5 costly mistakes to avoid when buying a...

5 COSTLY Mistakes to AVOID When Buying a Home

5 COSTLY Mistakes to AVOID When

Buying a Home

Gary Wong, MBA


Table of Contents

Introduction ............................................................................... 3

CASE #1 – Show Me the Money! .................................................. 4

COSTLY Mistake #1: Not Making Sure You Have ALL Your

Financing in Place BEFORE Looking for a Home! ................... 4

CASE #2 – Inspections Are Highly Recommended ...................... 6

COSTLY Mistake #2: Not Performing a Home Inspection ....... 7

COSTLY Mistake #3: Not Performing an Oil Tank Inspection . 7

CASE #3 – The Risk of Unauthorized Suites................................ 8

COSTLY Mistake #4: Not Knowing the Ramifications of

Unauthorized Suites ................................................................ 8

COSTLY Mistake #5: Not Hiring a Buyer’s Agent .................... 9

About The Author ..................................................................... 10

Contact Information .................................................................. 11


Introduction

Buying a home is like buying candy, right? You

can just take your pick and if it looks good, it’s

easy, just pull out some change and buy it, right?

And if it doesn’t suit you, just buy another one,

no big deal, just cost you some pocket change,

right? NO WAY!

Anyone who tells you that buying a home is

simple and easy is grossly misinformed.

Yes, it’s sometimes simple, but most of the time,

it’s not and if you’re not careful, it could blow up in YOUR FACE! It’ll cost you a lot of Time,

Money and Stress!

Do you want to know what these COSTLY mistakes are and how to AVOID them? I’m talking the

ones where if you’re not careful, it could CRIPPLE YOU!

SURE YOU DO!


CASE #1 – Show Me the Money!

Jack and his wife and child were renting a

home and sharing it with his mom, dad and

aunt and uncle. His sister Susan and her

husband and child were renting another

home. They were looking for an 8 bedroom

home for under $900,000.

I worked with them to look at several homes

and finally helped them find their dream

home in Surrey that was 4000+ sq ft, built in

2012, great neighborhood, great floor plan and it was priced really well at $850,000 (where

comparables were $900,000+.

We negotiated an accepted offer and were working on getting the financing.

They had gotten a mortgage pre-approval for around $900,000 but the problem was, it was

subject to them receiving a down payment gift from their relatives which wasn’t going to come

for another 6 months! Big problem! The seller wasn’t going to budge on the completion date.

What’s more, my clients didn’t even have money for the deposit which was $20,000 and to be

paid upon subject removal.

RESULT: We couldn’t remove the subject to financing clause on their dream home and because

it was priced really well, other buyers came in and bought the home. Clients were incredibly

disappointed, stressed and thought they wasted a lot of time for nothing.

COSTLY Mistake #1: Not Making Sure You Have ALL Your Financing

in Place BEFORE Looking for a Home!

RECOMMENDATION: Always make sure you have your financing in place before even

considering buying a home. You don’t want to find out 6 months into your home search, after

looking at dozens of homes, negotiating a stellar price for the home of your dreams, then

realizing you can’t remove subjects because you can’t get financing.


What’s worse is that you find out that the dozens of homes that you were looking at weren’t

even in the price range of what your lender said you could afford, thus, you wasted all your

time for nothing.


CASE #2 – Inspections Are Highly Recommended

Jason was in the middle of a bidding war. The

East Vancouver market was HOT as the West

Side was becoming too unaffordable.

This old timer (1930s) large home was situated

on a large lot in a prime neighborhood, on a

quiet street, close to great schools and close to

transit.

The listing agent specified that offers were to

be received by Friday at 3pm and it was noon.

The last time he asked the listing agent, there

were 5 offers and some were over asking and

some were subject free.

The home was priced well below market value

and even if Jason was going to pay more than

asking, he knew he could easily renovate it and

flip it to make a 6 figure profit in a few months

based on the market conditions. Jason was confident as he has bought, renovated and flipped

a few homes by himself before. That was his plan.

He wrote a subject free cash offer, well above asking price with a quick completion and won the

bidding war! “Woo-Hoo!” He thought. After receiving the keys a few weeks later, he quickly

began hiring his contractors to begin with the renovations. One of the contractors noticed

some structural issues with the home and recommended that he get a home inspection done.

Jason hired a home inspector for $500, and the home inspector advised him that there were

some structural, foundational issues with the property. The home inspector recommended him

to hire an engineering company to inspect the foundation.

RESULT: The engineering company found out the home was located on peat (soft soil) and

indeed was sinking on 1 side. The cost to fix was going to be $75,000 and it had to be done if

Jason still wanted to renovate and flip. There goes his profit. He wanted to get rid of it and

knew no one was going to buy it with that sinking issue, so he did the repairs and put it on the

market.


COSTLY Mistake #2: Not Performing a Home Inspection

RECOMMENDATION: Always do a home inspection for older homes if you’re not planning on

tearing it down. If you’re in a bidding war, pay to get a home inspection done before

submitting a subject free offer. You may lose the $300 if you don’t win the bidding war, but it’s

better than paying a $75,000 bill later on.

Jason put the home on the market and again, it was a bidding war and he received subject free

offers and he sold it and broke even on his investment or so he thinks.

