[Picking the right home inspector is almost as important as picking the right house.]

This fall, Ontario is looking to introduce a bill to regulate home inspectors and create a body to govern the industry. While only 65 per cent of homebuyers in the province hire inspectors to look into their potentially life-altering purchases, the move will bring stronger standardization to an industry that country-wide is, for the most part, still unregulated.

It’ll also add an extra layer of confidence to the sometimes-daunting process of finding the right inspector. But it’s not the only thing consumers need to keep in mind.

Yahoo Canada Finance chatted with Brian Hutchinson, past president of the Canadian Association of Home and Property Inspectors Atlantic and treasurer of CAHPI National, to get the low-down on finding that right inspector. Here are the 22-year veteran inspector’s tips:

Figure out what you want from your inspector

“More and more inspection companies are starting to offer a menu-driven price list,” explains the Dartmouth, N.S.-based inspector. For instance, a basic inspection may run you $350 to $600 but you’ll have the option of adding other services beyond a standard visual inspection including testing for radon or looking into the sewage lines.

“Some inspectors will do water testing, some will do air quality testing over and above the visual inspection,” he says. “The price can mount up, it’s not hard to spend $1,000 on an inspection if you’re doing all those inspections.”

Look for an inspector with a designation

While homebuyers wait for Ontario to set a precedent, Hutchinson recommends turning to national organizations like the CAHPI or regional ones like the Better Business Bureau.

“Look for a professional affiliation that suggests that the inspector is serious about their profession and has made an effort to ensure his educational standards of practice meet a high level,” he says. The Registered Home Inspector program through the CAHPI, for instance, requires inspectors to have completed at least 250 fee-paid inspections.

He also said consumers can feel more confident with an inspector who’s registered with the Better Business Bureau because it suggests they’re willing to submit to scrutiny.

Visit their website and then speak to them

Often buyers will get recommendations from their real estate agents or friends. Hutchinson points out that even if the trust factor is there, buyers should still look at the website of the inspector before hiring them.

“Take a look at [whether] their website is professionally done or if they have one at all [as well as] customer referrals on those websites and a statement about their level of experience,” he says.

He also points out that while many inspectors will have some sort of appointment booking service online or via phone, it’s good to schedule a face-to-face meeting or speak to them over the phone before hiring.

“You want to get a sense that they have good communication skills – technical skills can be taught but if somebody isn’t gifted in terms of communication they’re going to have a hard time being an effective communicator,” says Hutchinson. “Our work is very focused around effecting communicating of our findings… we’re trying to relay to [customers] the technical aspects of the house they’re buying.”

You can also ask to accompany them on the inspection, which can bolster that ability to communicate.

Ensure they’re insured

A breakdown of communication can prove costly to the consumer. Hutchinson recommends finding an inspector with insurance in the event something goes awry.

“The presence of personal liability insurance suggest they’ve been vetted by the insurance companies somewhat,” he says. “Secondly, if something does come up and you subsequently have to sue the inspector you want to know that the inspector has the resources to pay out any settlement that’s necessary.”

Set your expectations upfront

A lot of inspectors will have their clients sign a visual inspection agreement that outlines exactly what they can expect. The homebuyers need to comb through this and make sure they agree and understand their recourse if things don’t go the way the anticipated.

Some agreements will limit the liability of the inspector to just the fee paid and within a certain time frame from the point of purchase.

“If after two years you make a discovery that I couldn’t make in the three hours I was in the house, it seems unreasonable I would be liable,” says Hutchinson.

But if you do have a problem with an inspector you’ve hired, Hutchinson recommends first approaching the inspector.

Imagine you’ve just purchased a new house with your dream backyard. It has a gazebo to escape sweltering summer days and a hot tub to ease your aches and pains.

Now imagine, come move-in day, you show up at your new home only to have your dream shattered because the previous owners took those precious amenities with them.

That’s exactly the unfortunate series of events that happened to the clients of Ontario real estate lawyer Mark Weisleder.

“The seller took the hot tub and the gazebo out of the backyard because he said it wasn’t a fixture,” Weisleder told Yahoo Canada Finance.

