Don't get seduced by a model home
By Michelle Warren • Bankrate.com

When first-time buyers Peter and Dawn Crawford set out to buy a new house near Toronto, they visited dozens of model homes and had to keep reminding themselves that no matter how much they loved the model, it wasn't the home they'd end up living in.

Like many potential buyers, they discovered it was easy to be seduced by the model home but faced a reality check when it came to reconciling the fantastic features with the home's base price tag.

It's a common communication problem, says David Foster, a housing consultant with Reid/Foster Associates in Ottawa. He recently visited a house with a base price of $264,000 but worth $368,000 as presented.

"When you go into the model home, everything you like is an upgrade," says 30-year-old Peter Crawford, who asked that his real surname not be used for fear of ruining his relationship with his builder before he moves in. He adds that he was sometimes frustrated with the lack of clarity on the part of building companies, not to mention the high price of upgrades and add-on features.

Do standard homes exist?
He's not alone. According to a study for the Canadian Home Builders' Association, upgrades have become a source of disillusionment and contention for new-home-buyers. People believe the standard home is a myth; the running joke is the only things that come standard are the light switches.

As a result, "a lot of builders are being more careful in making sure people know what they're looking at [while] others are upgrading their base standards," says Foster. "When there's confusion about upgrades, it doesn't benefit anybody."

Still, with today's penchant for hardwood floors, stainless steel appliances, high-end kitchens and architectural details such as soaring ceilings, few homebuyers end up with a standard home.

Creating a home with personality
For many décor-savvy buyers, customizing their purchase is one of the most enjoyable aspects of buying new. It's also overwhelming. "The important thing for buyers is to take the time you need to make decisions," says Foster, adding that changing orders can be costly and delay the building process.

Large building companies usually have design centres filled with product samples and staff who help with selections. Some companies have relationships with manufacturers and suppliers and set up appointments for their buyers to visit those showrooms. Smaller building companies may dedicate a portion of their sales office or model home to the process.

The base price of a home includes a range of features and fixtures, but standards vary from builder to builder and even from one design to another. The builder's package should outline in detail the features and list the manufacturers or suppliers. It's always a good idea to verify the sources' reputations and warranties.

After establishing what comes as standard, do your homework and decide what you can live with and what you can't live without. Upgrades include everything from premium countertops, high-end cabinetry and thicker carpeting to fancy towel racks and windows.

You can also expect to pay extra for hardwood floors, high ceilings, fireplaces and air conditioning -- again, check the builder's package or talk to representatives for a thorough list and prices.

Where to spend your money
"We did our homework on upgrades," says Crawford. "We went in with a set budget and were determined to stick to that budget." They spent $27,000 on window coverings, a fireplace, nine-foot ceilings, rounded walls, arches, carpet under-pads, lighting, kitchen features and higher quality paint.

"Most homebuyers expect to spend a minimum of $15,000 to $20,000," says Foster. One rule of thumb is to set aside at least 10 percent of the home's purchase price for upgrades, however, buyers at various stages in life approach it differently. First-timers tend to be more budget-conscious, while those moving up usually spend more on high-end features, such as granite countertops and luxury bathrooms. Empty-nesters, who are downgrading in size, tend to upgrade without compromise.

While the aim is to personalize your new home, it's always smart to think about resale appeal. Kathy Wardle, a Toronto-based Bosley Real Estate sales representative, says "if people are buying something built in the last 10 years, they don't want to do anything to it."

Quality kitchens and bathrooms are a major selling point, as are gas fireplaces. In addition, "everybody is looking for hardwood floors everywhere -- upstairs and downstairs." Indeed, hardwood floors are the most popular upgrade; other favourites include central air conditioning, higher-end tiles and, in the luxury market, media rooms and wine cellars.

Choose neutral colours for major features, such as floor or tiles, and add personality or colour with paint and accessories. Remember, you have to live with your choices for a long time, so aim for timeless rather than trendy.

If you're handy and you know it…
When you're on a tight budget, decide which features you need now and which you can plan for in the future. If, for example, it's an architectural detail, such as high ceiling, obviously it's now or never. If you have your heart set on a bay window, it's more convenient to have it installed from the outset. But, there are plenty of things, such as painting or laying tiles, that you can do yourself for a fraction of the cost.

Crawford says that while they really wanted hardwood floors, they weren't prepared to pay $14-plus a square foot when a friend had just laid oak floors for $2.99 a square foot.

Don't forget about the deposit
While it's easy to roll such costs into a mortgage, homebuyers should be aware that they're usually required to make a deposit, beyond their initial down payment, on the upgrades. "The thing that really held us back was coming up with a 35 percent deposit," says Crawford. "Overall I was pretty happy -- my only regret is I didn't have money to do more."

Most disappointments and disagreements can be avoided by arming yourself with information, clearly defining priorities and never rushing a decision. "When you're buying a house," says Foster, "the best thing in the world is no surprises -- for all involved."

Michelle Warren is a writer in Toronto.