The Vancouver Life Real Estate Podcast Episode 11 - The Mistakes First Time Home Buyers Make
The Vancouver Life Real Estate Podcast Episode 11 - The Mistakes First Time Home Buyers Make
Buying a home is an exciting time and it's easy to miss a step along the way. But these missed steps can be very costly and not knowing what you don't know can really hurt home buyers, both financially and mentally. We go through the biggest mistakes first timers make, and how to avoid them.
The Mistakes First Time Home Buyers Make
Unknown Speaker 0:02
Hi, and welcome to the Vancouver Live
Unknown Speaker 0:04
podcast. This podcast is created to answer the most talked about questions when it comes to navigating the Vancouver real estate market. I'm your host, Dan Wurtele, a licensed agent and accredited Real Estate Investment Advisor based here in Vancouver, and I'm joined by my co host Ryan dasht iden. I'm also a local realtor and exhausted father of two, husband of one and really happy to be here.
Unknown Speaker 0:30
Let's get right into today's episode.
Unknown Speaker 0:36
Hello and welcome back to the Vancouver life real estate podcast. This is Episode 11 and today we are talking about the mistakes that first time homebuyers make. Yes, without proper review, there are lots you can make. And we're going to talk about everything from mistakes you'll make in your financing to choosing a realtor to listening to your uncle, sister's realtors friend all the way down to how to build a really good offer as opposed to making a ton of mistakes that will leave you without a property.
Dan Wurtele 1:14
Looking for a new home is obviously very exciting. And of course the number one things that people generally do is hey, let's just start looking at homes. Yeah, right. Let's jump online. Let's go do an open house. Let's just see what houses look like and get all excited and fired up about that. And that's, that's natural.
Unknown Speaker 1:27
Yeah. That's how we look for clothes.
Unknown Speaker 1:31
Clothes, luckily are a little less pricey. Yes.
Unknown Speaker 1:33
And if you don't like your shirt, you can really just go by on the line generally,
Dan Wurtele 1:36
yes. Any kind of fee. Yeah. So obviously this is a huge decision. It's likely the biggest purchase anybody really makes. Yeah. So starting off in the right foot is very important. Yeah. And doing the steps in the correct order really help set you up for success.
Unknown Speaker 1:54
Yeah, they they allow you to maybe be more successful in a time when you thought you needed to be more prepared, right. So making sure that you've done your preparation and you've got your plan, and you can execute your plan makes you a whole lot more capable, then going about it the way you think you might go about it, and can really make it a lot smoother. Yeah, you know, they remove a lot of stress if you have a proper plan in front of you, and it's just executed, you know, and that's just, that's not just for the buyer, that would also be for the seller, it's a lot less stressful for the seller when the buyer is very organized. True,
Dan Wurtele 2:27
right. So number one, as you can imagine, it's all about understanding the financing aspect. Yeah, this is of course, what you can afford. And and and the finances and the money it's going to help or take to get you there.
Unknown Speaker 2:41
Yeah, I mean, there's nothing like showing a buyer something they can't buy, right or following Yeah, if you go out and start looking and you fall absolutely in love with the dream home, only to then make an offer and find out Guess what? You can't get financed for it. You can't get financed for whatever reason. Yeah, or maybe you actually can but guess what, you haven't filed your taxes in two And you didn't simply know that that was required to be able to get your financing. And so they said, great, you know, you need a couple months here to get everything in order. By that time the house that's sold to somebody else, and I think that's the that's the big thing like I, you know, I think when I, when I first started, you know, you would kind of take anyone in anyone who is interested in real estate, you just because it was great, and you want it to feel like a realtor. But now that we are very established and very busy with now proving that we go out on on tour with people and they are, you know, fully capable, fully financed and capable of buying a property when they walk out of something that they love, the possibilities that are going through their minds are real, versus when you go out with somebody and they're just trying to see if they like it and you know, maybe I'll buy this. There's just there's nothing really tangible happening there. Right as opposed to maybe peeking your interest in an area. But that is not something That I would recommend doing until you've got your money in place.
Dan Wurtele 4:05
So a great first step here is researching and talking to a few lenders, right? I highly suggest not walking into your local bank and saying, Hey, can I talk to someone about a mortgage? Yeah, it's not always the best professional or the best approach to find out the financing options that are going to work best for you. We do suggest talking to a mortgage broker or two yet and quite often talk to people in the industry who can make good recommendations. So total, they've seen great success stories with it's not just about the best rate, you know, and it can seem that way. You know, we keep hearing about great rates these days, but there's a lot of underlying items behind that, including penalties and fees and whatnot and inflexibility.
Unknown Speaker 4:46
Yeah, you know, I mean, I can't tell you right now the advantage of maybe having a portable mortgage versus you know, having to break a mortgage pay penalties. You know, the you'll pay thousands out of out of pocket, just to try and get the right mortgage later on. So, you know, again, preparation planning, knowing your financial steps to take is tremendous in saving money.