“Now you have lawyers going to court to figure out how it was attached: was it attached a certain way? Were there wires? Was it hardwired? Was it not hardwired? Was it bolted into the ground or not?”

And that’s why he stresses to homebuyers the importance of writing everything down and being “as detailed as possible” in a contract about what is going to be included in the transaction.

This is just one of the things that people should never skip if they want to avoid headaches and potentially nightmare scenarios after a sale.

Write everything down

In the aforementioned scenario, Weisleder stressed that the lesson is “be as detailed as possible about what you expect to receive upon closing.”

“List everything inside the house or outside that you hope to keep,” he said.

“The more detailed you can be when you write these things down, the less chance of an argument or misunderstanding … after a closing.”

Weisleder said that some of the common points of contention are closet organizers, mirrors, television brackets or other items that are “built-in.”

In particular, he said that buyers should be as clear as possible about keys.

“I have had people buy places, and there are sliding doors, and there are no keys for the locks,” he said.

“And it costs a lot of money to get a locksmith to take [them off].”

Get a home inspection

Skipping out on a home inspection can also end in disaster.

According to the Real Estate Council of Ontario, 15 per cent of homeowners wished they had used an inspector when purchasing their house.

Weisleder said he has seen a number of situations where buyers find mice or mould after closing, but unless there is a “major defect” that they can prove the seller knew about and they couldn’t have found it, “for the most part, it is buyer beware.”

The problem is, according to Weisleder, that in the red-hot real estate markets across Canada many buyers are facing  the prospect of a bidding war and are encouraged to place an offer without conditions, such as a home inspection.

And buyers who insist on doing an inspection could spend several hundred dollars and not have the winning offer as they’re sometimes going up against five or six other bidders.

Furthermore, they could be forced to pay for several inspections before they come away with a winning bid.

But in the balance, Weisleder said it is worth it to spend a couple thousand dollars getting some “piece of mind” that a home isn’t a ticking time bomb when the average Canadian is making an investment of more than $500,000 or topping $700,000 and $900,000 in major cities such as Toronto and Vancouver respectively.

“There’s a real risk when you buy a house with no inspection,” he said.

Make sure your money is available

Weisleder said buyers can run into trouble with banks when they want to use money from RRSPs, brokerage accounts or need to close a certificate for a sale.

He said real estate transactions can be put in jeopardy because buyers are ignorant of conditions surrounding the amount of notice needed for a withdrawal.

“I find that some people … don’t get that right and if they don’t have the money on time, then they could default on the deal,” said Weisleder.

However, money can be easily transferred from most bank accounts on the day of.

Walk a neighbourhood

Another process that buyers shouldn’t neglect, according to Weisleder, is something a simple as walking through the neighbourhood of the home you’re eyeing.

While there’s a plethora of information online — including walkability scores, neighbourhood guides and listings of schools, restaurants, parks and other attractions — Weisleder said there’s no substitute for taking a stroll to get a real feel.

“Just walk it … Talk to people. Talk to neighbours. Get a sense of the neighborhood, the amenities,” he said.

Getting a good team

Despite the wealth of information on online, Weisleder said it would be “very hard” for most people to go through the buying process themselves, as they simply don’t have enough time to track constantly fluctuating real estate prices in neighbourhoods across Canada.

The first step, he said, is to find a good local realtor who knows the area you’re considering and has a “sense of the market.”

Weisleder advised buyers to get referrals to get a sense of how they perform in bidding wars, which is vital in Canada’s hyper-competitive market.

“You really have to know how to read people and it is very hard to do this by yourself,” he said.

Weisleder also said many banks won’t trust the final numbers that have been agreed upon by private buyers.

“It is very hard to get a mortgage when you do a private deal because the banks don’t know how you came up with the purchase price so they’re going to need their own appraisals – they’re going to be suspicious,” he said, adding that buyers going it alone also “invariably” make mistakes with the paperwork as well.

Weisleder stressed that buyers should also add a lawyer to their team to close the deal, a home inspector, a contractor (when an older home is being acquired to assess how much it will cost to make repairs) and a mortgage broker.

Determining the costs you can handle

One of the processes that a mortgage professional can help buyers with, according to Pat Giles, associate vice-president of real estate secured lending at TD Canada Trust, is determining how much they can actually afford if you take into account income, budget and the lifestyle they want to maintain after they purchase a new home.

