First Time Home Buyer - Calgary

[Nabber]

Hey Tooz in this market sellers are usually giving a 3 month possession date as it's harder that usual to find something to buy. Buyers on the other hand are in most cases looking for a quick possession as their home may have sold or for other reasons are rushing to get into something. I usually recommend giving a 60-90 day possession as that gives the sellers enough time to look for something to buy and the buyers enough time to get ready to move in. With my listings I like to set a specific possession that works for the sellers but also state that it's negotiable as you can always reject or counter dates not to your liking, hope that helps.

[Nabber]

Originally Posted by Bobblehead

Since betting a house built takes so long right now, when should you list your current house if you are considering having one built?

IMO I would list it 3 months before your new house is to be completed at the most, in a market like this you could even cut it shorter cause a house priced right will sell right away.

[trew]

Originally Posted by Nabber

I know there was a new story about it and how dangereous it is but that's because these un-conditional offers are being put forth without knowing what the buyers with qualify for. I feel the property inspection is way more important than the financing condition, you never know what's wrong with a certain house, with financing at least you know if you've talked with your bank or broker.

Even though you might be preapproved for the amount of mortgage you need to buy a particular house, that doesn't guarantee the bank will give you a mortgage.

The banks will do an appraisal before approving a mortgage. What happens if their assessment of value is much lower than the purchase price, and they decide it is too risky for them?

If you waive that condition and fail to arrange financing and cannot close the deal, you will loose your deposit and can be sued for damages. These damages could be severe if the house fails to resell quickly (racking up interest claims) or resells for a much lower price (causing a claim on the differential between your offer and the final closing price).

Personally, I would sooner forgo the property inspection condition, although I wouldn't recommend this to anyone either. At least you can close the deal on a house with a cracked foundation.

[mykalberta]

Wow, I expected a page maybe.

As to reasoning to live close to downtown.

(1) I work the M-F 8-4.30 job.
(2) I have a part time (self employed job) installing wireless networks into apartment buildings - most work is in NW - some in SW. I have approx 17 ongoing mtce contracts (kind of like extended warranty) that onsite work is preformed on weekends.
(3) Basically same as (2) except I run a computer repair/install buisness. Mostly senior citizens complexes in the NW (Country Hills) and Bowness where same deal, with ongoing mtce contracts. Those normally arent on site as I can remote them but with 34 ongoing....
(4) I would rather bike from an area like Bowness than live in Altadore and drive/take the bus

Anyways here is the update.

I placed offers on 3 2 bedroom condos ranging from 720-850 sq feet ranging from 192-208K, was outbid twice (first by about 5K, second by more than 10K), and the third was rejected because I had a condition condo documentation and building inspection (will not bend on either unless I have inside info).

After that I was about as ****ed as you could possibly be. So I now have acquired the services of an agent who somewhat specialzes in condos - after about 10 days of dealing with her and her assitant I have a fairly good belief that she knows what she is doing. I have thus made a bid on one location in ParkHill and was again outdone by conditions (details below).

As to the suggestions about building - if you do a look on the City docs of where the next build phase is, its to the East. I am very adiment about not driving and having to park downtown (I would Park&Ride but for now that is not where I am focussing). The building crunch is on, and from the City docs I have looked at here is the reasoning.

SW they are done becuase of the reserve.
W along TransCanada they are done because of acerages
N and S along Deerfoot they would have to appropriate the land from County of Airdrie and they are being difficult - same with NW they are fighting county of Cochrane.

The fact is Calgary has bery little room to grow without the help of the province in fast tracking land appropriation which is unlikely before an election (because if they do it for Calgary then the 50 year old Edmonton Refineries issue will raise its head).

Also to those who believe it will fall off if another NEP come along, most of the people making the money in Calgary are Sales guys, I work in a Sales office and of the ones I talked to are pulling down 70K in salary (more than me) but get bonuses in the range of 100-220K. So even if the NEP part deux were to happen, I would be most of the high end stuff affected - example the Sasso and Vetra.