Dan Wurtele 5:09
Yeah. Right. And, you know, you have to understand an insured versus an uninsured mortgage, and which one potentially might be right for you. Yeah, you know, knowing how much it takes to put down on a property in order to be properly financed to the number that you want total. And you can generally get in for 5% down, but some people want to be working with an uninsured mortgage, so they want to put down 20%
Unknown Speaker 5:30
or more or they want to pay less in terms of interest and more in principle, right. So again, you know, this is if you go to a bank and you speak specifically to a mortgage specialist, you're going to understand pretty well, what the bank's product who's going to offer you. But But talking to a mortgage professional, you'll actually get a much broader spectrum of what's available to you. And I think that's what that's what we like it's it's better if you understand just the positions, right that the bank is going to take maybe position that the broker is going to take and then you know The relationships that you have existing already with, with your financial institutions. Getting a broad spectrum and understanding that is, is critical.
Dan Wurtele 6:08
And depending on your status status, there may be a few things you might want to pay off in advance, maybe there's some outstanding student loan, that the your finances will say, look, if you get this paid off, you actually increase your buying power by x. Same with a credit score
Unknown Speaker 6:23
bright like you want to you want to get a better rate I know we just talked about it's not just all about the rate, but the rate is important. And you know, one of the best things to affect the rate is whether or not you are good at paying your bills, right. So if you're gonna go and get pre approved, and you're looking for a decent rate, maybe spending the first month before you actually go get that paying off all of your bills and improving your credit score by 100 points.
Dan Wurtele 6:44
Another great thing to keep in mind is the down payment and when that is due, right because you're going to need to be liquid once you're financed to be able to firm up a deal. And generally that's going to be about 5% of the total purchase price. But that money needs to be you know in a bank and you Be liquid and accessible quite quickly, right? You know, the last thing you want to do is again, find that dream home, put in the offer and be like, Oh, well, the funds are coming from my grandmother in London
Unknown Speaker 7:09
and taking a picture of a statement.
Dan Wurtele 7:11
Yeah. Suddenly that bank says, Well, no, we need the funds in your in one account under your name for 30 to 60 days. That's right. Yeah, you don't want to find that out last minute, either. So talk to your lender, talk to a few of them, get recommendations and get that financing in place. Because that empowers you to then go search for the home that you can truly afford.
Unknown Speaker 7:29
Yeah, it really empowers you to do everything else. Right? Like if that is that's got to be, you know, knowing where you can buy, what you can buy your thresholds, understanding your cost every month. Those are the things that are going to help you say yes or no to a particular place.
Unknown Speaker 7:48
Unknown Speaker 7:50
Yeah, and then but we hit they also need help finding that place, right? Mm hmm. True. So next up is finding a great realtor that suits your needs.
Dan Wurtele 8:00
Many out there. And then there's many ways to find good ones. And it's important, I think similar to finances, you need to listen to colleagues and industry professionals about referrals and recommendations, but also do your own homework, you know, don't just just find one person and think that they are best suited to your needs. Yeah.
Unknown Speaker 8:18
It's kind of like anything, if you were to, to really look at maybe a doctor, you were looking for a particular surgery, you would go and get a second opinion or a third opinion, this is that level, right? You're at that level, you're you're making this is that sort of level but for your finances, right, that decision by interviewing a few can literally save you 10s of thousands of dollars or make you 10s of thousands of dollars. Right. So yeah, certainly, you know, an area expert is is or somebody that can, that can become an area expert very quickly. That is that there's tremendous value there. But also, you know, even going further beyond and looking at some Google reviews, doing some independent reviews of people of professionals, and that would exist as well for mortgage brokers, not just realtors.
Dan Wurtele 9:06
Well, and let's be true here, be honest, experts can also work the opposite way. Because I had a client right now who decided to originally on her first purchase ever work with what she was told was an area expert. Okay, right. The guy had done thing was East Burnaby for 25 years now. Yeah, he was the guy. I'm the area expert. Right. He's so great. So and understandably, that seems like a great attribute to have. Yeah, it's far from the only attribute. And I'll tell you the story because it's it was a bit of a shocker. I just interviewed this client last week. She bought this home with this agent who you know, always claimed I'm the best on the best, I know this area. And it was her first home so she was just taking guidance such as you should. And when it came to moving day, she showed up at the property with her dog. And the strata manager was outside saying what are you doing with that dog? We don't allow dogs here we don't allow any pets here what that that buying agent literally didn't even look at not not only the strada dogs, but any bylaws nothing.
Unknown Speaker 10:12
Unknown Speaker 10:12
So she was then told that her you know her dog her for her baby her child was not allowed to live with her in this in her brand new new home. So imagine imagine the the dismay, the imagine the anger, frustration. I mean, how does the story end? Like? Did she was she able to move in like she snuck the
Dan Wurtele 10:36
dog and she was found out pretty quickly. Yeah, of course. She received three months of fines. And then she gave up her dog. Oh my god. Yeah. So again, so how great was that area expert for her decision making and buying a new home. Yeah, that's
Unknown Speaker 10:50
that's a horrendous experience. So yeah,
Unknown Speaker 10:53
and that's that's enough to really taint kind of any purchasing experience after that,
Dan Wurtele 10:58
right. So you definitely need to learn Beyond just one or two attributes, right, you go deep This is again, it's a huge decision and, and you need to be protected in this. Yeah. You know, it's I always tell potential clients when we're meeting to, you know, of course, yes. Like Ryan said, look at Google reviews, talk to our past clients. And we have lots of clients that say, look, yeah, we are happy for you to share our contact information with future clients, because we want to share our great experience with you.