“It comes down to considering what your priorities are,” Giles told Yahoo Finance Canada.

“I have friends who have travelling as a high priority, so they consciously made a decision to go with a less expensive home so that their mortgage takes a lesser proportion of their overall budget.”

Giles said TD often suggests that buyers “test drive their mortgage” by making automatic transfers in the amount of their mortgage into a Tax-Free Savings Account or a regular savings account for a couple of months.

He said this allows clients to see how they deal with the added expenses and, at the same time, save for a larger down payment.

The Canada Mortgage and Housing Corporation, says, in general, that a person’s total monthly housing costs (meaning their mortgage payments, property taxes and heating expenses) should not exceed 32 per cent of a person’s gross house monthly income.

It also suggests that their debt load (housing costs plus car loans, credit card payments, personal loans, line of credit payments and other debts) shouldn’t be over 40 per cent of their monthly income.

In addition, buyers need to factor in whether they will need mortgage loan insurance, which they will need if their down payment is less than 20 per cent of the value of their new prospective home.

The CMHC offers a household budget calculator that can be seen here.

However, Weisleder suggests buyers shouldn’t borrow right to these limits.

“(That’s) when you’re living to pay your mortgage,” he said.

“When you do that life is not so much fun … it is very stressful.”

Getting pre-approval … and more

Giles said getting pre-approval for a mortgage is also integral to a smooth home-buying process.

At TD, getting pre-approval means that a buyer’s credit history and income has the bank’s seal of approval and guarantees them of a loan up to a certain amount for 120 days.

“It really allows you to go out and shop with confidence because you’ve been given a number you can confidently stand behind and that allows [you] to feel good about the next steps and your budgeting,” said Giles.

While Weisleder said getting pre-approval is vital in knowing how much you can afford to spend in a bidding war, banks sometimes will not provide their initially promised mortgage if its appraiser pegs the value of the house you purchased for less than what you paid.

“I’ve seen some buyers scramble and either they borrow the money from relatives or they’re in danger of defaulting,” he said.

“You can’t just depend on the bank to the give you the money you were pre-approved for, they have to determine the house was worth it.”

Weisleder advised buyers to have an additional five to 10 per cent down payment deposited in reserve just in case.

Prepare for closing costs and the unforeseen 

Even though you’ve likely depleted your life savings on putting together a winning bid for a home, you’ve only just begun to realize a lifetime of expenses.

Following the sales, both Weisleder and Giles said buyers need to be wary of a wide range of additional closing costs, including land transfer taxes, legal and title deeds, property surveys, moving costs, utility adjustments, lenders’ administration fees and prepaid property taxes.

Giles advised buyers to build a three-to-five per cent buffer to cover these added expenses.

In particular, Weisleder said lenders administration fees, prepaid taxes and prepaid tax bills can sneak up on buyers.

Weisleder also suggested that buyers who are also selling at the same time to stagger the closings of their transactions.

He said if they don’t, a buyer can wind up temporarily homeless if, for example, a seller unexpectedly needs extra time to move out.

“You may have to end up staying in a hotel, paying extra storage costs – it’s a nightmare,” said Weisleder.

[A condominium construction site is seen in Toronto in this March 11, 2014 file photo. (REUTERS/Aaron Harris/Files)]

The real estate world is a scary place for first-time homebuyers. Rent or buy? City or suburbs? Can we even afford anything in this market?

Irene Chow is a sales representative for RE/MAX, working in Toronto, Mississauga and the west side of the Greater Toronto Area (GTA), specializing in relocation, condos, luxury homes and rentals. She spoke with Yahoo Canada Finance about the misconceptions and truths she’s run across in her own experience with young buyers and renters in the Toronto area.

MYTH: Young people can only afford to rent

Though renting is a young person stereotype for a reason, there are definitely twenty- to thirty-year-olds looking for places to buy. In Chow’s experience, it’s usually happening outside of the city. “[If] they have that combined income, they are able to get into townhouses or starter houses,” she said.

