Buying first house - things to take care of
Hi
I am in an interesting situation. I have recently moved to Oshawa, ON, Canada. I will be buying a small home operated business there from a gentleman who is moving out of the city. I have proposed to buy his house also, since he is relocating. I list below, the advantages and the possible pitfalls of the deal.
Advantages- Since we are dealing directly with no real estate agent involved, we will save 5-6% on the deal which we will split 50-50.
- This one is a small advantage, but still mentioning it here. All the equipment for the business is already set up in the basement and I will have an up and running operation.
Possible Pitfalls
- Since we are dealing directly, both of us have a different idea of the value of the property. While he thinks it is around CAD 550-560 K, I think it is more to the tune of CAD 510-520 K.
- He was already in the process of renovating the house to sell it when we started talking. I am afraid that if he knows that his house is selling for a certain price, he might be inclined to cut corners on the renovation and rehabbing.
Some details about the house:
- It is a 4 bed, 2 bath house with 1 bath en-suite the master bedroom. It has a den and a finished basement. The basement does not have a bath.
- I can spend about CAD 10-15 K and convert it into a duplex with 1 side yielding a rent of around CAD 1 K.
- The basement business gives CAD 2 K monthly, allowing me to effectively stay for free in the house.
I have a few questions:
- Since no real estate agents are involved, what will be the best method to determine the correct value of the house? The seller believes that appraisers are conservative and give a low value. To me, an appraisal seems a fair way to bridge the price expectation gap between the buyer and the seller. Anyway, my bank will lend me basis their appraisal value.
- This is my first deal and I will be house hacking. What should I be checking in terms of the house and renovation quality before closing the deal.
Inputs on this will be greatly appreciated.
Thanks