Unknown Speaker 11:23
Yeah, and that's ultimately the best endorsement is people who have done it before you right? And if they've had a good experience and you trust that person, you know, that's, that's, that's a great place to come from. Another one that I really want to talk about here is the quality of service. I mean, you just kind of hinted at it here. But the other thing that a lot of realtors are a lot of conversations they seem to have with with buyers who are shopping, realtors, talk about kickbacks, you know, can I get 20% back on your fee if I use you and words of caution there, because a lot of times we find that people will, you know, step over dollars to pick up a dime, right in doing this. Because a good realtor can, yes, there, they are going to make a commission. But if you start taking that commission from them, they're inadvertently not going to work very hard for you. It's, it's simple truth. The same exists in likely in your line of work. So, at the end of the day, you know, if you're thinking about trying to save a couple thousand dollars, because your realtor is going to give you a kickback, I would focus on the one who can save me or make me 20,000 or 30,000 with the right strategy, knowing that I'm going into this and I'm actually going to win this property because I've got to compete for it now. You know, how hard is somebody going to go to work for you if if they're working for a discounted fee? And they've got to compete against people who aren't?
Dan Wurtele 12:54
Yeah, yeah, we see it all the time. And another thing we've seen for some, some agents of that mention is, for example, there's something out there called 1% realtors. And that agency generally offers a discounted commission to the buyer's agent to bring a buyer, right. And so a lot of agents, they won't even show these properties to their clients because they're gonna make less money if they get overlooked. And that I mean, I personally definitely don't do that I've absolutely purchased 1% properties for buyers because the home was right for them. That's right. Yeah, it's not about me. It's not about us. It's about you getting the perfect home. Yeah. And could you imagine if that perfect home wasn't even shown to you just because that agent wants make a couple extra grand
Unknown Speaker 13:33
Yeah. And it exists led me
Unknown Speaker 13:37
another big one here. realtor to realtor relationships. that's a that's a kind of a big point. I have been able to secure property for clients before the properties go to market just based on the conversations that we're having in our back channels. It's it's a huge part of our business, the better can Did your real estate agent is the higher the likelihood of UK completing your sale?
Dan Wurtele 14:06
Exactly if an agent is newer, you know, nothing wrong with that everyone's been newer once, but they ultimately can lack the the relationships and the transactional history. Just to show that hey, yeah, if you work with this agent, you know, he has a 99.9% closing rate. Yeah. And and, of course, you know, with with our brokerage with ocwen, here, pretty much anytime we have a client who wants to look at a listing that has an open agent on the other side, yeah, it's it's almost a done deal. Yeah, right there. Right. Because there's a there's a commodity there
Unknown Speaker 14:36
totally. And there's a there's a level of respect and professionalism that that the brokerage carries. And I would I would venture to say I think just about all of my in house deals have gone incredibly smooth. Right. And and it's said there's good training over here, but anyways, yeah, so that's not an obvious one. You know, I think that's a bit of a deeper dive. But ask your agent and find out you know, the ones that you're interviewing and say Look, how many transactions have you done? And what's your history like and what's your closing rate? Yeah. And I think just to kind of sum up this, this little piece here, this is likely going to be the biggest purchase of your life, the biggest investment you'll you'll you'll make. So don't think about getting a kickback is the number one reason to use sub one. Make sure that you're getting the right strategy. You're having the right conversations and that you're thinking and that your professional is also thinking about the next 10 years.
Unknown Speaker 15:29
Dan Wurtele 15:31
One of the biggest knows who you see in the industry is listening to nonprofessionals. And also that includes reading the headlines and believing the headlines right? The news media will almost ultimately always guaranteed to be a negative spin on something. Yeah. And just believing in what the media is telling you who rightfully so they're not actually the industry professionals. Yeah, they're just reporting on it. Yeah, there's so often well wrong or misleading or just not showing the full picture.
Unknown Speaker 16:01
Yeah, they're not they're they're taking a position on their reporting as well. Right, as opposed to just talking about what's actually happening. And, you know, we see a lot of that creating fear, either fear of missing out or fear of getting out, you know, one of the two, right. And, you know, it's also the information that you get from the media is typically lagging information. So it's full store, its latent, right? So you're, you're you're getting what is selling newspapers, you're not getting what's coming and what fits the narrative, right? That's, that's often what you read. So understanding that there's a story and a headline, and then checking that fact checking that with your realtor with with real stats,
Dan Wurtele 16:47
and they're also they're generalizing. Yeah. Right. They're not talking to you in your specific story in your specific roles. That's right. They're just throwing out sort of a mass headline to kind of freak people out and sell some more advertising. Yeah, right. So you It's very important to understand and align your goals with people who can share the data that's going to help get you there. Yeah, exactly. And that that includes, you know, not listening to your cousins, uncles, sisters, realtors friend. That's it. Everybody has an opinion on real estate and that's fine. Right? We all live somewhere. Yeah, of course. It's it's completely natural to have a conversation and have an opinion about real estate and what's happening. Yeah. Unfortunately, most of those opinions are non fact base and and they're actually dangerous
Unknown Speaker 17:29
Muslim or wrong. You know, I, I've had a couple times where, you know, we're looking at market data, it's staring us dead in the face, right. And we've got a very obvious strategy to take care. And, you know, just based on an anecdotal story that happened to this client's uncle about three years ago, and the way that they got their property should be the way that I get my property. It In essence, it hurt her she was no longer able to buy the property and came in Way too low. And as a result, the whole the whole experience went sour because of that, right? It's it's if you don't listen to your professional, the one who does it every day, if if you went into your hairdresser and told your hairdresser, actually how to do their job, your haircut would look horrendous.
