In recognition of Genworth Canada’s Annual Homeownership Week, we’ve asked homebuyers for their first-time homeownership lessons in this three-part series.
Sarah closed on her first home on March 1, 2013. At 22 and working as a production manager, she was able to purchase a three bedroom, two-bathroom townhouse with a finished basement in Ajax. Her search started in September 2012 and led her to look at around 15 different condominiums and townhouses with her real estate agent, along with endless hours spent scouring Realtor.ca for ideas and insight into what she wanted and what she could afford. Renting in downtown Toronto is expensive, and as Sarah found out, her monthly mortgage payments are actually less than what the rent would have been on a 300 square foot apartment. The experience brought some valuable lessons about home buying and what she needed to do to prepare for it. Learn more about Sarah’s first-time home buying experience:
Q: How was the experience in submitting an offer?
A: I started looking in September 2012, but had issues with my real estate agent and ended up finding a new one in November. With my new agent, it only took me about three weeks to find exactly what I was looking for in a home. The seller already had an accepted offer, but it fell through due to financing, so I knew they were eager to sell. I put my offer in on a Thursday night, knowing they were having an open house on the weekend, so I assumed I would not hear back from them until then. In addition, there was another offer on the home. The next day, my agent called to tell me that the owners had turned offers back to ‘revise’, but had left mine as it was. The morning of the open house, I found out that they accepted my offer.
Q: What was your down payment?
A: I was able to put down 20%.
Q: What is the best way to prepare for your first home purchase?
A: I went through all of my expenses before I even started looking at houses to figure out what was the maximum monthly mortgage payment I could afford. Since I had never paid utilities before, I also estimated what they would be based on what my parents pay monthly. Obviously, my home would be smaller but I wanted to have an estimate in the higher range to be safe. Once I knew what I could afford, I started looking at houses within that price range so that I would not be tempted to stretch my budget.
Q: Did anything unexpected happen?
A: Upon moving in, I discovered the previous owners had left behind a mess. I spent hours cleaning the stove of grease, the bin was full of garbage; the dryer was broken — despite stipulating in the offer that the appliances needed to be in working condition. Also, because I purchased the house in winter, I couldn’t really see what the yard looked like, but after the snow melted, I found broken glass all over. Unfortunately, all of this became a case of “he said, she said”, and there was little my lawyers could do in regards to compensation. Lastly, the basement was not finished properly; the drywall and baseboards were not sealed properly nor were the tiles laid correctly. I ended up tearing apart the whole basement to refinish it.
Q: What do you wish you had known before buying your first home?
A: I wish I had looked beyond appearances when purchasing the home. Little things are staged to help the home sell like furniture, lighting, and other nice touches like French doors. While they are nice to look at, I got caught up in the euphoria of buying my first home and didn’t stop to think that these niceties were all minor and once I moved in, I could change anything. Also, before I made the offer, I viewed the house for a second time with my parents. This time, the sellers were home and it made things extremely awkward. You don’t feel like you can fully look around, open doors, or anything else without feeling like you’re being watched, nor do you feel like you can truly express your honest thoughts. In that situation, it feels like an extremely rushed process. In hindsight, I should have seen this as a warning flag and I would have likely noticed more work that would be needed if they had not of been there.
Q: If you could purchase the same first home again, would you change anything?
A: If I could purchase the same home again I would lower my offer, and stipulate no appliances be included. It may seem like a small change but the fact that I had to replace three of the five appliances within the first month, was not something I had factored into my budget. I also think I would have been more specific in my offer — to ensure that things were as I expected them to be. Not being specific creates confusion and makes it much more difficult to get compensated.
Q: Anything you would recommend to first-time homebuyers?
A: Sit down and consider the house after you see it. I made a list of what I loved and did not love about each house I viewed. If there were any deal breakers, I moved on and crossed it off. I also kept the things I did not love in mind about the house and why — it helped to keep it in mind for any other homes I looked at. You should also look up the history of the house, including things like what it sold for the last time it was on the market, how old it is, what upgrades have been done to the home and what it would need. A simple search helped me find out it sold for $70,000 less, ten years ago and allowed me to compare with other homes on the market in that area. Basically, be as thorough as you possibly can!
Sarah is certainly not the average first-time homebuyer.
Venturing into homeownership at a young age is a feat for anyone but it doesn’t come without some obstacles. The problems she encountered with her prospective property, both outside and inside the basement are quite common. Your perfect home might still need a bit of TLC before it truly becomes what you want it to be. If Sarah met the qualifying criteria, then Genworth’s Purchase Plus Improvements plan could have assisted her in making home improvements faster and easier – she would have been able to make the upgrades upon taking possession of the home and roll those added costs into her mortgage. You can check out that plan, as well as others that we offer here.