Let me start with a qualifier. I have owned Real Estate in Vancouver (Delta), Kelowna and Toronto and prior to becoming a Realtor, I always used a Realtor to help me buy and sell my real estate. However, like many people, I found the fees and commissions expensive. To my success, I worked with great Realtors. Each and everyone was top of their field and they gave me service beyond the fees I paid them. Sadly, I only realized this last fact after I became a Realtor myself.
Because I used a Realtor (and experienced ones at that) I was spared many of the common mistakes that I see buyers make. I did not make any big mistakes. I dodged bullets I did not even know existed. My Realtors kept me safe and their guidance kept me on a path to success. Today, I own a modest home with a modest mortgage and I am in process of buying revenue property. My home has been my most solid wealth vehicle.
So, when I look to helping people understand the "mistakes buyers make" I do so partly from personal experience but mostly because I deal with the ramifications of buying mistakes on a regular basis. I deal often with sellers who are in a difficult situation, because they made a "bad buy".
Mistake Number 1 - Buying any property without the use of a local, skilled and committed Realtor.
Please notice the use of the words "any" and "local". I see people in trouble each and every week and it often goes back to a buying mistake - not a selling one.
"Any" property means new construction, land, strata's, for sale by owners and of course residential resale properties. Also, "local" refers to someone who knows the area and can anticipate and spot red flags during the buying process.
I live 25 minutes from Vernon where my family owns property yet I refer my family to a local REMAX Realtor in Vernon. Sure, I could list the property and help them buy in Vernon but, I believe that the local knowledge of a colleague will better serve my family. I know Kelowna, Lake Country, West Kelowna and Peachland like the back of my hand - not Vernon.
Think of it this way, if your profession is say a plumber, teacher or welder and you have 5 years of experience, would you hand me a wrench, chalk or welding rod and let me go at your latest project? Would I be able to move into your shoes seamlessly and with grace and skill? The same holds true for Real Estate transactions. Sure, you live in your house and know what you want and can see the asking prices around you. However, the experience and skill regarding big and little details is missing.
I have a seller who is trying to move a two year old home. When they purchased the home they bought from a developer. The developer's sales person is not a Realtor and does not owe a fiduciary duty to the buyer. The buyer relied on the sales person's advice of "in a few years you will have no trouble making money when you sell this property". Now the buyer is a seller and the asking price of the home is $40k less than the cost to build.
What advice would a Realtor have given the buyer who is now a frustrated seller? I know what I would have done as I do this with all my buyers. I ask buyers a lot of "what if" questions. What if... you need to sell in one year, two years or more? Is this your dream home or an investment? Are you willing to sell this property for a loss? Through the building process, the buyer could have easily cut costs to bring the project into a different price range and perhaps minimized the loss.
Second, these buyers were new to Kelowna and they did not understand the pros and cons of the area. They built a great home and a good area but these homes are not very resistant to market fluctuations. They could have bought a good home in a great area and be selling for a profit instead.
For example, today it is much cheaper to buy a 1 to 3 year old home than to build a new one. So obviously, I am recommending that people buy resale homes for the simple fact that pound for pound when you look at comparable sales, the best deals are resale homes. This advice might change quickly. If lot prices drop I might just go build a new home myself.
Each segment in each real estate market fluctuates at a different rate than the others. New Construction makes sense when labour and land are cheaper (relatively), resale homes in older established neighbourhoods seem to be more solid buys and condo's can fluctuate wildly depending on a multitude of factors.
One thing remains constant, a Realtor who is looking out for you is much more valuable than you realize. You need a Realtor who can ask you important questions and one who digs deep into your needs and desires. You also need a Realtor who is not interested in making a sale just to earn a commission. Hire a Realtor who helps you make great choices today but also one who is truly interested in helping you sell this investment in the future.