Dan Wurtele 18:20
That's true. And I actually got a pretty heartbreaking call the other day, I had a client who, you know, we started looking at homes about 16 months ago, and we found a few great ones. And we were very close to putting in the offer. And then she was asking about the market data and what's going to happen and you know, the first timer, right, a lot of questions, thankfully, we're looking into the Langley Walnut Grove area, and
Unknown Speaker 18:46
she was told by her boyfriend's accountant, that the market was going to go down. Mm hmm. And that of course, a guy apparently has more information than we do.
Dan Wurtele 18:58
You know, again, this isn't a dig at somebody, but This is the kind of stories we hear all the time. But guess what happened? The market has gone up 11% in that area, she just called and said, Look, I'm actually priced out. I've just been watching it go up and up and up. Right. I, the homes that I wanted have gone up $70,000 in that time.
Unknown Speaker 19:16
My income hasn't gone up 11% and she literally can't afford a home anymore. And she's just decided to rent
Unknown Speaker 19:22
say, hey Tay, I hate to say told you so
Unknown Speaker 19:25
kind of against something that I told you. So it's about don't listen to people who aren't the industry professionals. Yeah, I mean, if that same guy told you to not get the hernia surgery, would you? Well, that's a stat it's no different than than your doctor. These are just the people that do it every day, right? And we're not saying listen to Dan and I were saying interview your professional and ask them difficult questions. find out whether or not they know their stuff, because this is your hard earned money that you're trying to make work for you. And the last thing you want is to be that that person
Dan Wurtele 19:59
that's it right Think in line with that, too. There's a big one that people try to do as first timers and they want to, quote unquote, time the market, right? Because if you buy the bottom, you know, it's only gonna go up and everything's gonna be great. Well, timing the market is virtually almost impossible. Yeah, you know, there are predictable cycles in real estate. But timing the cycles is quite a challenge. And what's far more important and what we'll probably end up saying on every single podcasts,
Unknown Speaker 20:24
it just, it just rings true all the time.
Unknown Speaker 20:26
It's not timing the market. There's time in it. That's time in it. And and we'll quickly just mention again that, you know, you look back at the history of thanku Real Estate numbers. Even if you were to cherry pick the ultimate height of a cycle. As long as you hold that property for five or more years, that valuation will have dropped and come back up and then continue to increase. Yeah, right. So one thing that I guess we can touch on now is it's when you you can't be short sighted in real estate, right? We will always say if you're planning to buy a home, we highly suggest if you're doing you're expecting to have some good amount of mortgage paid out and potentially some appreciation. Plants live in that home is seven to 10 years minimum. Yeah, right real estate gets expensive if you think you're just going to flip it every two, three years. Yeah, especially if, you know, you could do that in a marketplace where where maybe it was appreciating by 10% a year or something like that. But we're not in that marketplace right now. You know, however, it is vastly improving. You know, and if I had tried to have timed the 2020 market, I would have missed everything. Right. I'm, I'm, I guess, lucky, quote unquote, that I own a property and that even though it went through a significant price correction over the last two years of owning it, it's now gone up, you know, or it's at least at the very it's starting to trend up, you know, and I could never have timed the Coronavirus with the market going up. I just couldn't have done that.
Dan Wurtele 21:51
Yeah, both Ron and I have owned property through the the 22,008. excusing 2008 2009 financial crisis. Yep, through the stress test, yep, through COVID through mortgage rate fluctuations and of course, you know, we're just we're up Luckily, you know, but it's again, that's just because of long term hold. Yeah, that's it's, it's,
Unknown Speaker 22:13
it's, it's understanding that, you know, if you're in a region that is growing in population, you know, he just your high level, macro economics, you can make some fairly decent decisions around that, you know, and then understanding some, you know, basic financing options can really help you paint a decent picture of where you should be and, you know, understanding then perform, you know, mortgage advice, planning advice, sort of macro economic level of interest. You can really kind of figure out if your realtor knows what they're doing. Okay, so here we go. Now we are properly financed, you've chosen a realtor, you've decided to cut out the nonprofessionals. Yeah. Now it's time to start looking at some homes. So there's some mistakes that can be made with that as well. Yeah, I think, you know, thinking that MLS MLS or realtor.ca or e W is the king of kings and queens I guess of advertising is really short sighted. Yeah, not every home that's available can be seen on those sites. And, you know, if if the perfect home is available, but it's not publicly listed, you need to be with someone who has access, it's gonna say, how
Unknown Speaker 23:25
are you gonna buy it?
