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Should you trust your parents advice when buying a home? | Surrey REALTOR tells his darkest stories

Transcript:

So it's the new year, and I want to start off the New Year with doing a video. I think you are absolutely going to love. This is all about the worst, the nastiest, the most rotten, unfavorable advice first time home buyers have got from their parents when buying a home. This is advice that we have heard throughout the years that has cost homebuyers money and also led them to make some really bad decisions.

One of the worst parts, though, is first time home buyers, they really trust their parents and they look up to them for what they think is really good advice. But the fact is very often, it's incredibly terrible. The fact is, most parents these days have been in their home that they're living in currently for quite some time, and it's been a long, long time since they purchased real estate. So when they give you advice, it's not honestly usually the best. Okay, so here's the deal.

Your parents, they don't want to give you bad advice. They just do. They really, really, really want to play the hero in your story when it comes to you buying a home and guess what, guys, their intentions are always really, really great. The problem is they have no idea what they're talking about. Here is some of the absolute worst advice I've heard parents give their kids when buying homes and a few stories from some of my colleagues as well.

The first is comparing you buying a home to the time that they bought their home. Like I said at the start of the video, they probably bought their home back in the 1990s or it's been a really, really long time since they purchased and the market is way different. If you ever hear your parents utter the words "the last time I bought a house," run for the hills.  You want to make sure that they understand this market is much different than when they bought their last home. And you know this, of course, because the market changes all the time and the longer you get away from maybe the first time you bought your home to today makes an even bigger difference. The other thing, too, is they likely, very likely haven't owned that much real estate.

So you really want to be taking advice from them? Probably not. The second is do not do a home inspection. I got it. We see parents tell their kids that all the time. Maybe your Uncle Dave is a contractor or your parents bought a home back in the 2000s and it was a new house. They tend to think they know it all. And guess what? They don't. Home inspectors see hundreds of homes a year.

They have tools that you certainly don't have access to or at least don't have. And they are experts in many areas, general and others. But they have a very keen eye for noticing when something is up in a house. Their job is to bring all of this to your attention so you can make an educated decision about buying that home. And Uncle Dave, who is a contractor, builds new homes.

He doesn't see used homes that are 10, 15, 20, 30 years old. An evil cousin of not doing a home inspection or getting your maybe parents or Uncle Dave to do it is telling you to go find a home that needs less work when the work is really quite simple, like updating paint or even doing a simple kitchen renovation. Buying a home should be all about the location, the layout and the price, period. Parents also tend to let very small things screw up a deal, so don't let $500 worth of repairs on an $800,000 house, screw up getting a house for you.

The next one on the list is you don't need to speak to a mortgage broker. We'll figure it out when you find the house. This is a terrible piece of advice that parents give all the time to their kids, telling you to go find the house first and we'll figure it out later. Guess what, you guys. The market tends to be so busy that when you find a house, you need to move quick and when you're not prepared, you're going to lose that house.

And you might go into this thing thinking, Well, my parents have lots of money. They're great. They've done well at their jobs, and your parents might even offer to co-sign for you. I can't count on all of my fingers and all of my toes, the amount of times I've heard that and people have gone to investigate this, only to find out that guess what? Your parents don't have any money, or maybe they've got terrible credit. They don't like paying their bills, or they simply can't carry two mortgages. And this becomes a big problem for you. You've now found the house you're in love with. You're going to drag the sellers along and take up a lot of their valuable time, and they're going to get frustrated, wanting to work with other people.

You definitely want to make sure you know where all your money is coming from in advance of starting your search. And also speak with a mortgage professional long before you start getting serious about buying your home. A few fun ones are don't buy the first place that you see. Well, that's kind of silly because you've been in a lot of homes before. You know what's nice and what's not.

And another one that we hear all the time. Never pay asking price or start way below what the asking price is. Parents give this advice like they are some sort of international importer negotiator for Canada, and they've been doing this since 1980. And guess what? They haven't. The absolute stupid, and I hate to say stupid , but stupid boneheaded offers that parents tell their kids to make is absolutely incredible.