I am quickly coming to the realization that I may have to buy a "fix-er-upper" for say 180-190K and then put 10-20 K in renovations in.

Before you read the next paragraph know that Parkhill area would be almost my perfect location - bike to work (good exercise), Ctrain in Winter etc - just in case you think the bid was too high - I think it was too hight but tis Calgary.

The bidding is crazy, for a moderate location - there was one in Parkhill (1Bd 1Bt 730 sq ft, 190K 280$ CF) would have been a bit of a trek to get to the Eau Clair YMCA but I am young .It came online on last week (Saturday I think) morning and was sold by 8pm that evening. This is the first property I bid on with the assitance of a Realator, we went there, I looked at the place. I had a contractor along to look at the outside foundations, etc (the building manager wouldnt let him in without owner permission - owner lives in TO and realtor wouldnt allow it). The contractor I had brought in found sealant that looked to be covering what could be serious foundation problems - called his buddy and said he worked on a place about 3 blocks away (condo was 1 block from Elbow) who said the water level had risen so much that a place right on the river had to have serious work done to it. To make a long story short I felt I needed a document inspection and mtce inspection done, there were 7 bidders so I bid 198 K and was again subsequenlty tied for the bid, but lost because of conditions (seller(s) realator came to me and offered it without the conditions - I said I would forgoe the mtce inspection but not document inspection, offered to put 10K down and seller realator refused - a few days later my realator asked around and place when for 198K, no conditions. As of today its still pending so it looks like there might be fnancing problems - here is hoping.

Anyways, tis the life of a middle-class young guy whos parents are financially healthy but not enought to have an extra 20-50K sitting around

MYK

[Shazam]

mykalberta, there's some older condos for sale near Westhills, starting at the 170's. You can see their big banner from Sarcee.

[Go4Gold]

Here is another opinion, mine, and I'm not trying to point you in any direction, just my opinion.

I would buy a property, not just anything that you can afford, but something that is affordable and something that you wouldn't mind living in for a year or two. In this case, you might have to have a sacrifice of commuting into work for that period of time. This gives you a place of your own, and you are in the market, so when you go to purchase something else, you won't be effected by the larger increases or as much if you haven't purchased a place. You might find that the commute is not that bad and then purchase a new home at todays price, probably have to wait about a year before it's done, and at that time you can decide whether to move into it and sell your existing home at that future price, or the new house at that future price and paydown your mortgage, or put towards the purchase of a home closer to downtown.

[MacDougalbry]

Originally Posted by mykalberta

The bidding is crazy, for a moderate location - there was one in Parkhill (1Bd 1Bt 730 sq ft, 190K 280$ CF) would have been a bit of a trek to get to the Eau Clair YMCA but I am young .It came online on last week (Saturday I think) morning and was sold by 8pm that evening. This is the first property I bid on with the assitance of a Realator, we went there, I looked at the place. I had a contractor along to look at the outside foundations, etc (the building manager wouldnt let him in without owner permission - owner lives in TO and realtor wouldnt allow it). The contractor I had brought in found sealant that looked to be covering what could be serious foundation problems - called his buddy and said he worked on a place about 3 blocks away (condo was 1 block from Elbow) who said the water level had risen so much that a place right on the river had to have serious work done to it. To make a long story short I felt I needed a document inspection and mtce inspection done, there were 7 bidders so I bid 198 K and was again subsequenlty tied for the bid, but lost because of conditions (seller(s) realator came to me and offered it without the conditions - I said I would forgoe the mtce inspection but not document inspection, offered to put 10K down and seller realator refused - a few days later my realator asked around and place when for 198K, no conditions. As of today its still pending so it looks like there might be fnancing problems - here is hoping.

First let me say that I have no idea which building in Parkhill it is that you are referring to, but I do know that there is a building in the area that has a very dicey history, so you are smart not to put in an unconditional offer.

