A Twitter follower recently sent us this article on Yahoo Finance.
First of all, I love how the stock photo model in that picture is somehow simultaneously looking sad AND flexing subtly for the camera. “My home purchase went so bad, the only thing that can cheer me up are tickets to the GUN SHOW!”
But aside from that, here are a few highlights from the survey done by the Real Estate people:
- 32 per cent of first-time homebuyers did not “feel prepared or knowledgeable about buying a home.”
- 20 per cent are blindly offering more than they’ve budgeted without knowing if they can get the financing.
- 45 per cent of first-time buyers wished they had done things differently when buying their homes
- 69 per cent of people have “no idea what they’re doing when they’re signing those deals”
So we have a real estate market in this country where two thirds of people admit they don’t know what they’re doing, and about half came away from the buying process regretting what they just did. This is, by the way, the biggest purchase most people will make in their lifetime, and the consequences of which will remain with them for the next 25 years. Canadians LOVE to feel smug when comparing themselves to their American counterparts, but I’m starting to think that smugness may not be entirely justified.
As we’ve yammered on about in the media, our turning point when we finally became disgusted with the real estate markets came when we were looking at a house in the neighbourhood of East York in Toronto. A house that had been getting run-down and dilapidated for many years, one whose owner was an obvious hoarder with mental issues (he kept painting UFO on the windows with what I can only hope was red paint) went on the market for sale. We laughed and thought “What idiot would buy that thing?” A few weeks later, the house was sold for $500k.
We then watched as the buyer (a flipper, obviously) moved his contractors in and proceeded to perform the most half-assed reno we’ve ever seen. Done in a month, it was obviously just a cosmetic rush-job that didn’t bother addressing the obvious structural issues that come from being owned by a crazy tin-foil hat hoarder. The floors weren’t even, the tiles in the bathroom weren’t lining up with each other, and the stairs into the house weren’t even the same size (everybody who went into the open house kept tripping). Even a cursory home inspection would have thrown up more red flags than China.
A month later: Sold over asking for $800k.
During our house hunting days, the home inspection clause was always the first one that the seller demanded we drop. Yeah, that sounds legit. I’m going to plop down hundreds of thousands of dollars on this place and I’m not allowed to even look at it? If someone was selling you a sandwich, and when you asked what was inside they got offended and insisted you weren’t allowed to look before you bought it, what would you do? You’d rightfully tell them to fuck off and then promptly report them to the Health Inspector.
That buyer of the $800k snake pit is screwed. They’re going to be screwed for the next 25 years as they realize their house is unliveable, and unsellable. And in a red-hot seller’s market where every condition is being dropped to participate in a manufactured bidding war, anyone who buys anything in this country is getting equally screwed.
Now it’s no secret that we have a few opinions on house ownership, but if you for whatever reason have to buy a house:
- Make sure your real estate agent represents you and you alone. If they represent both the buyer AND the seller, that is a massive conflict of interest.
- Insist on a Home Inspection. This is non-negotiable.
- Never sign an offer when you aren’t 100% sure about the financing. If you later can’t get that money for whatever reason, the seller can and will sue you for damages. A friend of mine got caught in this trap, and the resulting flameout caused a messy and expensive divorce.
- And if you find yourself having to drop one or more of these conditions in order to “buy now or buy never,” walk. Staying a renter while getting rich, retiring in your 30’s and travelling the world ain’t such a bad alternative.