Unknown Speaker 23:28
Right. And, you know, I have an anecdotal story here. I mean, this is just using basic social media that everybody has access to. I have a client who bought this year, we found her home, we we looked for a year Dan, looking through MLS, you know, realtor.ca and it took me getting really creative going on social media platforms, you know, following other realtors in certain areas so that I could try and find if they would post exclusive listings or you know, trying to actually get to know these People, right? That's what it took. And a year later, you know, I was able to, to find a home on Instagram of all places that was listed exclusively with with a realtor wasn't on MLS or any other website. And you know, we were able to get our client in there. We bought the home the next day. And then they went on MLS, right. And by that point, you know, there were five realtors that were really, really mad that their clients could buy the home. And it was because we got there first,
Dan Wurtele 24:31
right. As agents, we have access to not only off market listings, but into brokerage listings, you know, our brokerage is over 500 agents. And we have an internet database of properties that are available exclusively to our realtor. So our realtors and yeah, of course, these are not public listings whatsoever. So you can just imagine the power of that alone. Yeah,
Unknown Speaker 24:53
yeah. And unfortunately, the public doesn't have access to any of these forums. Right. So unless your realtor is on them and and, you know, making you aware of that. You just won't know about these opportunities.
Dan Wurtele 25:06
Yeah, so we're out looking, it's a lot of fun. You want to be careful to not look at too many homes in one day. I know it's exciting. I know you want to fit in as many as possible, but it's overwhelming. It's overwhelming. And they all start to blend together. Yeah, you know, you want to kind of stay hyper focused, see, maybe three to five a day kind of thing. Take great notes and just don't overwhelm yourself. And don't don't burn yourself out.
Unknown Speaker 25:27
Yeah, I think about the properties you're going through kind of critically, right? Like, you know, it looks great from the outside. That's why I want to go see it. Well, you got to dig a little deeper, right? And look at the way you're living your life right now, to thinking about whether or not that spaces is conducive to what the way you want to live your life, right, as opposed to just liking the way it's colored or something. That's right. So while you may fall in love with a home in the daytime, we highly suggest going back, you know, in an evening or at night, you know, there can be some surprises that come up or maybe the home doesn't look the same Doesn't feel the same
Unknown Speaker 26:02
neighbors might be home.
Dan Wurtele 26:03
There you go. Well, that's that's a big one that you just touched on. Because I literally have a client right now, who is selling a home they absolutely love because it's a half duplex, and the other half is owned by a quote unquote nightmare. They're literally had to sell their home because they don't like the neighbor. And if, if they if they had just done the due diligence a little bit further, if their previous agent had just said, Look, well, let's find out who lives who you're sharing a wall with? Yeah, you know, then they could probably just stay and it would be fine. So it's an important thing to consider totally.
Unknown Speaker 26:37
Also, just just, you know, looking at a home at in the daytime versus at nighttime, you know, you might only be able to get out at nighttime to see a home. Don't make a decision just by seeing it at night because you're not going to see things that you would see in the daytime. And it's it's it's big, right?
Dan Wurtele 26:54
Yeah, another mistake too is not being flexible in where you want to live. And it totally understand. However we've all seen people are like, I have to have a one bedroom in case Yeah. Okay, great. Well, let's go look at those, you know. But we've also seen Ryan and I both have experience of all of a sudden these people who wanted let's say, a one bedroom and kids suddenly discovered North End. Yeah. And they discovered, wait a minute, I can get a whole extra bedroom for the same price. And the seabass is super convenient for me. And all of a sudden, you know, a two bed North van is what they buy. It's, it's it's funny working, working with buyers who,
Unknown Speaker 27:29
you know, at a surface level, maybe they want the lifestyle that the friend has, right. And so they're thinking that that's it, I have to have a place in kids. And so they're trying to emulate that as opposed to really digging deep about what they want. And you know, I have actually a decent story to this as well. Somebody that we we just closed on a property in Yaletown, and he's a good friend of mine, good buddy of mine, and we were looking at Mount Pleasant. We looked at a bunch of places and we were at a cheaper level right and and You know, everybody kept telling him Hey, you should be in Mount Pleasant. I think you'd really love it in Mount Pleasant Scott, all the restaurants, you know, yada yada yada. Dan, this guy is a Yaletown guy. Right. And as we're going through the properties there, I remember stepping out and, you know, he liked nine out of the 10 things. And it, you know, I kept asking him, Well, you know, what's what's inhibiting you? And he kept just saying, you know, I, I just, you know, I feel like my life is in Yorktown. And I said, Well, why are we looking at Mount Pleasant? Well, that's where everybody tells me to keep looking. And I said, Well, that's not we, you know, we're not doing the right thing here. We, we got to get to the root of it. And lo and behold, we looked at a couple places in Yaletown, and then three days later, he bought something
Unknown Speaker 28:43
nice, right right
Unknown Speaker 28:44
now he's happy. He's very, very happy. He's excited.
