going to be stuck with a special assessment that, you know, you're not prepared for. Exactly. There's nothing, you know, I can't imagine, you know, finally deciding to buy a condo and everything looks perfect and then you get it. And then a little while later, you find out that there's a big bill to pay because there's some major repair you weren't aware of. Yeah. So taking all these steps, it really helps you as a buyer make an informed decision so that you know what you're

buying and you know if there are risks and maybe there are risks and you're comfortable taking them on and that's okay too. But it just helps you make that smart decision going into it. I mean, in a market like right now where, you know, homes are moving quickly, people maybe, you know, should consider doing what you did and which is getting the home inspection before putting your offer in. You know, it's tricky because you don't know if you'll get the home, but at least you'll have all the information you need. And that peace of mind, which is priceless. Of course, absolutely.

One thing to kind of close up, I want to talk about closing costs because again this was a big thing that i learned about that i you know no one really talks about but it can be very impactful and very expensive absolutely so of course there's the purchase price that you pay on the home but then if you're in the city of Toronto, there's two land transfer taxes throughout Ontario. There's the provincial land transfer tax. You might consider buying title insurance. Again, if you choose to have that home inspection, you know, that's a little bit of an extra cost. So all of these things add up together. And, you know, it might be thousands and thousands of extra dollars beyond, you know, what you plan to spend. There's also things like they're called chattels.

So if you're buying a home, you really want to know if the current owners, are they going to take their appliances with them? Oh, yeah. You know, the light fixtures, the window treatments, it might seem like a pretty small concession, you know, to say, oh, sure, take the light fixture, you know, that big, beautiful dining room chandelier or, you know, the window curtains. But again, that can be hundreds and maybe thousands of dollars that you hadn't expected to pay. Absolutely. No, it's funny that you bring it up because the home that my parents currently live in, I think they've lived in there for maybe 10 or 15 years now. And I still remember when we moved, I finally got my own room when I was a kid. It was great. lot of things that we realized we're like hey didn't this used to be here and the owners actually they took out the um kind of peephole glass thing that goes into the front door they took that with them so there was a hole in our door they took that with them and they also took some there's

these kind of decorative uh wood stumps that they had on the that were kind of um nailed onto the fireplace because it was kind of a ranch type feeling. And they took that out and we're like, why? What are you going to do with that in your next house? There's so many weird things that they took with them that they, I guess they just didn't have that in writing, but who would take those things? But yeah, it's one of those things you've got to think about. So funny. So definitely if you see things i know when we bought our place the kitchen has a little bit of an island and it's not a built-in island it's more of like a piece of furniture island but it looked great and we got it really went with the kitchen

and it's something that we didn't want to have to buy after we took possession so our our agent made sure to write that into the contract to say that that island stays and we're so happy that he did because otherwise it was a piece of furniture and maybe they would have taken it. Absolutely. So I guess it's good when you do make an offer to have a list of things just to, you know, for safety sake to me, like make sure that we get the dishwasher and, you know, this and that and make that part of your offer. Definitely. Yeah. That's a really good idea just to have all of that in writing so that, again, there's no misunderstandings after.

And I guess another thing, and this is kind of trickier, I guess, in a hotter market like this, but you can also put things in your offer that are like, can you repair certain things? Or I even know, well, when my parents bought their house, I think it was a flat market. So they were kind of lucky, but they actually asked the owners of the house. They were also, the owners of the house actually developed houses in this cul-de-sac.

So we knew they had some capabilities and we asked them to actually put in another bedroom in the basement and finish the bathroom because it was a completely unfinished basement. And they actually did, which I doubt that would happen nowadays. But they were able to put that in their offer and they accepted it. It never hurts to ask, right?

Yeah, you just never know. So you can get maybe a new paint or replaced window or who knows. It never hurts to ask. They can just say no. Exactly, exactly. I know that also upon closing, one thing that we hadn't budgeted for were the adjustments. So the previous owners had paid part of the property taxes for the year and part of the maintenance fees. And coming in halfway

through the year, of course, we'd be enjoying the rest of what they'd already paid for. So there was a little bit of an adjustment where we had to pay them back for those items they prepaid for. And that's something that, you know, we thought that we were really trying to, you know, be super informed and have all of our decks in a row. And that caught us completely off guard. It wasn't a huge amount. But again, when you're buying a home, you know, a couple hundred dollars there, a couple thousand dollars there, and it really adds up. So going through all those items beforehand will just will help so much to make sure that you have a smooth transition. Absolutely. So say, you know, you've found your house, you've dealt with all the closing costs, when does the real estate lawyer come into play? Because that was something that

I haven't experienced yet. So when would they come into play? Is it after you've, you know, signed the contract and closed on your house? So I believe it's typically when you have an offer. So as a buyer, you've put an offer in on a home and the seller has accepted that offer. So now you've got a legally binding contract that you'll buy their house and they'll sell that house to you. So at that point, you'll want to make sure you have a real estate lawyer lined up. And typically in your offer, it'll say when that closing will happen. So in advance of the closing, you'll want to get your lawyer on side to make sure that they do the title search and they have everything ready to go so that the title transfer can happen on that date.

Okay. Okay. Good to know. So I guess more information can obviously be found on RICO's great website and social media accounts. Yes, definitely. So we have lots of great resources for buyers and sellers really at any life stage. So if you go on our website, which is ricoreco.on.ca, we've got lots of tips for buyers and sellers. We have a new first time home buyer guide, which is also available on the website, ricoreco.on.ca slash first time buyer. It's got everything about how to select the right real estate professional for you and how to budget for closing costs. Really everything we talked about today and more. Of course, we've got our daily tips on Facebook and Twitter and some YouTube videos. So check us out at Rico Helps. And that was episode 45 of the Mo Money Podcast. Thanks so much for listening.

Make sure to check out the show notes, jessicamoross.com slash 45. I'm going to include some resources and some links in there that if you are thinking about house hunting or just thinking about thinking about it, you're going to want to check out the show notes. I've got a bunch of great resources. And I'm also going to include my blog post series about my experience house hunting last year in case you haven't checked it out. So thank you again for listening and make sure to also check out Rico's awesome website, rico.on.ca. A lot of great stuff in there. That's again how I learned about buyer representation agreements and I'm really glad I knew what that was before I signed on the dotted line. So thanks again for listening. And I will see you next Wednesday. This podcast is distributed by the Women in Media Podcast Network. Find out more at womeninmedia.network.