Is a Used Home Right for You?
Published on 29 August 2022, 07:22:56 AM
Those ’70s Oshawa bungalows sure are spacious. Lots of room for your family to grow and they still look good after all these years. Watch out. Your used home could be hiding a secret.
Kicking the Tires Not Enough
Buying an older car seems like a great way to save money. Why pay those new car prices when the value will plummet like an elevator when you drive it off the lot? While you’re looking under the hood, take a peek at the condition of the rubber throughout your used chariot. Aging rubber can crack, harden or shrink due to changes in its molecular structure. Exposure to the sun or frosty winter air ramps it up. Next thing you know, you’re shelling out to replace rubber seals, gaskets, hoses and even trim in your jalopy. If you can find the parts.
Looks Aren’t Everything
Homes are like that too. Surface appearances aside, changes going on all around you may be bringing down the value of your home and reducing its life expectancy. Banks call the aging out of a home its remaining economic life (REL).
Is Your Home Ready for Retirement?
Like a crusty co-worker who’s been around forever, that home you’re eyeing so fondly could be ready for retirement. Creaky floorboards, aluminum wiring — the signs are all there, when you know where to look.
Watch Out for Cosmetic Changes
A new coat of paint and brand new appliances can make almost any home look great. Take the 2017 renovation and rebranding of 325 Bay Street, now the St. Regis Toronto (some updates vastly improve your financial picture). But be wary of any home over 25 years old that’s undergone a recent refresh. The orange shag carpets may be in the recycle bin, but the changes could just be cosmetic.
What’s Old is Old Again
Ah, the ’70s. If you were around back then, it was a time of trials, tribulations and triumphs. OPEC embargoed oil exports to Canada, ratcheting up gas prices for your trusty Dodge Charger, fresh off a Brampton assembly line. Only Love Can Break Your Heart by Toronto native Neil Young flew off the shelves at Sam The Record Man. The CN Tower sprang up, dominating the skyline as the world’s largest free-standing structure until 2007.
Nine Signs Your Home is Stuck in the 70s
- The master bath is a two-piecer, three with a corner shower in upscale ‘hoods.
- A mint green ring circles the Pink Champagne tub like the rings around the planet Saturn.
- The living room ceiling has the swirly plaster thing going on.
- The 9×9 kitchen floor tiles are lifting and the underside is black (could be asbestos).
- The foundation has a diagonal crack to rival a Diane von Furstenburg wrap dress.
- The platform bed carpet matches the Laura Ashley wallpaper and they’re avocado green.
- Hey, you’ve got wooden countertops! Beats that plastic tile trend.
- Instead of a media room, there’s a conversation pit.
- The entrance hall has a smoked glass mirror. Smokin!
Keeping Your Old Home Young
Just as the rubber trim in your car wears out, homes need a regular checkup. A resale home’s age and condition may even affect getting a mortgage. Most homes have about 60 years of economic life, less for major parts like roofs that typically last about two decades. When you take out a mortgage loan, your lender will appraise a home’s condition based on how long it will be before expensive parts like siding, electrical wiring or plumbing pipes need replacing. While they may be costly, major upgrades keep an older home new and allow you to take advantage of any savings you can make by purchasing a fixer upper.
Your Home’s Age Affects Your Mortgage
To get an idea of a GTA home’s effective age, hire a certified home inspector to assess the REL. For instance, if you plan to finance a home that is 35 years old, remember it has a REL of 25 years (35 + 25 = 60 years) before substantial repairs are needed. A mortgage lender will look at what repairs the home has had already to decide whether to offer you a 25-year amortization period or less.
Comparing Your Treasure to Heritage Homes
So how did real estate buyers got a mortgage for a historic farmhouse when your ’70s treasure is more contemporary? Some heritage homes have had many upgrades in their lifetime — a new roof several times over, knob and tube wiring replaced with copper. When a home is in its original state, the buyer likely came up with a bigger downpayment or risked not being able to finance the home’s full purchase price. There’s a reason home buyer DIY disasters are so popular on TV. Let that be a warning to get that 70’s home you are intent on buying properly inspected before you sign on the dotted line.
Get Real Estate Advice Before You Buy a Used Home
Our real estate lawyers can review your agreement of purchase and sale to find out if you are covered for age-related problems. Bring your agreement to meet with an Axess Law Ontario lawyer via video call or in person. Online video conferencing is available day or evening, at your convenience, 7 days a week. Call toll-free to 1-877-552-9377 or 647-479-0118 in Toronto or use our online booking form. Licensed real estate lawyers consult with you in person at our Toronto, Scarborough, Vaughan, Etobicoke, Ottawa, Mississauga Winston Churchill or Mississauga Heartland law offices.
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