Either a strong enough total income, or some help from their parents, can give first-time buyers the edge to buy instead of rent. And if they can afford to buy, Chow encourages them to.

”Every month when you pay that rent, you know you’re not seeing a penny of that back,” she said. “But if you’re buying and you can afford a smaller place, in a couple of years you’re getting all the money back […] and sometimes more as homes are increasing in value.”

MYTH: Young people can only afford condos

Not necessarily.

“I have young first-time homebuyers who are able to get into starter homes,” said Chow, who sells the occasional condo in the city but more often homes outside of it.

A mortgage broker has to look at their client’s financial portfolio first to see what they can afford, but $300,000-350,000 can mean buying in Mississauga instead of renting in the downtown, according to Chow.

She also has clients who can get into “spec” townhouses (short for speculative, meaning the owner builds them with a specific buyer in mind), which can be anywhere from one to three floors and approximately $350,000.

MYTH: Single people can’t afford to buy on their own

There’s a reason couples are the stereotypical homebuyers. Together they will have more income to spare, as well as be more likely to want a more sedate lifestyle than a single person of the same age.

“I do find there are young, single incomes [that are enough], but it’s rare,” said Chow.

Often if a single person is moving from a condo to a house, they are just upgrading their living situation (and parents are sometimes helping with the down payment.)

MYTH: Everyone is leaving the cities for the suburbs

Not so much. “Young people, especially if they’re single, they prefer downtown Toronto,” said Chow. “They don’t mind paying that rent.”

From what she has seen, a lot of younger adults will fork over the higher downtown rent costs in order to stay in the more active social areas.

“Couples that want to start a family, a life together, are moving to the more suburban areas. They are looking for a little bit more space, because now you have two of them.”

MYTH: The suburban market is getting competitive because the cities are less affordable

“You can feel it,” said Chow.

In the past, her and her coworkers never heard about multiple bids on homes in Mississauga, Oakville or Brampton the way they did for downtown Toronto properties.

But in the last couple years, the demand has skyrocketed and multiple offers are normal in these areas. Buyers can’t afford a semi-detached house in the city, so they have to leave their urban environment to make it happen.

MYTH: You need a $100,000 salary to afford a house in downtown Toronto

Chow knows the finances of her clients, and she’s pretty sure this one’s true.

“You would have to be making pretty much $80,000 to $100,000 to afford [one], plus a minimum 10 to 15 per cent down payment.”

According to the Canadian Mortgage and Housing Corporation, total monthly housing costs including your mortgage, property tax and heating expenses shouldn’t exceed 32 per cent of the household’s gross monthly income. Even if you pass that hurdle, your total debt load (including housing costs, car loans, credit cards and other loans or debts) shouldn’t exceed 40 per cent of the household income.

Chow advises sitting down with the right person to go over your finances before you get attached to the idea of buying or renting anywhere.

[Splitting assets in a divorce isn’t easy, and determining who gets the house is one of the toughest to determine.]

The current housing market is creating some tricky conditions for Canadians going through a divorce who are trying to decide who keeps the house. In the past, a partner who wasn’t named on the title to the house as an owner was still typically entitled to half via equalization of net family property, a process that adds up the couples’ assets and debts at the point of separation. But with the rapid rise in housing prices – the average price of Canadian homes rose 1.5 per cent alone, just in August – dividing the family home is becoming a contentious issue.

“This kind of real estate market it makes a huge difference because if I’m on title of the home and the house goes up in value before we make a deal but after separation, the starting point is I get all that increased value,” explains Andrew Feldstein, founder and senior partner of the Feldstein Family Law Group in Markham, Ont. “The non-titled spouse doesn’t get anything.”

In effect, the market conditions could create some lopsided divorce settlements. A Vancouver divorcee recently tried to use the housing market and the rise in the value of his wife’s primary asset – he kept the RRSPs and she kept their Vancouver home – to have his spousal support payments dropped. Unfortunately for him, the judge didn’t take his side.

“The increase of the value of the house does not change the present day financial circumstances of the wife in the slightest,” wrote Justice Frits Verhoeven in a decision released in March. “No argument is made that she could or should sell it. It is her residence and that of the two children of the parties. It is the same modest house the parties bought together in 2004. The value is in the land, not the house.”