[MacDougalbry]

Originally Posted by trew

Even though you might be preapproved for the amount of mortgage you need to buy a particular house, that doesn't guarantee the bank will give you a mortgage.

The banks will do an appraisal before approving a mortgage. What happens if their assessment of value is much lower than the purchase price, and they decide it is too risky for them?

If you waive that condition and fail to arrange financing and cannot close the deal, you will loose your deposit and can be sued for damages. These damages could be severe if the house fails to resell quickly (racking up interest claims) or resells for a much lower price (causing a claim on the differential between your offer and the final closing price).

Personally, I would sooner forgo the property inspection condition, although I wouldn't recommend this to anyone either. At least you can close the deal on a house with a cracked foundation.

Thank you... my point exactly. In a normal market, if you were pre-approved you could be pretty confident, but this is not a normal market. I heard an anecdote of someone backing out of a deal after the bank's assessment came in at $100K below the contract price and the bank wouldn't fund the whole purchase... this is a second hand story, mind you, so I can't guarantee the veracity of it, but I certainly wouldn't want to take the chance, myself.

[Wookie]

Originally Posted by MacDougalbry

Thank you... my point exactly. In a normal market, if you were pre-approved you could be pretty confident, but this is not a normal market. I heard an anecdote of someone backing out of a deal after the bank's assessment came in at $100K below the contract price and the bank wouldn't fund the whole purchase... this is a second hand story, mind you, so I can't guarantee the veracity of it, but I certainly wouldn't want to take the chance, myself.

A friend of mine works for an insurance company that would only insure a house just bought for $100,000 less then they paid..

[I-Hate-Hulse]

Thought I'd resurrect this thread with some true stories from the painful battle that is this home purchase of mine right now. It confirms much of what people have said above.

Never ever waive the financing condition unless you have large cash reserves. Our purchase price was submitted to the banks for appraisal, and they have said they will not lend out the full value of the mortgage. They believe it is overvalued by 5%. As a result, I now have to find the difference between the appraised value and my purchase price, in cash, if I want this place.

Now given it's location, I think that's a very contentious valuation, but it is what it is. Had I had not put in a financing condition, I'd have been on the hook for the additional 5%, even it it means selling a kidney. Or giving up my deposit.

It's a mess right now, but I thought I'd share a tale of caution in this ridiculous market!

Waiving a property inspection? Absolutely nuts!

Might miss some of the game because of this!

[Ironhorse]

We waived the "Subject to mortgage approval" when we put in the offer that bought our house, but we did enter a condition of "Subject to bank appraisal". We had already prequalified our mortgage, so we knew how much we could spend. IMHO, few honest sellers will balk at a "subject to bank appraisal" condition.

IHH, I hope things get straightened out for you!

[Neeper]

My buddy sold his 800sq/ft condo on Heritage Dr for $190,000. He bought it got $80,000 about 7 years ago. He listed it at 10:00am and sold it by 3:00pm, $15,000 over his asking price. It's unbeilevable. Same complex as Kevan Guy's too.

[I-Hate-Hulse]

Thanks Ironhorse, phew... finally got straightened out at the 11th hour. All of the madness I speak of is because the selling agent is a complete rookie. I swear this was her 1st deal - she didn't have documentation ready to go and quite frankly gave her client terrible advice. Luckily I had my own agent.

We split the difference between the appraisal value and the original purchase price to get the deal done, and we'll scrape up the cash for the difference. While no one likes to hear they paid over what an "expert" says it's worth, the location of this place is outstanding, and I don't think they truly took that into account. Hopefully at current price escalation that premium we paid gets caught up in a few months.

Ironhorse, that's a great thing to do - specify it's mortgage appraisal no financing approval - less offensive. The only thing I can think of is that on the sale agreement it gets written on it gets lumped into a box broadly marked "financing condition" which may freak out inexperienced agents.

I cringe when I think about the bind some people may get into when they waive all conditions..... I could have just walked away but I see a lot of deposits being lost this way....