5 Common Mistakes to Avoid for a First Time Home Buyer in Toronto

Justo Team | September 26, 2018

So many things can go wrong when searching for your first home. You don’t want to have buyer’s remorse six months after closing on your first home, so it’s a good idea to learn about the five most common mistakes first time home buyers in Toronto make.

Because others’ mistakes are the best way to avoid yours, we’ve listed the five most common first time home buyer Toronto blunders.

  1. Going It Alone

Many first-time buyers make the mistake of handling the purchase of their home without the help of a (reliable) real estate agent. This costs home buyers thousands and often leads to unforeseen problems down the road. A real estate agent and his team can help you understand home inspector reports, legal contracts, and financing. Or he provides these services for you! Most of all, agents can negotiate a realistic offer that benefits you. A real estate agent’s commission can seem high at first, but put some research is finding the fair ones and fees are a pittance compared to the amount you could lose in a botched offer or in repair issues afterward. Don’t be like some first-time buyers, skipping the home inspection which leads to our next point.


  1. Waiving Inspection

Frequently, when a home buyer finds his dream home and becomes emotionally attached to it, rational thinking becomes hard. You could get into a sales panic when a bidding war ensues, and this is where first-time home buyers lose a lot of money. You want to make the offer attractive, so you think skipping the home inspection will help them secure the home before others do. Your potential new home may look perfectly fine to the naked eye, but if the house has some age on it, you may end up missing problems lurking beneath the surface such as asbestos, flood damage, leaks in the HVAC system, and termite damage. There could be structural and engineering issues, too. You don’t want to end up paying for these costly problems a few months down the road after closing on the house.

Try using an agent who offers independent home inspection included in the fee. Or, before you make an offer, it might be a good idea to pay for a pre-sale inspection. If the home passes inspection, then you can waive the inspection contingency after the offer since you’ve already inspected it.

Beware of only relying on the seller’s inspection, unless he works with a reliable real estate company. Often, a seller will order their own inspection before listing their home on the market. This is a way of tackling issues before listing and to show potential buyers that the house is sound. The reason this could be a problem is that the inspector hired by the individual seller is beholden only to the seller. So, the inspector is liable only to the person who ordered and paid for the inspection. In this case, it would be the seller, so if the seller’s inspector missed any issues, you would have no recourse.


  1. Not Purchasing Mortgage Insurance

If you choose to opt out of mortgage insurance, you open yourself up to potential debt and credit damage. Remember, the most money you’ll ever spend on investment is probably your home. So it’s a good idea to protect it. Mortgage insurance gives you more flexibility in financing, and it offers you available equity to pay off debt. A good real estate company should be able to help you with insurance and legal matters.


  1. Fixer-Uppers Can Cost You

The price may be right, but that fixer-upper could turn into a money pit. Hiring a real estate agent that is familiar with fixer-uppers will know how to negotiate for a more extended due-diligence period to gather estimates from contractors. This will give you time to back out of the deal if the renovation costs exceed what you budgeted for. Also, the real estate agent can offer home inspection and carefully walk you through the inspector’s report to help you understand what challenges lie ahead.

One of the most significant challenges can be finding a reliable and reputable contractor. You’ll need to thoroughly research a contractor’s licenses and background before hiring them. Experienced real estate agents can help you with this since they have a network of reputable contractors. Also, you’ll need to find a suitable lender who has experience dealing with fixer-uppers. Speak with your trusted real estate agent for help regarding this too.


  1. Lack of Research

Many first-time home buyers are unaware of the financial assistance and benefits they could receive from government home buyer programs. A home is your biggest financial asset, so you want to make sure you save as much as possible on the purchase of your home. First off, there are the agent commissions or fees which you need to understand well. There are flat fees to take into account and a percentage commission of about 5% that is paid half by the seller and half by the buyer.  Find the agency that charges reasonably!

Also, not researching government home buyer programs is one of the costliest mistakes a first-time home buyer can make. First-time home buyers are eligible for a 15 percent tax credit for closing costs. Land transfer rebates (provincial and Toronto) are available to first-time home buyers of new and resale homes. You can receive a maximum of $4,000 in provincial land transfer tax (LTT) rebate, and a maximum of $4,475 of Toronto LTT rebate money. All buyers who entered into Agreements of Purchase and Sale before December 31, 2007, are eligible for a full Toronto LTT rebate. Government programs also serve general buyers and those in the commercial, multi-unit property, and industrial property market. An experienced agency can answer your questions about these programs and help determine your eligibility.

I’m sure you’ve noticed a pattern here: first time home buyers Toronto who hire experienced real estate agents avoid these costly mistakes. It’s so important to have an agent working as an advocate for you throughout the whole process. Buying a home is a complicated legal transaction, and it’s your biggest financial asset, so don’t go it alone and later regret it.

At Justo, we care about a different and fair real estate system. This is why we offer you unique content that can help you make a right and balanced decision when it comes to your home. We’re ready to help if you’d like advice to avoid first time home buyers’ mistakes and more when searching the Toronto market. As residents and local real estate experts in Toronto, we’re familiar with the neighborhoods and nuances of Toronto and outlying areas.

By Justo Team

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