The scenario is one of several outliers that arise in Canada’s otherwise relatively straightforward approach to deciding who gets to keep the house in a divorce. While there are some provincial quirks, divorce in Canada is governed by the federal divorce law. When it comes to deciding who keeps the house – often called the matrimonial home – there are three main scenarios.

  The first is sole possession, which usually results in one partner buying out the other.

“Frequently people will negotiate a buy-out with their spouse because maybe they want their kids to stay in the house,” says Feldstein adding that an appraisal is done on the current or fair market value of the home. It has the benefit of allowing one partner to get their money in 30 to 60 days without the headache of trying to sell the home.

Co-ownership is another option. In this case, partners in an amicable divorce can both remain responsible for payments and when the home sells, both get half the funds. Of course, there’s also the caveat that while both parties are responsible for capital gains on their share of the profit, the spouse who stuck around living in the house might be able to tap into a capital gains exemption.

Then there’s the sell option where the house is listed and both parties split the profits, even if they’re common law married.

“(But) if they’re common law and they’re not on title then the spouse who isn’t has to make an argument to say that they have a beneficial interest in the home in order to get any money,” explains Feldstein. In the case of common law, partners aren’t entitled to equalization automatically, which means they’ll need to build a case around what they’ve contributed to the home in terms of “sweat equity” as part of a trust claim. If successful, that partner can recoup some of the benefits of sharing a home during their marriage even if they weren’t an official owner.

It all comes down to negotiation. And the decisions made during the marriage can create challenges in the event of a divorce.

[Buying or selling a home can be overwhelming, but there are ways to cope.]

If you’ve played the real estate game even once, odds are good that you may have experienced a whiff of regret at some point.

Nagging though they are, regrets shouldn’t sap your energy, keep you up at night or plague you with chronic medical conditions.

“Real estate is often one of biggest investments you’ll make in your lifetime,” says Dr. Eilenna Denisoff, a psychologist and director at CBT Associates in Toronto. “And so if someone has a predisposition to anxiety and they tend to be a worrier then making a decision around real estate can be very difficult or almost paralyzing.”

Since our emotions are driven by our thoughts, what’s important when you’re experiencing regret is that you focus on changing how you think. To prove her argument, Denisoff uses a simple example of a dog. For one individual, the dog makes that person feel happy and excited, while another is terrified. “It’s the same dog,” she explains. “So it’s not the dog that determines how you feel, it’s what you think about the dog.”

But learning to love the dog can be tricky. When your “woulda, coulda, shoulda” response seems to dominate your thinking it’s time to teach your brain how to become more flexible and positive.

“Flexible thinking is always associated with better health and very rigid thinking makes it difficult for people to feel good about anything,” says Denisoff. “For example, if somebody has a very high perfectionist standard and they set the bar so high they leave little room for themselves to be happy with any decision they make. And that kind of perfectionism can lead to a lot of regret, sadness and is associated with clinical depression.”

Talking to a professional helps when negative thoughts and self-doubt become debilitating. A psychotherapeutic strategy known as cognitive restructuring teaches people to identify and dispute negative thinking patterns which are commonly associated with mental health disorders. With this process, your brain practices alternative ways of thinking and interpreting events and experiences. Learning to tolerate a certain level of uncertainty is also healthy.

Regrets about Vancouver’s wild real estate market appear to underlie many of the reasons clients come in to seek guidance or advice from Mark Weinberg, a registered psychologist in Vancouver.

“When you talk to anyone here that’s a consideration at the back of their minds,” Weinberg says. “When you are living in [a] place where you sense your opportunity to go up in [the] world in terms of your residential lifestyle is impeded and there’s a sense that your friends are leaving for opportunities elsewhere that will happen. I don’t know if it’s true but there’s a sense of migration here that people are leaving.”

That’s not altogether surprising given the city’s housing prices. A typical single-family home in Vancouver is $1.4 million, while the city’s desirable west side commands $3.2 million for a single family house.

Weinberg says the human mind can’t tolerate the notion of having two competing thoughts so we start to rationalize uncomfortable thoughts, a state known as cognitive dissonance. For example, the thought that a person will never be able to afford to buy a house in Vancouver could drive someone to rationalize that renting is the better way to go because investing in an over-heated market is foolish and prices are far too high.

