Tag: home buying tips

Ten Steps of the Home Buying Process

Beginning the journey to homeownership can be overwhelming and stressful. But with a little planning, you’ll get the home that’s right for you. A home that strikes a balance between your “wish list” items and the practical realities of the property, location and the housing market. Before you know it, you’ll have a place to call your very own. A place to entertain. A place to decorate. A place to raise a family. It really is an exciting time!

To help keep you on track, below are ten steps of the home buying process to assist you in buying your first home.

STEP 1 – Build a Budget

An effective budget will map out your plan to set aside money for your down payment and additional costs. It will also help determine the price of a home you can afford.

STEP 2 – Investigate Mortgage Options

There are many different types of mortgages. If you don’t have the 20% down payment for a conventional mortgage, you can get a high ratio mortgage, combined with mortgage default insurance, that allows for a smaller down payment. You should be pre-approved for a mortgage before you start house hunting.

Consult with a mortgage professional to discuss what options are available to you and learn more about how to get started.

STEP 3 – Choose a Realtor

Your realtor will play a vital role in your home buying experience. The best realtor will be a combination of a personal advisor, consultant and negotiator. He/she will show you homes that match your criteria, guide you through the home buying process, negotiate the best possible price for your home and deliver your closing documentation.

STEP 4 – Get a Lawyer

It’s important to hire a lawyer who specializes in real estate. You could find yourself in a bidding war for the home you want, and it doesn’t hurt to have a lawyer look over any offer to purchase before you submit it. A real estate lawyer will also conduct a title search and check for outstanding taxes and liens on the property.

STEP 5 – House Hunting

* Create a wish list

House hunting can be a lengthy process. To save yourself time, know exactly what you want in a home beforehand. Think about your immediate needs, future plans and lifestyle. When you look at homes, you may be tempted to concentrate on the home, but don’t forget to look at the whole property: the lot, the neighbourhood, the surroundings. How close is the home to facilities and services important to you?

STEP 6 – Make the Offer

Your agent presents the offer to the seller. This document includes the price, conditions, deposit and closing date. The seller either accepts, rejects or counters the offer (also called “signing back” the offer).

STEP 7 – Home Inspection or New Home Warranty

Hiring an inspector is voluntary, but it’s a smart idea for resale homes. You can choose to make your offer to purchase the home conditional on the outcome of your inspection. If your inspection reveals major problems, you can negotiate those repairs with the seller before your deal closes, or legally withdraw your offer.

What is a New Home Warranty?

New Home Warranties are typically used when you buy a brand new home. The builder provides a New Home Warranty to cover things like deposits and completion dates, along with labour and materials for at least one year after the home was built. It also protects you against structural problems for a minimum of five years.

STEP 8 – Finalizing the Deal

Finalizing the deal will include the final approval of your mortgage, a meeting with your lawyer to finalize details like insurance and conditions, and the results of a title search.

STEP 9 – Moving Preparations

There’s a lot to do before you move. Line up utilities and other services like phone, cable and internet. If you rent, you must give your landlord notice. Also, forward your mail to your new address and hire a moving company. Preparing these things well in advance will help you make a smooth transition to your new home.

STEP 10 – Closing Day

This is the day you legally get possession of the house. Your lawyer completes the paperwork (so the home is in your name), payments are finalized and you receive the deed and the keys. Congratulations on your new home!

 

Andrew Thake, Mortgage Agent

Dominion Lending Centres – Smart Debt

www.andrewthake.com

Read more
Limiting Risk

Buyers hate surprises. Most of the time, the surprises that arise when purchasing a property are unfavourable, such as a lien, a faulty roof, or inadequate funds in the condominium reserve. These are all issues that are not readily observable or even apparent to the average buyer. However, these are all issues that can be mitigated by drafting a proper agreement of purchase and sale contract, limiting risk and by working with a good real estate lawyer.

