Buying a home is probably the single largest investment you will make in your lifetime. Here are some of the most common questions first-time purchasers have about this very important decision.
Will real estate values increase?
Historically over the last 25 years real estate values have increased on average at a rate of between 1% to 3% per year. That is to say that if you purchased a home valued at $300,000 today, and took reasonably good care of it, at this time next year it could be valued at between $303,000 to $309,000 (based on the 25 year average) and the same the next year and the next, or maybe more! One thing I tell people is that your real estate broker will never call you one day and tell you your investment has disappeared; but your stock broker might. It is my opinion that owning real estate in Lethbridge is one of the best and safest investments you could make.
Should we rent for a couple of years and save more money towards a larger down payment?
Only you can make that decision. In the past however, prices occasionally have been seen to increase by substantial amounts over short periods of time. By the time you save the money for a larger down payment, the market may have moved further away from you.
How is real estate different from other investments?
Unlike other investments, the disposition of (and gain on) your principle residence is not subject to either capital gains or incometax. In addition, if you work out of your home, a certain portion of your household expenses can be deducted from your incometax. Consult your tax accountant for more details.
Should I have a Home Inspection
Home Inspection is a specialized skill and there are inspectors who have expertise in this area. The cost for getting real estate inspected depends upon the detailed level of inspection desired. There are different types of inspections that can be performed, though not all buyers get all types of inspections done. Some of the most common types of inspections are:
General Home Inspection:
A single home inspector may be able to provide you with a complete service that covers many areas/aspects of the home like: basement, attic, bathrooms, electric/wiring, insulation, plumbing, gas/fuel, furnace, heating and cooling systems, built-in appliances, foundation, construction, masonry walls, fireplaces and chimneys, roof, etc. This is useful for going over the overall details of the house.
During this type of inspection you would find out if the house has any pests (termites, carpenter ants or other boring pests) problem. The pest/termite inspector can often also report on structural irregularities such as wood rot, foundation displacement etc. Some of the local pest control agencies may be able to offer you such a service for nominal rates.
A general home inspector usually determines the state of plumbing by checking some things such as water pressure, condition and type of drains & pipes, leaks, rust etc. But, if you want to have a more thorough plumbing inspection done then consider hiring a plumbing inspector.
Cities and towns that supply water are usually required to conduct quite extensive and routine water tests to ensure the quality of water. Hence, in such cases you might want to consider relying on the city/town's water tests which are usually much more elaborate than what you/your inspector can conduct. On the other hand, if the house has a private source of water such as a well, water testing should be considered. Water testing labs can typically tell you the bacteria content and mineral content of water. It might also be a good idea to test the gallons-per-minute pumping capacity of the well pump.
The general home inspection usually covers basic electrical system inspection comprising checking amperage, checking for exposed wires, determination of type of wiring, wiring and outlets adequacy, etc.. If your inspector determines that there is a problem in the electrical system (for example, aluminum wiring which has been declared by the federal government as an "imminent hazard"), an inspection by an electrician might be in order.
New Home Inspection:
Some of the inspections described above also apply to new homes. In addition, you may also want to perform an inspection for: construction type and material used, ensuring that the new appliances are installed as designed, ensuring that all fittings and equipment are used as per specification and agreement, chances of water seepage in the basement, possibility of roof leakage, any new land grading issues etc.
This list is meant to give you a sense of inspection areas to look into when considering purchasing a property. But, it is by no means an exhaustive list of all the different kinds of inspections that can/should be performed. There may be other types of inspections as well and you must carefully consider all your options. Not all home buyers perform all the inspections. You have to make your own decision as to which ones are of value to you and are relevant. Consider obtaining additional information from professional home inspection services, home inspection books, CAHI (Canadian Association of Home Inspectors), etc..