10 Things to Ensure You Get the Best Value When Purchasing a New Home

Best Home Value Considerations

Let’s face it, one of the most important considerations for a new home buyer is how to get what he/she wants for a price that is affordable, and that also represents a good investment. Sure, most of us believe that a home is first and foremost a place to live, raise a family, and build lasting memories, but it is also an investment. Heck, a house represents so much of most people’s net worth, that it would be irresponsible not to at least consider the investment side of the purchase. Within this context we believe that it is most prudent to consider the investment value – including cost of ownership – of the purchase rather than just the purchase price alone. We also believe that homes within the urban core represent the least volatile investment, which is also important when considering such a large investment. With this in mind, we have identified 10 considerations to help you get the best value when purchasing a new home.

  1. Be an attractive buyer. Have pre-approved financing. If you need to sell an existing home, it is best that you at least have a conditional offer on your property before beginning to negotiate the purchase of a new home. Often it takes too long to sell a property or you are not able to sell the property for what you hoped, thus leading to the conditional offer on your new home falling through. Builders know this and will subconsciously discount an offer that is conditional upon the sale of another home, especially an expensive or difficult to sell home. As such, the new home seller will not give as much in the negotiating process, or may not even seriously negotiate at all.
  2. Ensure that you engage a reputable builder that is registered with the Tarion new home warranty programme. Not only does Tarion guarantee the builder is responsible for repairs due to workmanship or design issues, but also many issues dealing with pre-construction building representations and drawings. This dramatically reduces the risk of a new home purchase.
  3. Be careful if you consider the purchase of an older home. Don’t get me wrong, we love the character in many old century homes. In fact, increasingly we are trying to build some hint of that kind of character into our new homes. Unfortunately, true hundred+ year old character comes at a cost – usually much higher than buyers anticipate. Longer care free living and reduced maintenance costs result from the purchase of a new home versus most character rich older homes that are frequently found in urban centres.
  4. Don’t be seduced by the largest home you can buy. Bigger isn’t always better. It’s not just the purchase price that generally increases with the home’s footprint, but many operating and maintenance costs such as taxes, heating, furnishing, painting, etc. also increase significantly. After walking through one of our new homes, it is surpassing how many people ask how large the home is. It is even more surprising how many are then surprised that the home isn’t larger than the actual measured square footage. Rather than concerning themselves with how many square feet the home is, they should be considering how the home actually feels and how livable it is. If you are concerned that a home may not be large enough, wait until it is staged and spend some quality time in the home in order to get a good feel for its size and potential flow.
  5. If you are considering the purchase of a condominium, be careful to consider all the related outlays that could dramatically increase your true cost of ownership – as we described here. These costs include; condominium fees, future repair assessments, etc. It is also worth considering the appreciation limitation of condominium investments in order to fully appreciate the total costs and value of the investment.
  6. Watch out for hidden charges and unexpected upgrade fees. This latter point is important to recognize. A home represents the largest purchase that many families will ever make. It’s also a purchase that is laden with emotion. So it’s natural that many families wish to completely customize the home to their particular tastes. This is natural, but associated costs can get way out of hand very quickly, and it’s difficult to recognize what is happening until it’s too late. No matter how much design talent you may have, we have found that investing in – and then trusting – an interior design consultant will, in the end, save you anxiety, time and money. In fact, by offering our clients time with a third party design consultant as part of the purchase price of our new homes we have saved our purchasers a significant amount of frustration and money.
  7. Plan to stay for many years. Ideally you should be able to envision yourself living in the home through different life stages. Of course, no home will be perfect for every stage of life, but the home should be versatile – as we described here. A significant cost (and so destroyer of value) is multiple moves and their associated transaction costs. Of course in the dynamic world we live in today, there is no way of guaranteeing that you will be able to stay in the home you are purchasing, but consider one of the greatest value investors of all time – Warren Buffet. He still lives in the modest bungalow that he purchased early in his life.
  8. Be ready to act quickly. There are a lot of tire kickers in the market that can waste salespeople’s time. With experience, sellers recognize these folks and will be less inclined to engage them seriously and certainly will not be keen to offer them incentives.
  9. Buy early to get the best deals. Pre-construction prices are always the most favourable. Recognize that you are also taking somewhat of a risk when you make such a purchase, since you can’t be 100% certain of how the space will feel once it is built. Favourable prices can, however, still be had even after the home is built, especially if you engage the builder directly, since you may save on broker commissions. This is only advisable if you have a good idea of what you are looking for, and the builder that you are dealing with is reputable and a member builder under Tarion.
  10. Purchase in a desirable or up and coming community. Urban communities are almost always a better investment. They do better during downturns in the economy and so are a more stable, less risky purchase.
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