Ask Kathy Mendham - Meathrel your London MLS and Real Estate Questions
If you have a question about buying or selling a home in London, Ontario email KathyMM and she will be happy to respond. If you don't wish to have your question answered here please indicate.
Question Topics:
Results of home inspection?
Sell or buy first?
Economy vs Home sales?
Liens on a house?
Location, cost?
More on Real Estate and Building Permits?
How far in advance?
Topic: Results of home inspection
Question: Just wondered if there is some kind of protocol as far as when a buyer can "break the deal" due to results of a home inspection. I've heard a few stories lately of people getting out of the deal due to minor items the home inspector finds. Is this all at the discretion of the buyer?
Answer: Here is the home inspection clause I use which is fairly standard (although agents may use one of a few clauses which should be similiar):
"This Offer is conditional upon the inspection of the subject property by a home inspector at the Buyer's own expense, and the obtaining of a report satisfactory to the Buyer in the Buyer's sole and absolute discretion. Unless the Buyer gives notice in writing delivered to the Seller not later than 11:59p.m. on April 20,2009 that this condition is fulfilled, this Offer shall be null and void and the deposit shall be returned to the Buyer in full without deduction. The Seller agrees to co-operate in providing access to the property for the purpose of this inspection. This condition is included for the benefit of the Buyer and may be waived at the Buyer's sole option by notice in writing to the Seller within the time period stated herein."
Basically you can refuse to waive this condition if you are not satisfied with the home inspection report. You do not need to provide the seller with your reasoning however it would nice to inform them of the issues you have found. Typically minor and major issues can be addressed with either having the homeowner rectify the situation or through an adjustment of the purchase price.
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Topic: Sell or buy first?
Question: I'm wondering if it's better to sell your house first, then look for houses, or put a conditional offer in and then try to sell your house. What I worry about is if we sell our house and don't find something we like quickly enough, we might be out of a house. Is that possible? My other question is how quickly are houses selling in this market generally?
Answer: Whether to sell or buy first is dependent upon why you are moving.
If you are moving to find your dream home then it is best to buy first. If you are less choosey as to what you want in a new house then it may be better to sell first. I also think it depends further upon how you are as a buyer. In some cases I have had clients that walk into the first or second house that I show them and they are ready to buy it. Others have taken 40 plus homes before thay can reach a decision. The pros of selling first are that you know how much money you have to spend. You can go into you purchase with a cash offer (not conditional on the sale of your property). You won't need to be concerned with financing two mortgages. You're also not forced to reduce your sale price right away. The advantages of buying first are that you get the home you want. You can manage your closing dates so you don't end up homeless for a period of time.
If you purchase a home conditional on the sale of your current property it is not a condition the seller typically wants and they usually try to remove the condition during negotiations. If a conditional offer is accepted the seller will still attempt to sell their home and you may be forced within a short period of time to firm up on the condition or walk away from the property should another buyer appear. The length of time properties are staying on the market has increased since last year but typically homes that are priced well are still selling relatively quickly. I can give you an average of how quickly homes are selling in a certain area of London if you would like to PM me the general area you live in.
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Topic: Economy vs Home sales? (Spring 2009)
Question: With the down turn of the economy, how much on the average has that effected the cost of homes sell on today's market? Has it effected one price/type of home more over another i.e. townhome vs detached? New vs existing?
Answer: Yes, the economic situation is having an overall price reduction however this is not uniform across all areas and types of properties in London. In fact some areas are still experiencing price increases.
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Topic: Liens on a house
Question: If you are purchasing a house what types of liens may be associated with it? Are paying them off the responsibility of the buyer?
Answer: When you purchase a property the only lien should be the mortgage(s) that your financial institution(s) has registered against it. It is the responsibilty of the sellers lawyer to pay off all liens or encumbrances the seller has listed on the property. If the purchase price is not enough to cover the obligations then you should be wary and discuss this with your lawyer. Your lawyer will verify that this has been done and in turn will register your financial institution in its place. The only exception of this would be condo fees or where you are assuming an existing mortgage (which is not common.) I hope this answers your question.
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Topic: Location, cost
Question: Hi Kathy,
I was just wondering a few things. where would you suggest buying a home, when it comes to financially investing in a property. I want to make sure when we are ready to buy a home we buy it in a location where we have a good chance to build equity. also how much would you estimate the extra cost over the purchase price of the home would be, ie. lawyers, home insepction..and so forth. also we are thinking of buying in the north end of london around oakridge or sunningdale area..... still unsure would you think it would be a sound investment to purchase there??
Answer: First off for the straight forward part of the question which are the estimated costs associated with buying a home.
- Home inspection $350
- Legal fees range from $500-$2000 (depending on lawyer, complexities and disbursments)
- Land transfer tax varies depending on purchase price and potentially can be waived for qualified first time home buyers. rates: Land Transfer Tax Rates calculator: Land Transfer Tax
- Title Insurance $300
- Survey of Property $1000 (not often required)
- GST if buying a new build
- Status certificate $100 (condo's only)
- Moving expenses
- Various Utility set up/connection fees
If you are buying a house as your primary residence you should primarily think of it as a home not as an investment and you should not expect to make a profit if you turn around and sell in the short term. Real estate has historically appreciated over the long term and that should continue however there is no guarantee of making a profit on any home since it will be dependent on the market conditions at the time you are selling in relationship to the market conditions of when you purchased. I can't forsee the future since many factors that will impact the value of an area over time. There are certain areas of the city which have historically done better than others, this will be reflected in your purchase price when you decide to buy. The areas that you mentioned are traditionally nice areas and I would have no concerns selling a client a home in those neighbourhoods.
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Topic: More on Real Estate and Building Permits
Question: We bought a house last summer and didnt have it inspected, which we sorely regret now. We are fairly certain that there were no permits obtained for the extensive renovations that were done by the previous owners and as we have done our own work, we are having to repair many things that the previous owner didnt do right such as shoddy electrical work and questionable plumbing. Do we have recourse now?
Answer: You can check on the City of London's website to see if your property has had permits granted in the past. Building Code Information from the City of London Ontario Canada (click on the hyper link, then enter your address. If there were permits issued you can click on them for further detail). When you purchased your home did you receive and review a Seller Property Information Statement (SPIS)? If you did, how did the disclose regarding permits and work done while they had been in the home? At this point it is much more of a legal question and I would refer you to speak to your lawyer to see if there is any recourse.
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Topic: How far in advance?
Question: How far in advance should a family who is interested in selling their house contact a real estate agent?
Answer: There is no set amount of time before you should call a Real Estate Agent. It is ultimately determined by your personal preference and wishes. If you wish you could contact an agent today and you could potentially meet with them fairly immediately. If you have decided to or are fairly certain that you are planning on selling your home there are advantages to begin the process soon after the decision is made. The advantage of this is you can have the agent come and do a market evaluation of your property and provide you with some information on items that can be done to help maximize the value of your home. Therefore giving you time to work at getting your home ready for sale. During this time you may wish to start looking at homes that fit your need (presuming you are buying another home) which will allow you to get a feel for the market and give you a realistic expectation of market value.
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