It's really all about what the house is worth at the end of the day and that you're getting good value. And hey, guess what? Everybody wants to get a deal. There's no doubt about that. But when you see a house that's well listed in an area you love and it's got a great layout,

Everything's perfect. Guess what? You're not the only person looking at that house. There's other people making the same decisions you are that really want a nice house for a great value. Here's an idea. Let's make an offer that is so insultingly low to the seller, someone who we ultimately want to work together with in the end to come together for a deal and see how that goes. Why not try and piss them off right from the start? Isn't that a great idea? And the simple answer to that is, of course not. It's not.

Listen to your real estate professional about how to make an offer that's going to help you win and achieve a great price on that home. An evil cousin of this one as well is basing the price of a home on the assessed value. The assessed value is a stamp in time from usually at least 6 months ago, meaning the value is 6 months old. The assessed value has very little to do with what the actual market value of the house is in today's dollars. It could be higher, it could be lower, and sometimes it might be the same, but it certainly does not sit static.

So that is terrible advice. We're coming to the end of our list where I've got two more that are my absolute favorites. And I hope you've enjoyed the first one so far, but these are the ones that are the absolute worst, bottom of the barrel, in the sewer, types of advice that people get. You don't have to buy now, you should save up more of a down payment before you buy that way, your mortgage will be less. That seems like a reasonable idea, doesn't it? Here is an unfortunate reality check for anybody watching this video, you likely cannot save up more money faster than what the market increases every year. I'm sorry, don't hate me. I don't want to be the bearer of bad news, but it's true. Let me give you an example.

In the last 10 years in the city of Surrey, we saw prices of Condominiums, and I'm using Condominiums because that's what most first time home buyers get into. Condominiums went up on average by almost $31,000 each year over the last 10 years. When is the last time that you saved $31,000 a year? Most people are lucky if they can save a few thousand dollars a year. So these people effectively have let the prices go up by $31,000 each year, only to save an extra at $5,000, meaning they're out $26,000 or so.

This is not good advice. And for the very last one on our list, drumroll, please. You should wait for the market to crash. Just don't. People just don’t. The countless amount of times I have heard this been told to first time home buyers is incredible. And my last example of the market going up $31,000 per year in the city of Surrey for a condominium over the last 10 years. You can tell that's pretty bad advice. We have heard it for forever. The market is going to crash.

The market is going to crash. We are in a housing bubble. This and that, especially in the city of Vancouver, the lower mainland and Surrey and all those other areas. Guess what, you guys. The market has never crashed now, sure has it fluctuated in the past?

Of course it has everything fluctuates just like your stock portfolio might or anything else like that. But the market has never significantly seen a crash like you might expect from the dot com bubble or the financial crisis of 2008. Here's the interesting thing about that as well. In the 2008 financial crash market where everyone thought the world was ending, everyone thought that the market was taking a nosedive and it was going to be really ugly. Guess what happened in the lower mainland,

We saw benchmark values of properties drop. Of course we did. But guess what? After about 9 to 12 months afterwards, they were equal to, if not higher than when they were previous to the actual crash. Now I don't know about you, but waiting for this crash that our parents so much love to tell us about and tell us to wait for here's why that's so dangerous. You may have been lucky enough to pick up a property at the very bottom of the market in 2008, and since then, you've made some really great money. But here's the problem. #1) you don't know if that's coming. #2) You never know where the bottom is until it's too late. If you want to roll the dice and hope that the market does not continue on average, increasing $31,000 every year, you should wait for the crash.

I'm sure all those people who have waited to buy since COVID came in as an example, would agree with you because the properties they're looking at today are significantly more expensive. And I'm talking 30% to 50% more expensive since the beginning of the pandemic. Okay, so here's the point of this video. You guys. Your parents want to help, they want to give you good advice. They want to be the hero to make sure that you don't mess up because they feel responsible for you and they want to give you that good information to help you be successful. Unless they are a mortgage broker or a real estate professional, just be very careful about the advice that you take and take to heart from your parents. As in many of the examples that we've said in this video, it can really cost you quite a bit. So be gentle with that.

Thanks for watching and we'll see you on the next one. Take care. Bye!

 
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The Germyn Group
Darin Germyn PREC* & Adam Howsam
Macdonald Realty LTD
homes@germyn.ca | 604-542-2444 | www.germyn.ca
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