This is a guest post by Sean Cooper.

We are officially in a seller’s market in Canada’s biggest city, Toronto – with housing prices up a whopping ten per cent to $476,371 in June 2011 from just a year ago, first time home buyers are finding it increasingly difficult to afford a house. If you have saved up enough for a down payment that’s only half the battle – you’ll have to find a house you like and have the winning offer before your dream can finally be yours.

Location, location, location

You probably already have your dream neighbourhood in mind, but there’s a lot more than meets the eye. If you like a house it’s a good idea to drive by during a typical Saturday night to see if the neighbours are noisy. Also, if you don’t own a car, consider your house’s distance from the necessities like public transit, shopping, schools and the public library. Even something as simple as living near a stop sign or near a bus stop can be a major deterrent, so be sure to keep your eyes open.

Clean offer

When you’re in a multiple offer situation if you think that the highest offer is always key to winning the house you may be wrong. It’s important to consider the seller’s motivation for putting their house on the market. If they’ve already bought another house, then a clean offer – an offer with no conditions such as financing or inspection – could make your offer stand out and win you your dream house. Be sure to speak with the listing agent and gather as much information as possible without tipping your hand.

Editors Note:  I would recommend getting an inspection.  At the bare minimum, have a friend/family member who is experienced with construction to do a detailed walk through prior to the offer.

Research, research, research

You’ve probably heard it before: the three most important things in real estate are “location, location, location”. Well, when it comes to searching for your dream home I say the three most important things are “research, research, research”.

Finding a real estate agent that knows the area you want to buy in is key. Attending open houses is an excellent way to network with local agents and see how much houses are listed for. Once you’ve found the right agent, it’s a good idea to ask for comparables – houses that recently sold in the area – before making an offer to ensure you make a strong first offer, but don’t end up overpaying. Houses prices can vary widely from city to city and even from neighbourhood to neighbourhood, so it’s important to know your market because this is most likely the biggest purchase of your life.

Major Repairs vs Cosmetic Improvements

You’ve finally found your dream home… or so you think. It has been freshly painted, the kitchen has been redone, it has beautiful crown molding and a white picket fence out front. Everything seems perfect until you start to take a closer look: the roof is aging and the furnace needs to be replaced soon. Although cosmetic improvements are nice, they are a lot less costly than major house repairs, such as central air, amp, roof, furnace and windows.

Before you get excited and make an offer , make a second appointment and be sure to bring a second set of experienced eyes like your parents or a friend who is a handyperson. Something as simple as a slanted chimney can cost $5,000 to repair. If you are weary of something you can have a home inspector do a quick drive by of the property – it will give you a better idea of extra money you’ll need for repairs and give you something to negotiate with when you put in an offer.

About the Author: Sean Cooper is a single, 20-something year old, first time home buyer located in Toronto. He has experience in the financial sector as a Pension Analyst, RESP administrator and Income Tax Preparer. He holds a Bachelor of Commerce in business management from Ryerson University.


  1. Jeremy on August 17, 2011 at 11:48 am

    Getting a part-time job for the purposes of inflating your mortgage amount seems like a recipe for over-buying and long term cash flow issues.

  2. Greg on August 17, 2011 at 11:58 am

    Having a temporary part time job to qualify for a bigger mortgage? I don’t think that is sound financial advise…the extra income doesn’t help you afford anything once it is gone.

  3. dannycanuck on August 17, 2011 at 12:17 pm

    We are living in a time with extremely cheap and easy access to credit. If you need to inflate your income with a paper route to obtain financing, I would recommend not buying a home.

    Submitting an inspection-free offer into a competitive multiple bid situation is a recipe for overpaying for a headache.

    Not sure I agree with this posting. Maybe the title should have been “Why Not to Buy in a Real Estate Bubble”?