The new buyers also had a quick completion and moved in shortly. Not long after, the new

buyers hired an oil tank inspection company that discovered that there was an underground oil

tank in the back of the home. They had the oil tank dug up and realized it was leaking and the

soil contaminated, affecting the neighbors.

RESULT: Jason was sued as he is responsible for removing the oil tank and responsible for all

the clean up necessary. A lawsuit proceeded and Jason had to pay another $50,000 for the

removal, clean up, legal fees, environmental testing, and compensation to the buyers and the

neighbors.

COSTLY Mistake #3: Not Performing an Oil Tank Inspection

RECOMMENDATION: Many older Homes built between 1910 and 1970 were heated using oil

stored in underground storage tanks. When homes switched over to gas, these tanks were

filled with sand or capped but many still remained buried.

Unfortunately, over time, these tanks corrode and leaked oil and when that oil spreads to

neighboring properties, then you’re in big trouble!

ALWAYS get an oil tank inspection done before buying older homes. If you find an oil tank, not

only are you going to be concerned about leakage, but banks may not lend to you if they know

there’s an oil tank present.


CASE #3 – The Risk of Unauthorized Suites

George and Jill were looking for a Vancouver

Special with 2 mortgage helper suites in the

basement. They weren’t working with an

agent and thought it would be better if they

just searched on MLS and go to open houses.

They thought that if they go to the listing

agent of a home they were interested in, the

listing agent would get them a better deal if

they didn’t have an agent.

Anyway, they found this great home. It had 4 bedrooms upstairs, two 2 bedroom suites in the

basement of which both were unauthorized. The sellers were living upstairs and were receiving

around $4000/month in rental income. George and Jill thought it would be perfect for them.

They asked the listing agent to write an offer for them. The listing agent gave them some forms

to sign and before long, they had an accepted offer in place. George and Jill got their financing

and did their home inspection and removed subjects. The deal was firm.

After they moved in for a couple months, they received a letter in the mail from the city.

Someone had complained about their unauthorized suites and a city inspector was coming to

inspect the property.

The city inspector came, inspected the unauthorized suites, ordered George and Jill to shut one

of them down and make necessary renovations to legalize the second one.

RESULT: George and Jill spent $50,000 to renovate and legalize 1 of the 2 bedroom suites and

remove the kitchen of the other 2 bedroom suite. They also lost $2000/month in rental income

which put financial stress on them in making the mortgage payments. They couldn’t make the

payments without the 2 mortgage helpers and were at risk of defaulting on the mortgage.

COSTLY Mistake #4: Not Knowing the Ramifications of Unauthorized

Suites


RECOMMENDATION: George and Jill should have done their homework regarding

unauthorized suites. Unauthorized suites are illegal. Though there are unauthorized suites

everywhere and there are many that go years without being caught, more and more of them

are being reported to the city and the city is shutting these down regularly.

COSTLY Mistake #5: Not Hiring a Buyer’s Agent

RECOMMENDATION: When the listing agent asked George and Jill to sign some forms, he

didn’t really go into detail explaining them. He just asked them to sign here and sign there.

They trusted the listing agent and assumed he was representing them.

What they didn’t know was that the listing agent was offering them what’s called “Customer

Agency”, meaning he was representing the seller, not the buyer.

Hence, the listing agent was not looking out for George and Jill’s best interest and could care

less if they bought a home that didn’t work for them.

If you’re new to buying homes, hire a Real Estate Agent.

If you want to learn more about oil tanks, unauthorized suites, home inspections and other

BEWARE signs when buying a home, contact me today. Buying a home is not like buying candy,

hire an expert that’ll guide you step by step and watch out for you.


About The Author

Gary Wong is an Award Winning, Full Time, Full Service Real Estate Agent

servicing buyers and sellers in the Vancouver area. He is known for his no

obligation, no pressure approach where his sole goal is to love and serve his

clients.

His business is based on 3 key foundations: Ethics, Honesty and Integrity and

his business motto is “Here to Serve”.

Gary did his undergraduate studies at UBC and his MBA at SFU. He brought his years in the

workforce along with his business education into real estate, differentiating himself with his no

obligation, no pressure approach.

When Gary first entered the real estate industry, he saw how the public viewed Real Estate

Agents as shady, unethical and unprofessional which immediately compelled him to establish a

new standard in the industry. After interviewing 7 brokerages, he finally chose Macdonald

Realty, a real estate brokerage famous for its focus on ethics, integrity and producing highly

trained and qualified Real Estate Agents.

Through hard work, long hours, guidance from his mentors and his strategic approach, he was

able to establish himself as a trusted expert among his friends and he won the Sales

Achievement Award at his company in his 1st year.

Gary strongly believes in serving the needs of others and believes that no 2 clients are the same

and so his consultation adjusts and adapts to every single individual he meets.

Passionate about this industry and its reputation, Gary is committed to doing things RIGHT. He

is also an advocate for continuous learning and training so that he can bring his best to serve

YOU!

Many who have met and spoken with Gary about his business philosophy and saw how he

worked, quickly realized that he is unlike ANY Real Estate Agent they’ve ever met.


Contact Information

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