The agreement of purchase and sale governs the transaction between the buyer and the seller, and as an agent, it’s our fiduciary duty to ensure our client’s interest is fully protected. Recently, one of our clients was looking to purchase their first condo and following status certificate review, it was discovered that a faulty piping system had been installed in the building and the cost to remediate could potentially be substantial. Because of the inclusion of the status certificate review as a condition in the contract, our client had the opportunity to review this issue with their lawyer, make the decision to terminate the agreement, and see their deposit cheque returned to them in full.

There are a number of critical purchase agreement clauses that my team uses to protect our buyers and save them money – Eight Critical Purchase Agreement Clauses.

1.Basic Financing Contingency

In the event that a loan is not approved, and the buyer is unable to purchase the property, having this condition in place allows for the buyer’s deposit to be retrieved in full.

2. Review of Status Certificate

The status certificate is a comprehensive document that outlines the financial and legal health of a condo corporation. Included in this document are the duties and rights of the condo corporation and of the individual owners; whether any special assessment exists on the unit or building to pay for such things as repairs, budget shortfalls or boosting the emergency reserve fund; as well as the current budget and a Reserve Fund Study that identifies future replacement or repair work.

To protect our clients from legally or financially risky condo buildings, our team always recommends the inclusion of a condition for the review of the status by a real estate lawyer – Why the Status Certificate Review Condition is Important. These professionals conduct a thorough review of the Status Certificate and offer their opinion on the health of the condo corporation, limiting risk and ensuring your investment decision is a sound one.

3. Inspection

To give a buyer protection against defects in the building, it has become very standard to see the inclusion of a condition in the agreement of purchase and sale to make it conditional on the buyer conducting and being satisfied with the results of a building inspection – Home Inspection Before You Buy. By including an inspection as part of the conditions, a buyer can put the onus of the repairs on the seller before closing or make the necessary amendment to the offer price to reflect the value of the repair work needed.

By including such conditions in the contract, we prime our clients for the potential of undiscovered issues and allow them the time to conduct proper due diligence to uncover surprises, limiting risk in the long run. When our clients can move forward with a purchase in confidence knowing these conditions have been satisfied or waived, we’ve succeeded in our roles as agents.

Read more
Should I RENT or should I BUY?

“Rising Interest Rates”, “A Cooling of Housing Prices Expected”, “Banks Tighten Mortgage Rules”…these are the headlines dominating the Canadian real estate scene over the past few months. With this comes the longstanding question that most consumers ask themselves with regards to how they pay for housing – should I RENT or should I BUY?

The Case for Renting

Ben Felix of PWL Capital, in a February ‘18 G&M article, emphasizes that those in the market to buy a home should think carefully about what their motivation is. If your motivation to purchase is solely based on a stigma around renting or an assumption that one is simply “throwing away money” by renting, one should most definitely consider the following factors as well. How long are you planning on living in this home for? If this is a short-term purchase (less than 10 years) then the additional costs of purchasing and eventually selling (i.e. legal costs, tax, agent fees) have a lesser chance of being absorbed by any potential increase in real estate prices. Ben also contends that the financial reasons for purchasing a home are flawed and that a renter can build as much wealth, or more, then a homeowner over the course of their lives.

The Case for Buying

When looking at the buy side of the argument, I referred to a G&M Report on Business Mag article by Duncan Hood. The article reinstates that an argument can always be made that renting is a better option as you have lower monthly payments and you can invest the difference to attain a similar overall net worth. This is particularly true in the Ottawa market where over the past 5 years, the stock market has outperformed the housing market with average annual increases of 6% for the S&P/TSX Composite, versus 2.24% for the real estate market (Ottawa Real Estate Board MLS® Residential Sales (including Condominium) Percentage Increase or Decrease Over Previous Year). Duncan goes on to articulate a point that he believes shelves these arguments for renting over buying, and one which I feel has substantial merit.

The point though that I completely agree with Duncan on is that it takes a very disciplined renter to achieve these same or better returns, and in a consumption-oriented society, this is wishful thinking. To overcome these consumerist temptations that surround us in our daily lives, purchasing real estate provides a simplified and clear path for the majority of consumers to improve overall net worth over the long term.