Dan Wurtele 28:46
Yeah. I think something to consider as well is a mistake is expecting a home to be perfect. Yes, you know, it's hard to find a home that will check every single box. There are generally concessions that need to be made and you need to be Little bit flexible in that as well. Because if you're not, you're just going to hunt forever. And then again, maybe something horrible happens like you lose a job or you get priced out of a market. Or, or you just, you know, you lose on a bunch of properties because,
Unknown Speaker 29:13
yeah, absolutely. Look at the end of the day to knowing how to write that that offer. So you don't lose is a big part of this. Yeah, yeah, there are big mistakes that can be made there. So let's dive into those. Yeah. I think you elaborated on it earlier about not knowing about, you know, prop certain property docks and, and, you know, not knowing that you can't have a pet mm hmm, is a big red flag. You know, for somebody who is who has pet children,
Dan Wurtele 29:45
that a client is literally working with us now because it was a referral. And they were told by their friend how great the experience was working with us because of how diligent we were in our research of the property. There you go, and the analysis we did and the breakdown of you know, we're talking about hundreds of pages of information totally that we go through and we advise our clients accordingly. Yeah, you know, it's a very important part of understanding what is the status of that home, especially if it's a condo, there's a lot of documents to read and,
Unknown Speaker 30:13
and then depth depth depth report being the scariest one,
Unknown Speaker 30:16
and not and so you need to know what to look for. And just not even knowing that that exists, or what to look for can be a big mistake. And also maybe, you know, reading something and the fact that you're maybe you're buying for the first time and you're reading into something that's actually not as big as you might think it is, and therefore miss the opportunity or decide to sit this one out. Because your interpretation of it is different than what is actually happening. Right. And, and that's why I brought up a death report, whereas people often oftentimes go, holy cow, you know, there's $10 million worth of work coming in this building. It's like, Well, every building is going to have some level of work that needs to be done. You know, let's look at the actual work and let's see if that work is in line with The death report and let's see if they have contingency money to pay for it. Things like that. Right? So it's it's, that will give you peace of mind knowing and understanding what you're up against.
Dan Wurtele 31:12
I purchased a condo, early 2000s. And I was a lot younger than but a lot mentally younger than two and definitely not an agent. Yeah. And looking back when I bought that condo, the agent I bought it with didn't even mention that property documents existed. And I didn't know it was my first condo purchase, you know, and Latino
Unknown Speaker 31:33
professionals advice, right? Yeah,
Dan Wurtele 31:34
yeah. You don't know what you don't know. And you don't know what you're not told. Yeah, to cow. Isn't that true? Right. And this is literally part of my driving force and motivation behind this and doing this level of due diligence for clients, because I could have been screwed over big time. I was pretty lucky the building was in good shape. But you know, what if I suddenly wanted a dog or I didn't know there was a massive levee coming next month, you know, none of this was disclosed. None of it. That's scary. So you know, yeah, exactly. I've been a first time homebuyer. Yeah, I know what it's like on that side. And I know what I was basically neglected in my experience. And I want to make sure that our clients are so well educated that, you know, they feel 100% confident in every decision they make. Well, and speaking to that education, let's talk about thinking that the list price is your market value.
Unknown Speaker 32:22
List. Price is an interesting one. There's all sorts of strategies with the list price. And I think the first thing to recognize it's the list price is ultimately a marketing tool to attract buyers to that property. I think he just said it. It's a strategy, right? Like, when you look at it, we've looked at property that's, you know, $150,000, underneath anything that's selling in the neighborhood, right? And then clients going, holy cow, you think they'll take 50,000 under that price? And it's like, no, that's not what's happening here. Even even like you said, Yeah, something that's even 5% under market value. Yeah. All these people get super excited. Yeah. And they think that that's market value. Yeah, and They get their agents to write and suddenly they find out that there's 20 other offers and
Unknown Speaker 33:03
they got 14th place.
Dan Wurtele 33:04
Yeah, that's it. I mean, I literally just we saw that happen at our listing in Port Moody and heritage mountain, where there was one agent who was working with first time homebuyers. And they wrote at asking price right, and this is a listing that had 18 offers and sold for 9% over there. Their offer was dead last and she knew it the agent knew it coming and she said look I'm just educating my guys they think they can buy this thing for asking price I've told them they can't Yeah, I'm doing the process right and again, this is just ultimately them not listening to their professional Yeah, but her also taking the time to educate them through real world experience.
Unknown Speaker 33:41
Totally. I we we see this quite often.
Unknown Speaker 33:45
It and it's typical with first time homebuyers where they're getting into the process for the first time and and like anyone, you don't want to overpay for anything and totally get that and a lot of people go against their professionals advice because they don't want to overspend. But now they're not recognizing the fact that the market is going up by 1% a month here. So it's sort of like you're dealing with a million dollar property, you could make $10,000 on this thing next month, but I want to offer, you know, 40 or $50,000, under and allow somebody else to outbid me and make that 10,000. And also live in the home. Right, right. So yes, I understanding and trusting, trusting your professional
Unknown Speaker 34:26
Yeah. And they, they're going to provide you data.
Unknown Speaker 34:29
Yeah, that supports you can make that critical, critical decision by looking at the data. That's it, right, ask for it or not pulling numbers out of thin air here. This is like, okay, here are the last, you know, 10 homes that sold within five blocks in the last six months. This is what the data tells us the home is worth. That's right. And then yeah, it's usually by the second maybe the third time that they're in an offer situation where that first time homebuyer is now really relying on the realtor to get it done. You know, it just unfortunately is typically the the path that a lot Buyers take.