  4. Brandon on August 17, 2011 at 12:26 pm

    Always consider the things you can change versus the things you cannot. A dream house in the middle of a gang turf war would not be much of a dream house

    When I purchased my first home last year it was in the perfect location and the price was already 10% lower than an identical house that sold directly across the street. This house was mostly renovated inside (bathroom and kitchen especially) but it had a newly rented furnace, needed new shingles and didn’t have *anything* separating my lot from my neighbours lot (not even a bush, it was odd!). I assume the 10% price difference was because of these shortcomings.

    I realized I’m not going to find a better location than that. Backs onto greenspace … friendly neighbourhood, low traffic, large lot sizes… these are things that cannot be modified. On the other hand, I can install new shingles, build a fence, buy out the furnace … I offered asking price MINUS high-estimated contractor prices to do those three changes and the seller accepted. It was a very smooth transaction

  5. Brandon on August 17, 2011 at 12:53 pm

    Oh wow I totally missed that part time job thing.

    If you need to do this it’s time to leave Toronto…

    Additionally, if you already have a place in Toronto it’s time to sell and retire rich in almost any other city!

  6. ash on August 17, 2011 at 1:04 pm

    — “an offer with no conditions such as financing or inspection”

    No inspection? That’s a recipe for disaster. you never know what the seller might be hiding and even though you bring someone who is handy, chances are they dont know everything about everything, like a professional might.

  7. Tim on August 17, 2011 at 3:21 pm

    As a registered real estate salesperson, I would highly recommend a home inspection. If you want the offer to be “clean”…get one PRIOR to submitting an offer.

    Also, even though it’s a “dream home”, try to leave your emotions out of it. Think of it as a long-term investment and don’t start off by over paying what the market value is.

  8. Geoff on August 17, 2011 at 5:07 pm

    +1 for pre-offer home inspection in a busy market.

    I would also say be sure to calculate commuting costs/time into your math. I had all my inlaws tell me 4 years ago that buying a house in Toronto was a rip off and that you can get much more ‘value’ for your house in Pickering or Oshawa.

    Most of these people have no idea what a 3 hour commute does to your life.

    I have coworkers who spend this time + the go train + subway costs + driving to the go station for $600 / month who had no idea it cost this much to get around.

  9. Brandon on August 17, 2011 at 5:14 pm

    Does anyone else get a little bit queasy when someone tells you to think of your home as a long-term investment?

  10. greg on August 17, 2011 at 5:18 pm

    hahahaha a Part TIme Job to fool the bank?! Are you kidding me? That is setting yourself up for failure. Begging for extra leverage (debt) is terrible advice and will end badly in the long (or medium?) run.

  11. SST on August 17, 2011 at 9:09 pm

    Some Swedish doctor did research on residential real estate appreciations across something like 300 years and in various countries. He found the average yearly increase was ~1% in value.

    Speaking of “location, location, etc.”, don’t forget there are plenty of other places to buy a house other than in Canada. Wait five years and scoop up a half dozen condos in Florida for the price of one GTA/GVA lot.

    Just sayin’…

  12. BadCaleb on August 18, 2011 at 3:03 pm

    Seems contradictory to do look for major repairs but also not do an inspection. Personally, I would never buy without doing an inspection on probably the biggest purchase of my life. This lack of due diligence is what contributes to buyers rushing into things and fuels the seller’s market.

  13. Peter on August 18, 2011 at 4:23 pm

    What not to do when you are spending over $200K.
    Kudos to the real estate agent who said to do a pre-offer home inspection in a busy market.

    First rule in any legal transaction, put CONDITIONS on it. It’s your only way out if things go downhill. And pre-approvals don’t mean anything if you are overpaying for the house. The bank will say, yes you can spend that much but not on that house for that price. Application denied. Without conditions you will lose your deposit at the minimum, and still be on the hook for the remainder if the seller decides to go after you for the rest.

    Good things happen to those who wait, have cash/financing, and are ready to buy when the timing is right.