“With cognitive dissonance you bring down the tension within your mind by telling yourself another story,” he says. “It’s a good thing. That’s how we help regulate cognitively or emotionally, the decisions and things in our lives.”

The research on regret shows that the more opportunity you have the worse you feel, which seems counter intuitive. Weinberg uses the example of not studying for an exam. If you don’t study and fail you’ll be sorry but if the reason you didn’t study was because your power went out, you can say it wasn’t your fault and that you didn’t have a choice in the matter. That sense of having no choice in the matter is what is driving some of his clients to make a move in the real estate market.

“They will say to me I have to do this because I don’t have a choice otherwise I won’t get a property here,” he says.

We should also learn from our regrets, advises Weinberg. Since people who experience regrets tend to think in black and white terms, people should rethink those thoughts which will put them in a better context.

[If you’re not well-informed, you could end up with some serious regret when buying or selling your home.]

Ontario may be home to one of the hottest real estate markets in the country, but that doesn’t mean residents are particularly real estate-savvy.

In fact, according to the Real Estate Council of Ontario (RECO), Ontario’s real estate regulator, a sizable number of Ontario residents know little to nothing about the process of buying and selling a home. A study by RECO found that 32 per cent of first-time homebuyers did not feel prepared or knowledgeable about buying a home.

Granted there are worse things to be ill-informed about – forgetting your partner’s birthday is likely to be a much bigger pain than forgetting the formula for closing costs – but buying or selling a home is probably the biggest transaction you’ll ever participate in, and it pays to know what you’re doing.

Horror stories about the real estate market abound: houses are commanding tens of thousands over asking price, and dozens of offers are being made on sub-par abodes, prompting a kind of panic in which even the most knowledgeable buyers are not immune.

Kelvin Kucey, a deputy registrar of regulatory compliance with the RECO, readily admits that he and his wife got caught up in the hysteria in 2012 as multiple offers quickly became the new vernacular in Toronto real estate. Their rushed purchase meant overpaying for their home and doing so without the safeguard of a home inspection.

“And even to this day there are problems with the house that we’ve now had to ante up to repair because there were shortfalls in the construction,” says Kucey. “With that it was getting caught up in the buying process, the pressure to buy and not taking the cool heads approach that were promoting right now in our Be Home Smart campaign.”

RECO’s Be Home Smart campaign launched this month to help calm consumers frenzied by the highly competitive housing market. According to the Ontario regulator’s latest study, approximately 38 per cent of buyers are willing to go 20 per cent over their budget to get the house of their dreams. And given that the average single family home in Toronto is $1.2 million, that’s a hefty overage. Of those people, about 20 per cent are blindly offering more than they’ve budgeted without knowing if they can get the financing to do so.

But going over budget isn’t one of the biggest regrets Ontarians have about the process, according to RECO’s 2014 survey. Forty-one per cent of Ontario homeowners and 45 per cent of first-time buyers wished they had done things differently when buying their homes. Their biggest regrets? Not having a better grasp of the buying and selling process, not viewing more houses, skipping the home inspection and not doing a better job of researching and interviewing realtors.

Contracts are seldom compelling reading and that is evident in these survey results, which show that 43 per cent said there were sections of the real estate contract that they didn’t fully understand.

The survey also showed 36 per cent of Ontario homeowners mistakenly think that after a real estate contract is signed, a buyer or seller has a trial period during which they can cancel it. An additional 33 per cent said they were unsure if this was true.

“It’s spooky when you look at that stat – 69 per cent of people have no idea what they’re doing when they’re signing those deals,” says Kucey. “The only thing that has a cooling off period with regards to real estate purchasing is a brand new condo when you’re purchasing from the developer. Everything else is binding.”

When it comes to who can represent the buyer and the seller, did you know that a single realtor can act on behalf of both sides in a transaction so long as both parties agree in writing? Neither did 58 per cent of Ontario respondents.

Finally, over half incorrectly believe you get your deposit back right away if a deal doesn’t go through, when, in fact, the money can only be returned if both the buyer and seller agree, or by a court order.