Should I rent or should I buy? That is the question. Feel free to comment on which path is for you.

Read more
Five common mistakes home buyers make to watch out

Buyers are often so focused on finding the desired property within their budget that they make unnecessary and costly mistakes.  Here are five common mistakes home buyers make to watch out for:

1. Not Hiring a Qualified Home Inspector

Just like any other profession – no two Home Inspectors are created equal.  Always be sure to research a variety of professionals.  Find out how they report back results and determine their level of knowledge with the type of home they are inspecting.  You want someone who will take detailed notes and pictures, provide guidance, and take the time to explain the various concerns/benefits of the home.

2. Ignoring the Value of the Neighbourhood

The neighbourhood in which a home is located in is often ignored.  The focus is usually on the features of the home, but what about access to transit, schools, shops, and highways?  How do the other homeowners maintain their properties?  Is the area in a state of growth, stability, or decline?  Does the house conform to the general area?  Is it the worst or best house on the street?  All of these factors can impact not only the current market value but its anticipated future value.

3. Getting Caught up in Multiple-Offer Situations

A number of local real estate markets across Canada are experiencing high buyer demand with relative lack of active listings.  Typically, this trend will push home prices upwards.  This is often compounded by homes that are being priced below market value, and sellers not accepting offers until a specific date.  The purpose of these selling strategies in a hot sellers’ market is to encourage multiple-offer situations.  All too often, the end result is a buyer paying too much for a home.  As a homebuyer, be prepared to walk away from such a situation.  Allowing your emotions to rule your thinking may end up costing you more money than you should be otherwise paying for a home.

4. Having Search Criteria that is too Broad

Home buying should involve the process of elimination, not addition.  It’s normal to begin the process with a fairly broad set of criteria in terms of home features, location and cost.  Once you’ve had the chance to view a couple of homes and build your knowledge base, then it’s time to make some decisions.  The more focused and efficient your search is, the more you’re likely to find the home you actually want.  When search criteria are too broad, we tend to get overwhelmed and have difficulty making meaningful decisions.

5. Not Hiring a Professional REALTOR®

As in the case with every professional service provider, not all REALTORS® are made the same.  Do your homework.  Review REALTOR® websites, ask friends and family and interview multiple Real Estate Sales, Professionals.  A referral to a reputable REALTOR® can be a great source, but just because your good friend has a parent in the business doesn’t mean they’re a good fit for you.

 

Keep these five common mistakes home buyers make in mind when you are looking for your next home.

Read more
Residential Negotiations

Deal-making is at the center of a Real Estate Professionals job every day when taking part in residential negotiations. With this, there have been noticeable similarities and common denominators present in the majority of residential properties that our Buyers have picked up at what can be viewed as a “steal”.

The three most critical pieces of information that need to be understood prior to entering into nonemotional residential negotiations are:

  1. Don’t even consider a negotiation without this piece of info: “How much did the seller pay for the property and when did they buy it?” Thinking rationally, it should not matter what the Seller bought a property for because in a perfect world market price would find itself. But since the world isn’t perfect, if you are a deal seeker and you combine a property that was purchased 10 years ago for $200k that is now worth $315k with a Seller that is motivated a deal COULD be on the table at $300k or north. The thought of cashing out or moving on, combined with a nice profit, will typically help facilitate the transaction. Versus the exact same property, except the Seller just purchased it last year for $298k and would be taking a loss at $300k. The second Seller may be more inclined to sit tight and wait for $315k to cover their loses.
  2. How many days has the property been on the market for? This element is pretty obvious – Days on market combined with motivating mitigating factors can often lead to a low ball offer being looked at more seriously than if the property had been on the market for two weeks.
  3. Has the Seller purchased another property yet? Or any other motivating factors for them to move? The thought of carrying two properties can lead consumers to act irrationally. If possible, look into this. Even if the Seller holds their hand close, have your Agent test their position with the old ‘offer and walk’ technique. This approach will likely lead to a call back in a few days and a possible deal!

Deals are in the details!

Read more
Contact