  14. Keith on August 18, 2011 at 9:12 pm

    Wow, is this guy serious? I see why the country is in such poor financial state. This guy has a commerce degree and thinks that taking on a part-time job to inflate your income to get a bigger mortgage is a good idea. Wow…

  15. B Kelly @ MoneyMasteryAcademy on August 19, 2011 at 1:09 am

    It’s great that you are thinking of buying a home during this period. However, would definitley recommend that you look for something within your means – i.e. take into consideration all the other costs that come with the home purchase including renovations as well. A part time job will not help you relieve the stress of a mortgage that really eats up a major chunk of your income in the long run. Good luck!

  16. CA Student on August 19, 2011 at 10:58 am

    I would agree that the pre inspection is a great idea. If the report comes back negative, it saves you the time in having to put together an offer on a place that you shouldn’t buy.

    As a BBA holder and a CA candidate for 2011, I am shocked that someone with a business degree would think that it is a good idea to pump up your income to get a bigger mortgage. I would like to think after the financial melt down that society would realize that over extending yourself like that is asking for trouble. Why have a dream home when all your going to do is work around the clock to try and keep it? Get pre approved with your current income and try to find a home that is under the amount the maximum the bank will give you. This will ensure better monthly cash flow and the ability to enjoy life. This will also give you the room needed should you have a variable mortgage and the rates increase.

    Finally, I would have to disagree on looking at your home purchase as a long term investment. A home is a place where you live and may have a family to grow with. You should buy a place that will make those times the most enjoyable, not what house will increase the most in value.

    Just my $0.02 worth…..

  17. Don on August 19, 2011 at 12:44 pm

    Given the writer is in his early 20s and the inconsiderate advice he gave us, I strongly believe he has not gone through the house buying process at all. Why was he even allowed to write an article on this topic?!

    A part-time job to manipulate the bank? Do you know what are the repercussions of missing a mortgage payment?

  18. Jean on August 21, 2011 at 10:56 pm

    I say one of the best things to do is to be in a position where you have the time to wait. You never want to rush into something, often times thats when you get burned on a deal. So being a position where you can wait, will naturally allow you to have the patience you need. One thing also… don’t let your emotions get in the way, it can really blur your financial decisions if you make your decisions based on emotions.


  19. The Wealthy Canadian on August 22, 2011 at 1:37 am

    Sometimes it’s hard having to eat a slice of humble pie.

    If getting your ‘dream’ house is something that you can’t let go of and it’s something you want dearly, I can’t knock you for that. But there’s likely quite a few steps (and years) missing in between- IMO.

    I’ve sold my principal residence on two occasions in order to get to the home I’m in now, but the process never ever involved purchasing within a range I couldn’t afford, nor was the purpose to “scale up” in the world so to speak.

    They were just opportunities that presented themselves for me to advance my retirement objectives. The home I’m in now is just a basic bungalow; no major bells and whistles.

    The path you need to take is one that involves finding a property within a range that is more affordable and one you can enjoy and live in without pulling your hair out. There will be value in the equity in owning such a property, and what you do with that asset can be the key to possibly getting your ‘dream’ home at one point or another, if done properly.

  20. FrugalTrader on August 25, 2011 at 5:24 pm

    You guys are right, it was my fault for not screening this one a little better. I recommend an inspection, and do not recommend over leveraging to buy a house. I modified the article.

  21. Gerard on September 3, 2011 at 4:08 pm

    I understand why people coming down hard on this guy about the part-time job, but there are some situations where it makes sense. About 15 years ago, I had the chance to buy the house I was renting in Ottawa, but the bank wasn’t willing to count some of my teaching income, and I ended up missing out on the deal. A part time job that temporarily increased my apparent income would have let me buy a house that appreciated in value by about $30K in the following four years (when I moved to another city).

    Would I have been over-extended? Yes, BUT… I actually ended up paying more in rent than the house would have cost to carry, even with a reserve fund for repairs etc. So I was over-extended anyway, but I missed out on the appreciation, the savings in housing costs, and the equity share of the mortgage. And I spent four years living in a crappier house!

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