Dan Wurtele 35:01
Yep, of course, outside of listing price, the big one that a lot of people like to rely on is the assessed value. Right? The the BC Assessment website literally says market value on it, which we've done a whole podcast on because we've really kind of dispelled that myth or so it's very important to while or to recognize Well, the assessed price is one data point to reference, it can be so vastly off the mark when it comes to market value, that you cannot trust that or think that that has any real correlation to
Unknown Speaker 35:35
inhale price. here's, here's why. The vast majority of places are assessed once a year. And you know, as well as I do, Dan, that if a market moves at five or 7% in that year, the data is so late and it almost it's hard to trust and use, right especially in a hot market where it's moving even more or a market that is diving right It's using that assessment tool is really, it's really for taxation purposes and people got to understand that the government is is evaluating your place so that they can tax your property in some way, shape or form. It's it's not a really good indicator of what is happening in the market because it's just so latent. We've seen assessed price off by as much as 30 to 40%. Yeah, on either side, right. We've even we even had a listing. East Richmond, if you remember, only the assessed value was literally double market value double. And this was a million dollar property. Yeah. Imagine this $2 million assessment. You offered on that. Yeah, at that price. Well, and the conversation that we had to have with the seller, where he's coming in here and he was, he was mad that it was assessed so high force because he was like, I have to pay so much property tax and it jumped Dan by half of million dollars a year. Right for two years. And it went from and he was what? You know. And when we actually called and asked, they had said that they had decided to value the property based on a different zoning that they had not applied yet. I don't know how that's fair. Right. But again, if you don't talk to your real estate professional, and he did, and he went back and challenged those, and they've they've since cut them back as a result, there you go, right. But imagine, as a first timer, you're like, well, let's just offer assessed, you literally would have spent a million
Unknown Speaker 37:30
dollars. Yep, totally,
Dan Wurtele 37:32
you know, and then of course, the opposite happens, where you look at assessed and you make an offer at that and you find out again, you were dead last of 20 offers and it went for 15% more. That's right. So again, it's it's a reference point, but listen to the professionals and just analyze the data data is always going to lead you in the right direction towards market value. Yeah. In a hot market, in bidding wars, it's very easy to get emotional, right? We always make sure to have that conversation in advance of understanding the sort of peak price limit. Have your walkaway number. Yeah, that's just it because it's very easy to get overexcited in those situations. And we have absolutely told clients that no, don't bid up any more than this because the house isn't worth it.
Unknown Speaker 38:17
Well, I and I went through this last week, we were offering in a place in Maple Ridge. You know, the place was listed at 750. Our, our bar max offer was at 780. And the winning bid was 810, which is a $60,000 swing. But if you drive five minutes down the road, you can buy a house 500 more square feet similar in terms of age for 810,000. So at what point are you overpaying for a property just because you want it as opposed to and also if you do overpay for it? Is the market in a position to recover that overpayment or are you going to go You hurt yourself here,
Dan Wurtele 39:01
right? Because what can happen if a property is bid up so much and you overpay for it? The appraiser can come in value it at you know X percent less than your offer price and now your lender is not going to fund the amount you need to purchase it you
Unknown Speaker 39:15
got to come up with and you're on the
Dan Wurtele 39:17
hook for the difference in cash. Yeah, so there's there's that to consider as well. Right? Like we understand long term goals here holding homes for 10 years and is quote unquote overpaying by 30 grand okay with that long term, maybe but quite often it's also not and again, things like having to cover the difference in cash that the financier won't lend you that can be a deal breaker and lose the house or that Yeah,
Unknown Speaker 39:38
and this comes down to doing your homework before getting into the situation. Right? Like we said, Have your walkaway number know your your price ranges for a home like this and maybe know what the price range for you know, the next tier of home is going to be so you don't start paying into that tear for a home that's not there or a neighborhood that hasn't made that yet. Right. Yeah. So on Understanding how multiple offers work and your position and your strategy is very important in the hot market. Yeah.
Unknown Speaker 40:07
I mean, we can we can keep going here. There's lots to talk about.
Dan Wurtele 40:10
Yeah, I think again, a good one to touch on a very important one to touch on about location is not researching or not understanding what school catchment that home is in.
Unknown Speaker 40:19
Yeah, literally the the rating of a particular school will influence the property price, the dollar per square foot of that neighborhood. So if you've got a really high performing school, that does really, really well at the on the Fraser Institute or something to that effect, property prices around it are going to climb. It's the same theory will will apply to schools that do not perform well. property prices around those schools tend to struggle. Yeah. Now the first time mistake is not getting a home inspection. Yes. And maybe, you know, knowing when and when not to apply one two.
Dan Wurtele 40:56
Mm hmm. Yeah, it's, we basically recommend it 99 All the time, I would say you know, and we've seen people not get them. Yeah. Especially in a course frantic markets where you got to go subject free. You can do what's called a pre inspection before your offer yet but some people were not they were literally going in blind and people have been stung the horror stories we have heard. Yeah, it's a bit terrifying. So pay for an inspection.
Unknown Speaker 41:20
Yes. It's your protecting the way I see it is you spend $500 to protect 2 million. Yep. Great way of putting it right. You know, we've never had a client not doing I don't think and yeah, if they've if they haven't done one, it's likely because maybe the property was brand new. Right. And that's, you know, maybe one of the only times where you wouldn't perform a property because it's still under warranty, right. So anything that does maybe go wrong with the property. Somebody else is on the hook for it
Dan Wurtele 41:49
right? And in that case, we'll do what's called a deficiency walkthrough and have that sort of third party professional I go through that's right and markup everything that's wrong or imperfect with the home Make sure that it is perfect for when you get the keys. That's right.
