Anecdotes and Advice from a First Time Home Buyer Part 7 – A Close Call

by Mike Holman

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My friend Christine has kindly agreed to write a series of posts on her experiences with buying a home for the first time which will be posted occasionally. See Part 6 – Week One with a agent.

As the weeks went by, the house hunt took us to a nicely renovated semi with rental potential. After taking a second look at the property, my husband and I decided to bid for the house.

Our agent briefed us on the offer process. A bank draft made out to the listing agent’s company for five per cent of the asking price was required to accompany our offer. We were to go in with our best offer as it would be a multiple bid competition. Our agent also recommended that we submit an offer free of conditions or it might not even be considered. Thus we chose to have a home inspection prior to the offer date. As we already had pre-approved financing, we were comfortable with omitting such a clause.

Four hundred dollars is not cheap, but was a small price to pay to evaluate a purchase that we would be paying off for the next quarter century. The home inspection was also a useful primer about home maintenance and helped in estimating the cost of various repairs. Mike and his wife warned us ahead of time that a home inspector cannot see through walls. Therefore insufficient insulation or shoddy construction could not be properly detected. I was fortunate that I was able to be present during the inspection, and that the inspector had a gregarious personality and welcomed my many questions. At the end of the inspection, I was taken through the house with the more pressing repairs explained. Most helpful was having monetary figures attached to the various repairs. I truly felt that it had been money well spent.

After discussing the home inspection findings with my husband, we decided not to bid on the house. In many ways, the required repairs were typical of an older house. We took the advice of the home inspector in deciding if we could comfortably afford to budget in the immediate repairs on top of the purchase price. While we thought the house was lovely, it was not nice enough to warrant the additional repairs which we would have to do before making aesthetic changes. It was near the top end of our budget already. We passed on this house without regret and learned that it had sold later that week for over asking.

Things we learned along the way

Termites have penetrated into the majority of the older downtown neighbourhoods, as the following chart shows.

Aetna, one of the largest pest control companies in the city, maintains a database of termite infestations. Anyone can call and ask if there have been live infestations on a particular street.

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{ 4 comments… read them below or add one }

1 Mr. Cheap

I didn’t even realize there were termites in Toronto (I figured they wouldn’t like the cold weather). Good idea to check the area out before purchasing.

With termites the “recommended response” is to gas them before they do much damage?

The more I read/hear about older houses in Toronto, the more I think buying a lot, tearing down what’s there and getting a modular home installed on it might make sense…

2 FourPillars

Definitely termites in T.O. – especially in the downtown areas.

When I was looking for houses I came across quite a number of houses that had been treated for termites – it didn’t seem to affect their sale price. I think buyers figured if the house had been treated then it might be better than a house that had never been treated.

I couldn’t agree more that tearing down an old house is the better way to go unless it has some great curb appeal. Obviously it would have to be detached. The only problem is that it’s generally quite a bit more expensive than gutting and renovating an existing house – but the final product will be worth more too.

Mike

3 thickenmywallet

When my brother went house-shopping for older homes with multiple bids, his real estate agent immediately found out whether the house was knob and tube wiring and called an insurance company to get rates. It was one less issue to worry about if you are bidding without conditions.

4 FourPillars

TMW – that sounds like a good idea. There doesn’t seem to be a lot of consistency between insurance companies regarding knob & tube. Some won’t insure it, others will.

Mike

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