Unknown Speaker 42:03
Yeah, there's there's ways of, of getting your property diligently looked at that. And it doesn't necessarily mean it has to be in your contract. Right? You just got to talk about it. Yeah. touching on financing again hear it's it's very important to recognize that there are closing costs on homes. You know, there's not just the purchase price and not just the downpayment. There are closing costs that we go through with all of our clients well in advance so they know what to expect, because there's a bunch of items costs that cannot be rolled into your mortgage. Yes. And we've also got anecdotal stories of these but we don't really need to go there. Let's just make sure that you know what these are, yeah, and when they're paid and how much they are comes out a first one being property transfer tax. That's a huge, huge nut. Yeah. And you can't FYI, you cannot roll this cost into your mortgage. You have to pay the government. Pay them first. Yes, pay them in cash. Yeah, kind of like your lawyers do the same way. Yep. Yeah. Also, you know, knowing what your your property taxes, your annualized property taxes are on the property, right. And there's nothing like, you know, realizing that you got to pay an extra four or five grand at the end of the year, because you forgot or you didn't check.
Dan Wurtele 43:19
Yeah, or that that's already been pre paid by the seller, you're moving in with four or five months left in the year, and you have to cover that. That's right. They've already paid it. You gotta pay the balance. That's right. Yeah. So I mean, as a general rule, we say, put aside or keep aside about two and a half percent of the total purchase price for your closing costs. Yeah. But you know, obviously, we, we investigate every property case by case with the client to let them know in advance,
Unknown Speaker 43:42
yeah, we try and get you as close to that number as possible. Not to, you know, negate the fact that you will have some moving costs, booking elevators and things like that to roofing if you're moving into condos. And then
Dan Wurtele 43:53
also very important is the mistake of not knowing your monthly costs. You know, once you're in that house doesn't suddenly become freeing Clear. No. There are costs that include, like Ryan touched on your annual property taxes. Are you paying that yearly? Or are you having it paid monthly? Exactly. What are your strategies? And are those set to increase? Yeah, because they don't go down.
Unknown Speaker 44:14
Never seen it. Just like my taxes. Yeah.
Unknown Speaker 44:18
home insurance again, right. This is a very interesting one right now. And not only is it well, interesting, but it can become very costly and very much,
Unknown Speaker 44:25
Dan Wurtele 44:26
Yeah. So we always have clients get insurance quotes ahead of offering Yeah, that level because you need to know right, because some stratas have half million dollar deductibles now, and while we basically don't advise anyone to buy into those, some people do or have had the deductibles change. And of course, getting ahead of that early is only going to help you.
Unknown Speaker 44:46
Yeah, I mean, if you figure out that, you know, you've got $2,000 a month that you want to be applying to your place, and now you've got a $500,000 water deductible that you've got to carry insurance for That might push you to 23 year, you know, I'm on, then all of a sudden you can't afford that place anymore. And you're in the hole, you know, 3000 $4,000 a year now. And just because you just because you know, we didn't investigate,
Dan Wurtele 45:13
right? Yeah, that touches on a good good aspect here. So one thing that we always create for our clients is something called a net sheet. And it really just gives the buyers a very visual layout of what the monthly outlay is total. Yeah, right. Because everybody sort of has a number that they have in mind. I want to pay x per month total to have a home. That's right,
Unknown Speaker 45:31
let's let's call that $2,000 or often we hear I don't want to be house poor.
Dan Wurtele 45:35
Yeah, exactly. Right. And this, this helps them get there. So you work backwards from the ideal monthly outlay, which again, let's call it two grand. Well, you put in the mortgage, you put in the annual taxes, the insurance, everything's bad, a few strategies is a very important one. And you say, Okay, look, we can get to you this house, right. And that's great. But what's the swing and what we often find interesting is because strategies can swing so much lately, you know, you can have To opposing two bedrooms, one can be 350 a month one could be 750 800 a month. And you're like Why? Yeah, right. And and that three $400 swing, if applied to a mortgage gives you a much higher purchase price, which
Unknown Speaker 46:12
all of a sudden, maybe now you're looking at a two bedroom or sorry, a townhouse or something else that's a bit bigger because you no longer have to pay those monthly fees that are so high that you're also just burning every month.
Dan Wurtele 46:23
That's it. So Exactly. So make sure don't make the mistake of not knowing your total monthly outlay costs. And of course, what that allows you to buy. Yeah, so we've had people pleasantly surprised as well, because hey, like like Ryan touched on. Maybe you've been looking at a two bedroom condo. Well guess what? You remove that $700 strata fee, and you get your Yeah. And then you go into let's say a non strata half duplex, for example. There's no monthly strata fee. You've just increased your purchase power by you know, 200 grand, for example, and
Unknown Speaker 46:49
you find out who your neighbor is before you buy it.
Unknown Speaker 46:56
Whoops, yeah, no, that's pretty much it. I mean, there's probably nine nine other things that we could talk about here and mistakes that you could potentially make. But let's just sum it up with don't make the first mistake by not calling us. Cheesy.
Dan Wurtele 47:12
Thank you so much for listening. Yeah, this has been a very educational one and just know there's lots of professionals out there that are ready to help you not make these mistakes.
Unknown Speaker 47:23
That wraps up this edition of the Vancouver life podcast. For more information on this podcast and to access a ton of free downloads, investment opportunities, current market info and homes for sale, you can find it all at WWW dot Vancouver life.com. Thanks and we look forward to bringing you more podcasts about Vancouver real estate